Rochester receives clean 2017 audit

The city of Rochester on Monday, December 18, received an unmodified audit, or clean audit opinion, from accountants at PSLZ who presented the city's audit report of the 2017 fiscal year to city council members.

Rena Evans, a partner with PSLZ, told council members that property taxes fell flat during the fiscal year, which runs from July 1 through June 30. The largest increases in property taxes, she said, were commercial developments which were inside the city's downtown development district, where property taxes are captured by the Downtown Development Authority (DDA).

Overall, property taxes increased by about .58 percent from the 2016 fiscal year. The overall value in the city increased in large part due to new construction and renovation of existing properties. In total, the city issued more than 1,200 building permits, totaling $30 million worth of renovations in the past year. The city saw a modest increase in industrial property values, with a lowering of personal property values. As real property values continue to increase, property taxes will be restricted by Proposal A which limits the rate to increases in municipal revenues to the rate of inflation.

"While Proposal A significantly suppresses the taxable value the city will see in the near future, the spread between assessed value and taxable value will serve the city well if in the longer term future there is a significant drop in assessed value and make operational adjustments before assessed values are low enough to reduce taxable value," Rochester Finance Director Anthony Moggio said in his report to council. "This provides the city with a great planning opportunity, as the city continues to appropriately monitor the spread between assessed value and taxable value."

Rochester maintains an annual fund balance of 82 percent of the total general fund expenditures, or about $12.8 million, of which about $8.1 million is available for spending at the government's discretion.

Revenues in the 2016 FY totaled about $11.088 million, including about $7.457 in property taxes; $1.62 million in state, local and federal shared funds; $820,000 in charges for services; $556,356 in license and permit fees; $280,000 in franchise fees;and $95,000 in fines and forfeitures.

General fund expenditures for FY 2017 totaled about $9.855 million, about $62,000 higher than originally budgeted, while revenues were about $11,000 below the budgeted amount.

Council members presented with the report of the city's solid financial standing asked auditors for additional information on any potential trouble spots in the future, as well as an appropriate level of fund balance for the city to maintain.

Council in 2018 is expected to discuss using a portion of the city's fund balance for potential capital outlay projects for providing additional funding for the city's pension liabilities, which could provide savings to the city. Rochester City Manager Blaine Wing said he will be proposing council reduce the fund balance to a figure closer to 60 percent of general fund expenditures to free up funds for other projects.

Overall, Evans said the city is doing a good job with the budget, but will need to talk about future needs of the city when determining the appropriate amount of fund balance.

"You have excellent department heads. They like to be proactive. They are never satisfied with the status quo. With all the development, this isn't a place you can sit on our laurels. That doesn't happen here," Evans said. "If your population and development is increasing, then you have to provide more services and you need to be ready for that. This council has been great and responsive, but capital dollars are the largest ticket you need to consider."