City View: Prudence, optimism remain at work in our local government

by Bill Watkins

March 7,2008

When I gave my 2007 State of the City Report, I said that although I was "bullish" on the future of Columbia and our local economy, I was balancing optimism with a big dose of prudence when handling the city's fiscal affairs.

Eight months later, I would like to share a few updates that I believe confirm we are on track.

First, I am pleased to announce that Columbia has maintained its favorable bond ratings, including recent AA-/Stable rating from Standard and Poor's and AA Fitch Rating. Both reports cited the city's overall economic stability, good financial practices backed by strong reserve levels and moderate overall debt burden.

Favorable bond ratings reinforce our strong financial management and long-standing conservative policies. They are also good news for Columbia residents who must decide whether to vote for the Sewer Bond Initiative in April. By maintaining our bond rating, the city can take advantage of favorable interest rates on money it must borrow to complete projects, thus minimizing costs.

Secondly, the city has reached final settlement agreements with wireless phone companies concerning back payment of business license taxes. The city of Columbia was one of a large class of Missouri municipalities that went to circuit court several years ago to secure business license taxes not paid by cell phone companies operating in the state. That legal action resulted in a number of settlements requiring the companies to pay two years' worth of the back taxes they owed to cities and to pay the tax in the future.

• An agreement with Verizon returned $65,959.02;

• An agreement with U.S. Cellular returned $580,053.83;

• An agreement with AT&T returned $2,088,049.59; and

• An agreement with Sprint returned $1,408,710.07.

Five percent of the proceeds will be paid to the Missouri Municipal League for its work on this lawsuit and related legislation, leaving the city a total of $3,935,633.90. We are extremely thankful to have resolved these issues in a way that maintains both services and accountability to Columbia residents.

If used prudently, these settlements are one-time payments that can stabilize the city's current fiscal condition. There have been no appropriations for the settlement money at this time. We are taking a wait-and-see approach toward how sales taxes come in later in the year before deciding whether to spend any of the settlement money.

City staff have recommended to the Columbia City Council:

• that funds received from these settlements first be used to restore fund balances to a level sufficient to carry forward into Fiscal Year 2009. This is particularly relevant to our need for favorable bond ratings.

• after restoring the fund balance, the city should consider the purchase of some of the major equipment scheduled for replacement in FY 2008 but not purchased due to budget shortfalls.

In light of the agreement, I have loosened some of the spending restrictions on our FY 2008 budget including the 60-day waiting period before departments could fill vacant positions. I believe it is important to ensure the level of services that residents have come to expect from the city.

Lastly, I would like to address the results of the recent Stormwater Assessment, which looked at the following stormwater management goals, which are to

• provide for public safety;

• maintain the stormwater conveyance system;

• adequately fund, staff and organize the stormwater utility;

• environmental protection without unreasonable economic burdens;

• improve current environmental integrity and reduce flooding; and

• regulatory compliance.

The consultant's recommendations include considerable capital outlays that would cause significant increases in fees and utility rates. I wanst to assure you that before we move forward with any capital outlays, we will carefully assess the consultant's recommendations, seek public input to help us identify priorities and give careful consideration to our financial resources and collective concerns.

The stormwater assessment report is on our Web site at www.gocolumbiamo.com, as are many other reports on a wide variety of issues that shape our community.

I will continue to approach every issue with careful consideration and make decisions that are based on solid information, public input and that big dose of prudence.