Covington Presents Fiscal Stability Ordinance; Strategic Plan for Use of City Funds

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COVINGTON, KY – City Manager Larry Klein and Interim Finance Director and City Operations Director Lisa Desmarais presented Covington’s Board of Commissioners with an overview of a proposed Fiscal Stability Ordinance last night.

The ordinance is the result of an anticipated budget carryover from the City’s previous fiscal year and outlines how City carryover funds can be used responsibly and strategically in future years.

“Careful and strategic financial planning as well as extraordinary efforts by all of our departments to cut spending and work resourcefully have created an opportunity to be financially proactive with anticipated City carryover funds,” said City Manager Larry Klein. “The priority now is to be sure we don’t waste these hard-earned efforts by using carryover funds irresponsibly.”

The ordinance establishes a formal policy for developing future budgets and for allocating any carryover funds for years when the City has additional revenue. The policy follows the three themes outlined in Covington’s current fiscal year budget: Responsibility, Sustainability, and Investment.

The ordinance is also based on the Board of Commissioners’ Spirit of Progress 2015 Vision Statement which calls for transparency and openness, efficient and effective operations, and sustainability.

Primarily, the ordinance would require future budgets to increase their funding for existing financial and legal obligations. These obligations include repayment of the City’s short-term loan Tax Anticipation Note, payments to the City’s two employee retirement plans, building up the City’s reserve fund to the recommended two months of operating revenues, and funding toward the City’s two self-insured funds, one for liability and the other for the employee health plan.

Second, the ordinance would require the City to plan for meeting its business needs, such as payroll and benefits, equipment and facilities, and capital improvement projects.  

Third, the ordinance would require a portion of any increase in revenue over expenses to be allocated to both an Infrastructure Fund, to ensure ongoing funding for strategic infrastructure improvements, and the existing Covington Economic Development Program Fund, to ensure a reliable funding stream for key economic development projects.

“The goal of this legislation is to stabilize the City’s revenue and expenditure cycles, mitigating financial risks and improving the City’s credit rating. It is also in line with Covington’s strategic goals of transparency and reinvestment and growth,” explained Operations Director and Interim Finance Director Lisa Desmarais.

A presentation on the City’s Annual Audit Report by the accounting firm Clark Schaefer Hackett is expected at the December 8 Caucus Meeting.

Also as a result of expected carryover funds, the Commission suspended the implementation of pool admission fees for 2016. The admission fees had been previously imposed due to the numerous and costly repairs needed for the City’s three aging aquatic facilities and the urgency to begin repairs before winter weather. The fees were to be used to offset the repair costs.

Instead, pool fees will be temporarily waived for the 2016 season and the repair costs will come out of the City’s Fiscal Year 2015 carryover.

“We are fortunate that this past fiscal year’s carryover means there is a new source of funds to use for making the needed pool repairs,” said City Manager Larry Klein. “It is a way for our residents to benefit from  the City’s savings more immediately and tangibly.”

In the future, however, fees may again become necessary to offset the expense of maintenance and repairs needed annually.

Also on the agenda was a recommended plan for non-union employee wage increases.

In October, the Board of Commissioners had approved a 3% wage increase pool for 2015, in total about $149,000, for non-union employees. The wage plan is meant to bring non-union employees on schedule for wage increases with union employees, which include Police, Fire and Public Improvements, who received a 3% wage increase totaling $548,000 on January 1, 2015.