Surplus reduces city debt to $4 million
Surplus reduces city debt to $4 million
WOONSOCKET - Financial reports released by the Budget Commission this week show city and school operations resulted in a surplus for the first time in many years, allowing Woonsocket to reduce a portion of its ongoing deficit a bit ahead of schedule.
The city finished the fiscal year that ended in June some $2.3 million in the black, according to an unaudited report released by the Commission Oct. 17.
According to the report, the city collected an additional $2 million in revenue, and spent around $750,000 less than expected. Schools, meanwhile, used only $62.65 million of their approved $66.6 million.
Although positive, the results are somewhat misleading. The supplemental tax bill, which cost taxpayers an additional $2.5 million this year was not yet passed, or accounted for, when the Commission created a budget plan last year. And charged with the immediate goal of reducing on-going School Department deficits, the state-appointed group added a line item of $4.5 million, to be dedicated toward "education reserve for deficit reduction," with no official means to obtain the funds.
The resulting budget gap left Finance Director Thomas Bruce wringing his hands and watching the numbers closely over the past year.
"In all my years of accounting, I had never worked with an out-of-balance budget," Bruce said.
Since that budget was passed, the Commission - which was appointed to oversee city finances under state mandate - has worked out new contracts with most of the city's active unions, and made changes to the healthcare plans of retirees. They've forced many city jobs to stay open, in areas from public safety to education, and at the last possible moment, they obtained General Assembly approval of a supplemental tax bill needed to balance the city's books.
In fact, Bruce pointed out, tax bills paid up until the end of August were applied to a fiscal year that ended in June.
In the end, it seems, the numbers added up.
"The first priority of the Budget Commission was to make sure schools ended the year without any type of deficit," said Bruce, and that mission was well beyond accomplished.
Figures show the Education Department finished the year with an extra $3.99 million, addressing most of the 2012 budget gap, and paying off a chunk of the district's past deficit, all on their own.
The savings were largely the result of cuts to staffing and positions left unfilled throughout the year, adding up to $1.3 million less spending for salaries, and $422,000 less in associated benefits. The cost for medical benefits was also down by $1.8 million.
As a result, the city only needed to contribute $638,000 to hit their stated goal of reducing the district's multi-year, $10.8 million deficit by $4.5 million, a figure they well exceeded.
The municipal side of the budget report shows an estimated $2.7 million "surplus," consisting of $1.2 million in new tax revenue and $800,000 from other sources, plus the $750,000 less in expenditures.
The year appears to have left the city and schools combined $2.3 million ahead, allowing the deficit to be reduced to $4,046,957 instead of the expected $6,409,124.
The full report can be read here: http://bit.ly/1c0MaGo
The financial data was hailed as positive news for Woonsocket, and Bruce said it ultimately has the potential to improve the city's bond rating, currently at junk status. The School Department ended 2009, 2010 and 2011 with deficits, some of which were covered via an $11.5 million deficit reduction bond taken out in 2011. In 2012, schools showed a $7 million deficit, adding urgency to the city's ongoing fiscal problems. When schools experienced a crushing cash shortage in May of 2012, the need for an advance of state aid triggered intervention via a Budget Commission.
Bruce said the city expects another $800,000 in supplemental tax revenue to be applied to the current fiscal year.