Despite what you hear from some people, the City of Danville isn’t broke nor is it in bad financial shape. It’s quite the opposite. In this article, we’ll take a look at the city’s general fund and analyze what it really means.
We call this a BreakDown.
You can’t analyze a general fund statement without having a general fund statement, so here you go!
Lots of numbers. Now, let’s get some analysis and we’ll put it on a Big Board.
- Starting at the top, don’t look at the revenues & expenditures and think Danville is spending more than they have. Just because it’s around a $5 million difference between what’s coming in and what’s going out now, that’s normal. The second half of property taxes are just now starting to come in.
- One major expenditure increase has been the city’s health insurance costs. That’s up $1.4 million from last year. The city is self-insured, so they pay out routine medical claims from their own money. There is a stop-loss policy in effect so that the city wouldn’t get stuck paying a super-large medical claim, though.
- As of April 30th, the city had $43,143,332.10 in the general fund. The city is required by policy to keep 20% of the budgeted general fund operating reserves completely untouchable (except for dire emergencies, and even then that 20% balance has to be restored quickly). Bond and credit rating companies love to see that kind of last-ditch reserve levels. That required no-touch money is around $19.5 million, by the way.
- City Council can also freeze out parts of the general fund balance for projects and obligations. “Committed” funds are frozen out for projects, but that money isn’t obligated and can be unfrozen back into the usable general fund balance at any time. As of now, Council has two major things in the “Committed” column, one being $1.5 million for the city’s share in a new/renovated GW football stadium and the other being $3,000,000 for “budget stabilization”.
- That $3 million for budget stabilization is pretty much just an extra precaution that will never be needed. It’s just in case the city’s tax collections or revenues go out of whack badly. Considering that there’s already $13 million in the general fund that can be used with no problem, the $3 million for “budget stabilization” is just a feel-good insurance policy.
- The other part of the frozen out money is the “Assigned” list. That’s money that city management and the finance team haven’t frozen out on their own because they have a direct need for that money. The two major parts in the “Assigned” list are about $2 million for bills that the city owes and haven’t paid yet (encumbrances) and $2.85 million for Job Bust repayments to the Tobacco Commission.
- We’re left with $32,515,345.10 once we take all the things out that can’t or shouldn’t be touched. We subtract the mandatory minimum from that and we’re left with $13,012,485.30
- That’s right. The city has $13 million in spendable cash if they wanted to spend it. That’s another factor that bond and credit rating companies love to see.
- Danville’s city council has never gone on a spending spree for ridiculous things, so it’s safe to say that money will pretty much sit where it is. But if there ever comes a project that needs quick cash between budget cycles, the money is there to cover it.
So there you go. A comprehensive look at Danville’s general fund and direct proof that the city is in very good financial shape.
Now you see and know the truth. That’s why we did this BreakDown.
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