News: Setting the Record StraightPosted: 2012-04-02
Author: Toby Gilley
As an attorney, husband, father and a proud member of Murfreesboro’s City Council, I believe focusing on Murfreesboro’s financial facts will help us not only understand where we are, but where we are going as a city and community. Below is lengthy and detailed, but I believe this information is needed in order to set the record straight concerning Murfreesboro’s debt and financial strength. Please feel free to review Murfreesboro’s annual budget and audit or contact the City Managers office to verify the information in this article. First, since 2000, the population of Murfreesboro has almost doubled, requiring massive outlays for schools, roads, and utilities. Second, the property tax rate has declined 33% from 2000 to today, yet City’s reserves have grown by 180%. Third, Murfreesboro has achieved a level of financial responsibility and accountability that ranks in the top 5 cities in Tennessee—Moody’s A1 and Standard and Poors AA- ratings. 1. Population Growth & the City’s Financial Policy a. When over 44,000 people move into our city over the last 12 years they need adequate housing—over 14k new homes and thousands of new apartments—and additional schools, roads, electric, water, sewer, police and fire protection services. How we borrow the funds to provide these services is where we’ve seen most of the improvement over the last decade. b. A city, like your family, must sometimes take on debt to purchase long-term assets needed for proper quality of life. The City’s Financial Policy uses 6 of its 17 total pages to define how much debt Murfreesboro will use to build roads, schools and parks needed to benefit our community, while maintaining strong credit ratings and accelerating our debt repayment over fifteen years instead of the twenty to thirty years common in most communities—while keeping the flexibility needed for tough financial times. c. In 2000, Murfreesboro had $97,000,000 in debt that was supported by the property tax. Today, that number is $213,000,000. Over the last twelve years, Murfreesboro has used debt to build over $140,000,000 in new streets, four new elementary schools at a cost of over $35,000,000, new parks and greenways of over $25,000,000 and the new public safety and public works facilities and equipment required to serve 44,000 new and existing residents. Rate-payer funded entities such as Murfreesboro Electric Department and Murfreesboro Water and Sewer Departments have also incurred debt for capital improvements. However, repayment of this debt is not tax-dollar funded. This debt has also been incurred at very low interest rates, is aggressively amortized and these departments have strong reserves (the water and sewer department, for example, has reserved funding of almost $22 million dollars which is used to pay for projects on a cash basis when appropriate). d. The financial policies set strategies for planning new improvements, plans for funding them and discipline to prevent over spending. The policies set up four different measures of debt, each designed to alert elected officials to the danger of overextending the City’s credit. The City Charter sets a maximum debt limit of 15% of the value of taxable property in the City. In 2000, the City had utilized 2.25% of that 15% limit. For 2012, that ratio is 2.27% or almost no change in the twelve-year period. e. Another measure is the percentage of the annual budget used for the repayment of debt. The City’s Financial Policies set a limit of 33%. In 2000, servicing the debt required 13.5% of the annual budget. Today that ratio is 21.8% because of the decision to pay back the City’s debt on a fifteen-year amortization. The City will repay 92% of its current debt over the next ten years. While the ratio is higher, we will pay off our debt twice as fast, saving the taxpayer millions in interest. 2. Property Taxes & the General Fund a. How many cities with a population over 100,000 are able to hold the line on property tax rates or even reduce property tax rates? Hardly any. Yet, in Murfreesboro, we’ve reduced the property tax rate from $1.90 to $1.27 per $100 of assessed value since 2000—that’s a 33% decline! This strategy has helped families while making Murfreesboro one of the most attractive places to live in America. While property tax rates have been declining, the overall value of the City has increased. b. Fund Balance is the measurement in equity for the General Funds of local governments. It represents the difference between short-term assets and short-term liabilities of the City. It is the measure of the City’s ability to be flexible in meeting the needs for essential services during difficult economic times. The financial condition of Murfreesboro as demonstrated through the General fund balance (rainy-day fund) is very good. • On June 30, 2000, the General fund balance (rainy-day fund) stood at $17,291,000. • The same General fund balance (rainy-day fund) at June 30, 2011 is $48,452,000, an increase of $31,161,000, (rainy-day fund) over the twelve-year period. This increase of over 180% over the past twelve years is one measure of our community’s stewardship during a time of great growth. c. Perhaps the greatest act of community stewardship is the adoption in 2010 of a comprehensive set of financial policies to guide the City’s use of fund balance, revenues and expense and debt. These financial policies are intended to provide stability in the City’s ability to pay for needed services. The policy calls for the General Fund balance to be between 15% and 30% of one year’s budgeted income. In 2000, the General Fund balance was equal to 33% of the City’s annual budget. In 2011, that same General Fund balance was equal to 48% of the City’s annual budget, a 45% increase in the flexibility for the City to meet unanticipated events or economic downturns. This means that in the event of an emergency the city of Murfreesboro could run for almost a year just off of the financial reserves we’ve been able to preserve over the last twelve years. d. The General Fund is heavily dependent on three revenue sources: The property tax and the state and local sales taxes. Between these three revenue sources are 67% of the total City budget. Property tax rates have been declining as the overall value of the City has increased. From $1.90 as the property tax rate in 2000, the rate has been lowered three times to the current $1.27 per $100 of assessed value. This decline of 33% in the property tax rate is another sign of the financial stewardship of Murfreesboro’s elected officials. e. As local and state sales taxes recover from the economic downturn, 2011-2012 will be the largest local sales tax collections the city of Murfreesboro has ever recorded. The local option sales tax has grown over 120% since 2000 because more products and services are being purchase today than ever before. 3. Awards, Innovations & Cost Savings a. The City has received the Certificate of Achievement in Financial Reporting for 13 consecutive years from the Government Financial Officers Association. This award documents that the City has “achieved the highest standards in government accounting and financial reporting”. b. The City began the process of controlling health insurance and other benefit costs while still providing a benefits package to the city’s employees that is second-to-none. The City Council hired a consultant to assist City staff on the employee health, life and disability insurance coverages. The consultant proposed a three-year strategic plan, beginning with competitive procurement of the existing benefit products. Fifty-two proposals were received, with the best plans selected saving in excess of $400,000 each year on the employee benefits with no reduction in coverages. c. The City Council realized that continuing expenses of providing needed services had to be matched to the revenues available because of the economic downturn. After much study, the City’s workforce has been reduced by 53 full-time positions in response to the economy with the quality of service to the citizens being uncompromised. In conclusion I’d like to mention a few items of note. • Murfreesboro and Rutherford County rank as one of the fastest growing and most desired places to live in America. From the climate, to low unemployment, low crime rates, top-notch schools, great shopping and the states’ largest undergraduate university—we’ve got it all. • Since 2000 we’ve seen over $132 million of private investment in the Murfreesboro’s Gateway initiative alone, as well as the influx of new businesses such as Verizon, the Embassy Suites Hotel and Convention Center and Amazon—which provide thousands of jobs. As a whole our city is a great place to live, work and raise a family. I’m proud to have played my part over the last 12 years and I look forward to serving my fellow citizens for another 4 years on the City Council. Please remember that early voting ends on Thursday, April 12. Election Day is on Tuesday, April 17. If you need more information about polling locations, dates or requirements to vote please visit the Rutherford County Election Commission at: http://www.rutherfordcountytn.gov/election/index.htm For more information please contact Toby at email@example.com, call him at 615-893-1134 or visit http://www.tobygilley.com.