Reserves
In accordance with the City’ s Financial Principles, several cash reserves are maintained in order to mitigate the impact of a significant economic downturn on our ability to maintain service levels to our citizens. These reserves are an important consideration by bond rating agencies in determining the City’ s overall creditworthiness. The major reserves include the Unallocated Reserve, targeted at 3 percent of recurring General Fund expenditures. It is designed to be used for emergencies and unanticipated expenses. The Working Capital Reserve sets aside one month of recurring General Fund expenditures to provide adequate operating cash during normal revenue and expenditure cycles. The largest reserve is the Landfill Lease Reserve. This reserve, in excess of $ 17 million, originated from a one-time payment to the City when it leased its landfill in May 2005. Our newest reserve is the Business Continuity Reserve, originally targeted at 3 percent of General Fund expenditures. This reserve is in place to ensure that in the face of funding shortfalls, service delivery will continue until sound solutions to the shortfall can be identified. The total reserve amount adopted in the FY 2016 Budget was $ 49.1 million or 21.3 percent of the City’ s General Fund budget, net of one-time expenditures. This amount is approximately $ 14.5 million in excess of the 15 percent overall reserve level specified in our Financial Principles.
Bond Rating
Moody’ s, Standard & Poors, and Fitch rate the City’ s credit-worthiness, and the firms consider the City’ s reserves as one of our strongest assets. The rating agencies have all undergone significant structural changes in the methodology of assigning rating
$ 60,000,000 $ 50,000,000 $ 40,000,000 $ 30,000,000 $ 20,000,000 $ 20,000,000
Sales Tax Revenues FY 2000- 2016
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criteria. All three agencies, using new methodology, affirmed the ratings for both the General Obligation and Water bonds.
These strong ratings allow us to issue municipal debt vital to infrastructure at a very low cost to the City.
Debt
During 2016, the City took advantage of the cost of borrowing and issued $ 34.4 million in Permanent Improvement Bonds, $ 30.1 million in Certificates of Obligation, and $ 47.4 million in Permanent Improvement Refunding Bonds to make various capital improvements and capture interest savings. The City also issued $ 41.3 million in Water and Sewer Revenue Bonds for the purpose of improving and expanding existing water and wastewater infrastructure. During the year, the City paid down principal of $ 32 million on our General Obligation and Certificates of Obligation.
Awards
The City continued to be recognized for its outstanding financial reporting efforts. We again received the Certificate of Achievement for Excellence in Financial Reporting for our 2015 Comprehensive Annual Financial Report( CAFR), the Certificate for Outstanding Achievement in Popular Annual Financial Reporting for our 2015 PAFR, and the Distinguished Budget Award for our 2016 budget from the Government Finance Officers Association. We also received our 13 th consecutive Achievement of Excellence in Procurement Award from the National Procurement Institute, Inc. And in 2016, the City successfully achieved a Texas Comptroller of Public Accounts Transparency Star for Traditional Finance and Economic Development, recognizing local governments for going above and beyond in transparency efforts.
Priorities
Each year, the City Council identifies strategic priorities that guide the allocation of the City’ s resources. Council met at a strategic retreat in 2015 and chose the following priorities for 2016:
• Put Technology to Work
• Champion Great Neighborhoods
• Enhance Regional Mobility
• Invest in Our Economy
• Support Quality Education
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