Audit shines light on economy

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June 20, 2011

City’s books get clean bill of health from the state

By Scott Smith Tribune staff writer The Kokomo Tribune Mon Jun 20, 2011, 08:00 AM EDT

The city of Kokomo received a clean audit from the state last week, with no irregularities found, according to the Indiana State Board of Accounts.

While the city’s bookkeeping leaves nothing to be desired, the final 2010 numbers showed revenues largely leveled out in 2010, reflecting a stabilizing economy.

The city’s revenue picture over the past three years has been a reflection of the bad economy, state property tax caps and also of disputes over the tax burden of two of the city’s largest property taxpayers, Chrysler Group LLC and General Motors Components Holdings.

The Kokomo Common Council approved a $52 million budget for 2010, of which the city spent just under $48 million.

Local property taxpayers, taken as a whole, saw little change from 2009.

Property tax caps cut city revenues by $1.8 million last year, but that gap was largely filled because the city’s levy is allowed to grow by a certain percentage each year.

City Controller Jim Brannon said he doesn’t anticipate much change in either the budget or city spending either this year or in 2012.

“Based on the situation we’re in and how we’ve managed it, I think we’ve done pretty well,” Brannon said. “And on top of it all, the city looks terrific.”

While the portion of the city revenues controlled by the city council remained level, federal grants helped push up overall city spending by 7.7 percent, from $66.8 million in 2009 to $71.9 million in 2010.

Grant funding for about $3 million in projects at the Kokomo Municipal Airport, along with $1 million from the federal stimulus for the city’s public transportation system were the driving factors in that increase.

The city also started a new property tax levy in 2010, to help bolster the city’s street department budget.

The new tax levy raised about $1.14 million in 2010, allowing the city to increase spending in that category — which covers most of the city’s street re-paving work — by about 55 percent.

The city also spent more economic development income tax dollars in 2010, as it continued the Reach Higher program of business incentives and spent about $689,000 on Fire Station No. 2 on Center Road. Overall EDIT spending increased from $1.89 million in 2009 to $2.76 last year.

With fewer workers on the city payroll, the city is also seeing a flattening of health insurance costs.

Last year, the city spent $8.8 million on health benefits for city workers, almost exactly what was spent the previous year, and about $838,000 less than the city spent in 2008.

Some of the 2010 numbers appeared a bit skewed on the audit, due to the fact the city didn’t receive a $3.09 million installment of property taxes until Jan. 5, 2011, Brannon said.

With that money due to show up on the 2011 year-end financials, the 2010 audit shows a $2.4 million deficit, he explained.

Whether or not the economy has improved enough to increase the city’s tax revenues this year remains to be seen. Brannon said city officials should have a better picture in a few weeks, once they receive the first of two annual distributions of property tax revenue.

“I think we’re going to collect a little more this year because of the Chrysler and Delphi repayments,” Brannon said.

He said the city has been able to function well with the amount of revenue it currently receives.

“I think we’ve been able to do what we’ve needed to do,” he said.

• Scott Smith is a Kokomo Tribune staff writer. He may be reached at 765-454-8569 or via e-mail at scott.smith@ kokomotribune.com

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