Supervisor Brad Bonkowski to Hold 'Breakfast with Brad' Friday

Carson City Ward 2 Supervisor Brad Bonkowski will hold his first “Breakfast with Brad” of 2016 on Friday, Jan. 8, from 7 to 8 a.m. at the Cracker Box restaurant. All Carson City residents are invited to join Bonkowski for coffee and conversation. \
The monthly get-togethers allow local residents to have input and ask questions about important city issues.
The Cracker Box is located at 402 E. William Street in Carson City. No purchase is necessary. Bonkowski buys the coffee.

Understanding Carson City’s Debt by Supervisor Brad Bonkowski
Carson City’s debt is not an easy subject matter, but it’s an important one. I have attempted to tackle the high points, below, but if you’d like to read the information for yourself, you can find the City’s Comprehensive Annual Financial Report here: http://www.carson.org/index.aspx?page=6013.
For those of you who do not have the time nor inclination to read the report, here are ten highlights from fiscal year 2014/15:

— Reserves (ending fund balances) in the City’s Governmental Funds increased year over year by $9,770,685. Note: Ending Fund Balances, or reserves, are basically our savings account. The more we have in reserves the better off we are. We are increasing reserves, keeping expenses down, have refinanced our debt to reduce interest expense, are starting to work on our backlog of deferred maintenance and out-dated equipment. All of these are prudent fiscal policy and are being implemented.

— We acquired federal land from BLM with a value of $30.4 million that we added to our open space portfolio. We now have over 6,000 acres of open space lands. Note: We are currently transitioning from acquiring open space lands to maintaining and improving them. This should be the last major open space acquisition we have in the foreseeable future.

— General fund unrestricted ending fund balance was $6.8 million, which exceeds the required amount per our policy (5% of annual operating expenses) and our goal amount (8.33% of annual operating expenses). Note: We are required by the state to retain a balance that reflects 4% of our expense budget, but we (the Board of Supervisors) have set a requirement of 5% and a goal of 8.33%. The $6.8 million unrestricted ending fund balance as of fiscal year end 2015 was 11.1%.

— Actual General Fund ending fund balance at 6/30/15 exceeded what we estimated for the FY 16 beginning fund balance by $2,358,638. Of this amount, $1,266,890 is restricted or assigned to various City programs; $370,197 was assigned to road maintenance; and the balance of $721,551 is available for appropriation. Note: Although we had $6.8 million in ending fund balance most of that is spoken for. Only a little more than $700,000 is available to be spent as the Board sees fit.

— Our net debt increased $7.6 million, currently at 71% of our allowable debt limit. Note: The increase is the additional debt created to build the MAC and Animal Shelter minus the debt paid off in FY 2015. On average the City pays down $15-$16 million a year in debt.

— Our debt service as a percentage of expenses in the City’s Governmental Funds has remained virtually unchanged since 2007. (9.48% vs. 9.3%). Note: This shows that the City has done a good job managing their debt service over the last several years and that the amount we pay for our debt is stable.

— Year over year expenses increased 1.36%, below the CPI rate for 2015 of 1.9%. Note: The City has kept expenses stable which, considering the number of employees we have, is extraordinary.

— There was a year over year increase in sales tax (county option) and consolidated tax collections of $3.62 million. Note: As the economy recovers we should continue to see increases in the consolidated tax revenues, meaning we can continue to address the shortfalls we experienced during the Great Recession.

— There was a year over year increase in property tax collections of $935,000. Note: Again, as the economy improves, the assessed value of real property will increase. We have been able to offset most increases in assessed value by lowering the tax rate in each of the last three years.

— Departments that provide government services (fire, police, parks, wastewater, water, landfill, etc) collected 71% of the cost of providing those services through program revenues while general taxpayer revenues cover 29% of the cost of government services, primarily from property and consolidated tax collections ($26,661,147 + $22,993,975 = $49,655,122). Note: The City makes every attempt to pay for services through rates or fees designated specifically to those services. This reduces the burden on the General Fund and helps us keep taxes as low as possible.

It’s easy to focus on single lines of data, without looking at the big picture, and come up with scary stories about Carson City’s debt. The reality is that as of the fiscal year end 2015 our total debt was $144,311,919 in General Obligation bond debt and $17,159,100 in Revenue Bonds for a total of $161,471,019, plus $5,285,500 in Notes Payable for a total debt of $166,756,519. This is well below the limits set by NRS for allowable debt. Carson City is also the only consolidated City/County in Nevada, which means that you must read their financials differently that the other 16 counties. If you are not aware of that you can easily mis-read the financials and assume that Carson City has a debt ratio many times higher than the other counties. In fact, debt ratios in Nevada are mostly in line with the population of the counties in Nevada with Clark County having the highest debt ratio, followed by Washoe County, then Carson City.

The truth is that after several years of the Great Recession the economy has turned the corner and has begun rebounding, which generates higher revenue for the City. Now is the time for us to make well thought out, efficient decisions about increasing reserves, catching up on deferred maintenance and replacing worn out equipment.
These summarized numbers are reflective of a smart small town, investing and spending wisely and gaining efficiencies in employment. Almost all of our debt is financed at 4% interest or less, with only a few bond issues that exceed that rate but don’t qualify for refunding.
As we head into another exciting (and loooong) election cycle, you will see these numbers argued, managed, and manipulated. If you’re in doubt, please see the link I’ve provided above, and if you’re a numbers geek, like myself, I would be happy to sit down with you to discuss.