Decatur's Financial Discipline Pays Off in Recession

On June 21st the Decatur City Commission adopted the City's budget for the fiscal year which started on July 1st. This was the most challenging budget year I've experienced in my twelve year with the City. The City's property tax digest decreased for the first time since 1995. While the drop was slight, just over 1%, it translated into $300,000 less in property tax revenue for this fiscal year. Considering that we were already estimating to spend $702,000 in fund balance for the fiscal year ending June 30, 2010 and the state of the economy was still looking grim, there was some serious concern about the ability to continue to provide a high level of City services.

Just to clarify, in simple terms, fund balance is the difference between revenues and expenditures and it is cumulative. For example, in some years the City brings in more revenue than it spends and that amount goes into the fund balance. In other years, the City may spend more than it collects and will use some of the fund balance to balance the budget.

The City is quite conservative in its approach to public finance. As it turns out, during a recession, you can finally appreciate the conservative financial approach that city staff have employed for the past two decades or more. The City's fund balance policy requires a fund balance between twenty and thirty percent of the operating budget. At June 30, 2008, the fund balance was about $7,200,000 or forty percent of the operating budget. If there was ever a time to have a healthy fund balance, June 2008 was that time. By June 30, 2009, the fund balance was down to $6,700,000 or thirty six percent of the operating budget. We thought we were going to spend $392,000 of fund balance to get through June 30, 2010 but it looks like that may not be necessary because of lower than anticipated expenditures and higher than budgeted revenues.

So, what does all of this mean to Decatur residents?
Basically, the City's conservative financial practices, including a healthy fund balance, allowed the City to weather the worst economy in recent history without making drastic service cuts or imposing a tax increase. The City, with the support of it stable political leadership, has been strategic and deliberate in its decision-making. We follow long-term plans that represent the community's values. The City's management team encourages and promotes innovation and creativity. This is part of the city organization's culture that doesn't happen overnight and cannot be conjured up when faced with any crisis, financial or otherwise. The City has spent at least twenty years preparing for a crisis and our preparedness is evidenced by our ability to thrive even in the midst of a recession. Unlike many neighboring communities and those across the country, the City is keeping its parks and playgrounds open and maintained, city facilities remain open at least five days per week, no employees have been furloughed or laid off, community events continue to be held, community engagement opportunities abound, capital investments are being made and public safety remains strong. In short, Decatur is still moving forward.

To see the City's budget and financial reports, go to http://www.decaturga.com/ and click on 'Residents' and then 'Annual Budget'. Also, I am available to discuss any budget questions or concerns. Feel free to contact me at 404-370-4102 or andrea.arnold@decaturga.com.