Officials: Warren continues to improve financial position

By: Brian Louwers | Warren Weekly | Published June 28, 2017

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WARREN — Warren has a strong AA bond rating that saves taxpayers money on financed projects, and the city’s investments and accumulated cash reserves are now generating more interest, officials said.

Officials charged with overseeing the city’s police and fire pension system said they’ve also now taken a step toward retiring liabilities that will put Warren on track to pay down the unfunded balance in the decades to come.

“We’ll now be on a plan to pay that off in 25 years,” said Treasurer Lorie Barnwell, who sits on the city’s Police and Fire Retirement Commission. “Having a 25-year plan to pay down the unfunded portion will help ensure the future of our emergency responders, those who protect our city every day. This move also helps protect our bond rating and creates a clear budget.”

Barnwell said the commission, which oversees a fund of about $280 million, took action June 15, with the support of Mayor Jim Fouts and his administration.

“I will give credit to the mayor on this. His administration has been extremely supportive and helping in this process,” Barnwell said.

City Controller Rob Maleszyk said the move was recommended by the city’s actuary and is similar to steps being taken in other communities looking to shore up their financial situation.

Maleszyk said Warren has applied a multifaceted approach to keeping the city’s bond rating high, its fund balance robust at about $63 million — some of which is reserved to cover liabilities, legacy costs and capital equipment — and an unallocated fund reserve, or “rainy day fund,” at a comfortable $17.8 million. 

“I think we’re all working hard together to do what’s best for the residents, and I think that the hardest part that we have to deal with is our aging infrastructure and legacy costs,” Maleszyk said. “Those issues take up a lot of our budget. We’re doing the best we can.”

Since she was elected in 2015, Barnwell said, she’s moved fund-balance cash from savings accounts to secure investments that generate more interest for the city. Beyond that, she said, the city is on track to make $1.3 million more than projected in interest on bond proceeds tied to a new $53 million detention basin project.

Maleszyk said he and his team met with Barnwell and various investment banks to see what could be done to best benefit the city financially, in accordance with state law.

He said the city’s most recent bond report from Standard & Poor’s remains “very favorable.”

“It talks about our strong budget controls and our strong management,” Maleszyk said.

Maleszyk and Fouts have said maintaining the fund balance is crucial to keeping the city’s bond rating intact. They said that’s what made bonds for the new sewer project available at a rock-bottom rate of 2.98 percent, which saved the city money.

In May, City Councilman Keith Sadowski questioned whether a tax rollback might soon be in order, given the city’s fund balance and unallocated reserves.

Fouts said that while that might be something to consider in the future, he’d support maintaining the fund balance as the city continues to deal with massive infrastructure issues and legacy costs.

Maleszyk agreed.

“By all means, I want to lower taxes in the long run, but at this point it wouldn’t be the prudent thing to do,” Maleszyk said. “We have so much infrastructure, capital equipment and legacy costs that are still hampering our overall finances. Hopefully, over time we can lower taxes, once that is in order.”

City Councilman Scott Stevens said the tax rate reflects millages that were approved by a majority of residents who voted to support libraries, road repairs and public safety.

Stevens said he favors keeping millage terms short, so voters can opt to cut back certain expenditures if finances change.

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