Surplus pushes 'rainy day fund' over $20 million
Cranston’s audit for fiscal year 2017, which ended June 30, shows a surplus of $123,000, according to city finance director Bob Strom and the Mayor’s office.
Mayor Allan Fung said that the surplus has been added to the city’s rainy day fund, which Strom said now sits around $20, 150,000. They both believe that this fund is possibly the largest unreserved fund balance of all the municipalities in Rhode Island.
This surplus can help the city with future unforeseen expenses and is expected to improve the city’s bond ratings, thereby lowering future borrowing costs.
The surplus comes despite a reduction of state aid to the city totaling nearly $900,000 in lieu of taxes at the Pastore complex, according to a release sent by the mayor.
The budget for the fiscal year was $275,000,000, and Strom said that the audit shows that the city is doing a good job monitoring the budget for each department, which the finance department does on a bi-weekly basis.
Some expenditures that exceeded budget were public safety costs, which went over by $250,000, hospitalization costs (because the city is self-funded) by $500,000, legal expenses, and snow removal costs.
Strom said that the finance department must monitor this and respond by “tightening their belts” by finding other departments to take money from that are under budget, and do fourth quarter monetary transfers between departments to offset overages.
Overall, however, Strom said the city did well because departments generally stayed on or under budget and the finance department, as well as the Mayor, kept close tabs on the city spending.
Also aiding the city’s finances, Strom said, is the growth of industrial and residential areas because of the income and property taxes that come with it. He pointed out the growing population, which he believes may surpass Warwick sooner than later, as well as the increased commercial development in Garden City, Chapel View, and other spots around the city.
“The city’s been doing well for a number of years now,” he said. “Our fund balance has increased or stayed the same for the last five or six years. And ratings agencies note that because of our financial strength, we’ve gotten increase in bond rating.”
Mayor Fung added that the city is always watching their spending and making whatever adjustments needed on a monthly basis. He has the ability to issue executive orders to curb spending, like cutting overtime hours for city employees, if the city determines that departments are going too far over budget.
Now, the city is nearly six months into the 2018 fiscal year, and Strom is tracking Cranston to be running equal or slight less to the current budget for most departments. That budget is slightly higher than last year’s at $285,000,000. Strom believes that the city’s on track to have another surplus or at least a balanced budget for this fiscal year as well, although one of the biggest unanticipated costs is snow removal, and that part of the year hasn’t hit yet.
Mayor Fung said that the finance team would meet with him in March to prepare next fiscal year’s budget and finalize that before April.
“I always make a commitment to get this done on time,” he said. “It’s always a red flag when cities or states are late on their audits.”
Looking back on the finances of the city since Fung has become Mayor, his executive assistant Mark Schieldrop proclaimed “whether or not you agree on the Mayor’s political policies, there aren’t two sides of the equation when it comes to the city’s finances.”