Ohio Auditor Report Shows that Stow is on Firm Financial Footing
Not much happened at last night’s meetings. We gave out a handful of proclamations to worthy recipients, but did not really discuss anything meaty.
Instead of giving you a rundown of those items, I will blog to you about something with more substance…
In January, the state auditor released a report on every Ohio city, identifying their strengths and weaknesses from a financial perspective. The relevant data is from 2015 and it includes assets, condition of assets, liabilities (debt), revenue from income tax, revenue from other government sources, and cash position. Click here to see the report: Final – 06C55-FHI-2015 .
I have great news to share: Generally speaking, Stow passed the tests with flying colors.
Of the 17 statistics that the auditor reviewed, Stow received high marks on 14 of them. On the other three, the auditor only issued a “caution.” But the full picture shows that Stow is also in good shape with those other 3 statistics:
- Change in unassigned fund balance (category 2) – If the number is falling, the auditor will issue a caution. Stow’s fund unassigned fund balance fell in 2015, but just barely. And this was after two previous years of terrific growth. It’s not a concern.
- Percentage of general fund revenue that exceeds general fund expenditures (category 8) – The auditor wants to see revenue from the general fund exceeding expenses by at least 5%. In 2015, Stow’s general fund revenue exceeded expenses by about 3%. But if you look only at the general fund, you do not get a full picture of the city’s finances. Instead, if you take a look at all revenue and all expenditures (on a government-wide basis), Stow has met the 5% threshold for the past four years (see category 9).
- Ratio of debt service expenses to total revenue (category 12) – In order to avoid a “caution,” the auditor wants this ratio to be less than 10%. In 2015, Stow’s ratio was 12%. But, as you know, there are lies, damned lies, and statistics. This is a statistic, and it does not take into account the fact that Stow has been paying down debt at a rapid rate, in order to ease the tension on its balance sheet. In fact, since I was elected in 2009, we have reduced Stow’s total debt by 40% (if you wish, compare this with the federal government’s debt during the same period). Stow is exactly where it should be, from a debt position. You can’t hold it against a city for repaying debt. That’s like saying your household budget is better off with more restaurant dinners instead of an extra mortgage payment.
It may be useful to compare Stow with its neighbors. Stow had 3 caution marks with zero “critical” problems. Meanwhile, Hudson had 3 cautions and one “critical” issue. Tallmadge had one caution and one critical. Munroe Falls had 4 cautions and 2 criticals. Tip of the cap to Cuyahoga Falls and Kent, which had zero cautions and zero criticals.
Indeed, there is a lot of good news for Stow taxpayers in the report. It’s even more noteworthy when you compare it to where Stow was positioned as recently as seven years ago. I can assure you, the picture was ugly then.
But when I was elected, we began a campaign to improve the city’s balance sheet — while keeping in tact all of the services that residents rely on. We urged the repayment of debt. We pressured non-performing assets to make a turn-around or be cut free (courthouse, Fox Den). We emphasized the importance of economic development and a business-friendly regulatory and tax environment.
The auditor’s report is proof that the plan has worked. But we must remain vigilant, because history has shown that big spenders will seek to spread their wings after fiscal conservatives have righted the ship.
Council will meet next on February 23.