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Category: Government

City of Bessemer City General Fund Analysis

background

When Bessemer City leaders hired a new manager, he determined that a review of the general fund’s status was necessary. Operating costs were increasing and department heads needed funds for capital projects… but there was no formal plan in place to address the needs. The manager needed to know if the City could afford to pursue the projects without placing an excessive burden upon its tax payers.

solution

WR-Martin was engaged to examine the City’s financial reports, capital needs, ad valorem rates, and project the financial impact these items have on the City and its users utilizing a financial analysis developed specifically for the City. WR-Martin updated the general fund’s capital improvements plan for the next 10 years and ascertained the status of current annual operating budgets, programmed capital improvements, capital project budgets, contracts, and ongoing and pending financial obligations relating to the general fund. Additionally, we determined the adequacy of existing ad valorem rates to recover current and future operating and capital costs.

The study showed that the ad valorem rate increases needed to fund the entire CIP were excessive and unrealistic, even when spread out over 10 years. The high priority projects listed in the capital improvement plan greatly influenced the need for ad valorem tax increases. A $0.01 increase in ad valorem taxes yielded a relatively small increase in new annual revenue. Alternatively, the City considered only spending $100,000 annually on capital outlay and undertake more practical increases in taxes over the 10-year period as required.

result

At the conclusion of the project, the City staff decided that containing the increases in ad valorem taxes while maintaining requisite standards of service had the highest priority among City leaders. In order to minimize the impact on property owners, the City also pursued all opportunities for grant funding of needed capital projects, of which WR-Martin also assisted. To date, WR-Martin has assisted Bessemer City with obtaining over $9.5 million in grant and loan monies to fund both general and enterprise fund projects.