Just released today from the City of Chico, is the Comprehensive Annual Financial Report.
Important excerpts, more to follow
Local Economy…
The City of Chico continues to feel the impacts of the great recession, with elevated unemployment rates, a weak housing market, and continued State raids on local revenue. While Butte County’s unemployment rate, which is currently 12.2%, has declined from its high of 14.9% in January 2010, it remains nearly double of the pre-recession average rate for the area. This high level of unemployment has a direct impact on the City’s tax base, especially sales and property taxes.
Foreclosure activity within Chico remains at record highs, with roughly 47% of single-family home sales in 2011 considered as “distressed” properties (e.g. short sale or real estate owned). The County Assessor’s Office continues to process home re-valuations, to bring assessed valuation of homes in line with the current market values. The City’s property tax revenue is based on the overall assessed valuation of the properties within the City. Property tax revenue fell 3.6% from the prior fiscal year due to the declining home values and property re-valuations.
While sales tax revenue for the City of Chico grew by 4.9% over the prior fiscal year, sales tax remains 11% lower than its peak in 2005. The growth in sales tax this past year indicates a slight recovery to our local economy, with higher tax revenue from auto sales, fuel prices and the business/industry sector. The General Consumer Goods and Building/Construction sectors continued to see declines from the prior year, as disposable income remains tight and the housing market remains weak.
Also indicative of local recovery is the trend in the Transient Occupancy Tax, which showed a 5.6% gain over the prior fiscal year, marking the first year of growth since 2008.
Despite the positive indications of local recovery, the fiscal issues of the State of California continue to plague City revenues. In Fiscal Year 2010-11, the City lost approximately $450,000 in Vehicle License Fee (VLF) revenue, due to the delayed issuance of vehicle registrations by the Department of Motor Vehicles. In subsequent fiscal years, the City will lose approximately $720,000 in annual VLF revenue due to the passage of Senate Bill 89, which diverted local VLF revenue to law enforcement grants. While the City stands to gain an approximate $160,000 in grant/booking fee revenue, there remains a net annual loss of $560,000 in General Fund revenue.
Additional actions by the State of California this past year greatly threaten the future of the Chico Redevelopment Agency. Assembly Bill 26, in effect, eliminates all redevelopment agencies. Assembly Bill 27 allows for the continuation of redevelopment activities, however both bills are currently being challenged in court and a decision from the California Supreme Court is pending.
FINANCIAL HIGHLIGHTS
The assets of the City exceeded liabilities at the close of fiscal year 2011 by $372,998,418. Of this amount, $331,899,244 is invested in capital assets, net of related debt; $88,018,447 is restricted for specific purposes; and ($46,919,273) is unrestricted. Negative unrestricted net assets are primarily due to the governmental activities acquisition of debt to pay for the Water Pollution Control Plant Expansion Project, which is an asset owned by the Sewer Enterprise Fund (Business-type activity).
The City’s total net assets increased by $12,299,700 over the prior fiscal year.
As of June 30, 2011, the City’s governmental funds reported combined fund balances of $106,228,198, a decrease of $2,596,281 from the prior year. Approximately 48% of the combined fund balances, or $50,912,634, is available to meet the City’s current and future needs.
At the end of the fiscal year, spendable fund balance in the General Fund was $4,071,761, or 9% of total General Fund expenditures. The entire amount is committed for economic uncertainties or emergencies.
The City’s total long-term debt decreased $4,249,513 over the prior year. The decrease is due primarily to principal payments on the various bonds and loans.