- Special Sections
EAST PROVIDENCE â€“ City Manager Peter Graczykowski has announced that the city ended fiscal 2012 with a general fund surplus of $8.7 million, which will go into the cityâ€™s rainy-day reserve fund recommended by the Budget Commission and approved by the voters at the ballot box in November 2012.
The surplus number was reported as part of the annual audit by Parmelee Poirier & Associates, which completed its review of the cityâ€™s finances on July 31.
According to the audit, the cityâ€™s surplus from fiscal year 2012 was projected to be $6 million, but the total general fund balance as of Oct. 31, 2012, ended up at $8,743,840.
The School Department also reported a surplus of $7,595,872, bringing its accumulative deficit to zero as of Oct. 31, 2012. This was the result of the Budget Commissionâ€™s funding the School Departmentâ€™s cumulative deficit in a one-time transfer.
At a recent City Council meeting, Graczykowski said that, by ordinance, the $8,743,840 must be transferred to the budget reserve fund and is not available to be used for operating expenses.
Graczykowski also said that at the end of current fiscal year on Oct. 31, the reserve fund is expected to grow by another $1 million. In addition, the net proceeds from the sales of any surplus city properties will also be used to bolster the fund.
Once the cityâ€™s rainy day fund reaches $10 million, the city can draw on the money to pay for capital projects like roads and buildings, he said.
The budget reserve fund was approved by the voters as a charter amendment last November. The budget reserve funds will provide for a rainy day fund equal to 10 percent, and excess funds will flow into a pay-go capital account.
The reserve fund prevents the city from spending beyond 99 percent of the anticipated revenues in a fiscal year. Starting this fiscal year, the city will save 1 percent of its revenues, or about $1 million annually, and set it aside in a â€śrainy day fund.â€ť If the city must borrow from the reserve fund under emergency circumstances, it will have to put the money back within three years.
Once the savings exceed 10 percent ($10 million) of the annual revenues, the extra amount can be used by the city to pay for capital projects such as maintenance, repair and purchasing of equipment and buildings.
The purpose of the City of East Providence Budget Commission is to initiate and assure the implementation of appropriate measures to secure the financial stability of the city.Â The commission was established by state Director of Revenue Rosemary Booth Gallogly onÂ Dec.11, 2011, and will remain in existence until abolished by Booth Gallogly.
(Follow Joseph Fitzgerald on Twitter @jofitz7)