Revenues are up. So is Allegheny County’s fund balance. And credit agencies are giving the county better marks.
Still, more work needs to be done to secure the county’s fiscal future, county Controller Chelsa Wagner said Tuesday.
“We still have some long-term concerns,” she told members of Allegheny County Council during a presentation on her office’s 2013 Comprehensive Annual Financial Report -- in county government parlance, the CAFR.
Especially, she said, about the size of the county’s fund balance, its debt and pension obligations and the future of state and federal funding.
“We use the analogy very frequently ... of a household,” she said. “Just because your checkbook looks good this year, doesn’t meant that when you have different responsibilities or different commitments in future years, that it’s going to be the same.”
She recommended that the county bolster its fund balance, better address pension obligations, lobby Harrisburg for funding and adopt additional cost-saving strategies. She said funding to achieve those goals could be found by making county departments more efficient and finding savings.
County Executive Rich Fitzgerald said he did not agree with her assessment. The county still has work to do in terms of growing its pension fund and its fund balance, he said. But he said new revenue sources such as Marcellus Shale development, as well as the county’s efforts to look for efficiencies in its departments, have strengthened its financial present and future.
He pointed to recent credit rating reports -- most recently, Moody’s Investors Service issued a report Friday revising the outlook for the county’s general obligation funds from A1 negative to stable -- as evidence that the county has a “good story to tell.”
"I disagree with the controller when she says the future is bleak,“ he said. ”I think she’s wrong about that.“
The controller’s report shows that Allegheny County spent $1.5 billion in 2013, with about 60 percent going toward health and welfare. The county saw increased revenues in 2013, thanks in part to a millage increase in 2012 that yielded $50 million in additional revenue and increased deed filing fees in 2013 that brought in $11 million in revenue.
Allegheny County’s economy has improved, and that has resulted in increases in sales tax, hotel tax and drink tax collected by the county, Ms. Wagner said.
But Ms. Wagner said she remains concerned that the county’s long-term debt obligations, $859.5 million, exceed the county’s operating budget. Total annual debt service payments are at $75 million. Pension obligations were another concern, since the county’s funded ratio is at 59.5 percent, short of the recommended 80 percent funded ratio.
And although she called the county’s increased fund balance -- at nearly $28 million compared to $12.2 million in 2012 and $6.2 million at the end of 2011 -- a positive step, she said it was still lower than it should be. The recommendation of the ratings agencies is a fund balance of 5 percent, or $40 million for Allegheny County’s $817 million budget. She also said the fund balance is ”not as strong as it appears,“ saying that some of the funds are subject to change due to the county’s property reassessment.
Mr. Fitzgerald disputed that, saying that the county has put aside funds for that contingency.
Kaitlynn Riely: firstname.lastname@example.org or 412-263-1707. First Published June 10, 2014 3:21 PM