Financial Condition Update
September 22, 2011
The City of Westminster is financially sound but continually monitors and assesses changing conditions or demands for new or additional services or unfunded State or Federal mandates that are not contemplated in the city’s current financial model. City staff and City Council have committed to ongoing evaluation of the city’s financial condition, and are committed to pro-active measures to maintain the city’s strong financial condition.
Westminster continues to operate on a cash basis. Current tax and fee revenues are sufficient to fully fund all city obligations. In fact, the City of Westminster does not use a line of credit. The city is able to pay all bills on a timely basis without resorting to any short-term borrowing. The city never borrows to fund operations. The city does not run a deficit. The city maintains healthy reserve levels and uses the reserves as intended. The city must adopt a balanced budget.
The city and its business subdivisions, such as the water and wastewater utilities, the Westminster Housing Authority (WHA) and the Westminster Economic Development Authority (WEDA), do on occasion use various forms of financing and/or debt. These financings may come in the form of bonds or certificates of participation, financed at very favorable interest rates, and are used to construct long term capital improvements that include water and wastewater treatment plants, the Public Safety Center, freeway interchanges and the like or as approved by the voters to acquire open space properties before they become unavailable due to development. This is a common practice among businesses that prudently use financing and/or debt to fund capital investments or a homeowner who finances the construction or purchase of their home. In the case of the city and its various businesses, the outstanding principal balance of bonds and other credit instruments is only 30 percent of total asset value, or put another way, the city has 70 percent equity and no operating debt.
The city has independent verification by Standard and Poor’s and Fitch Ratings of the city’s strong financial policies and practices. In fact, Standard and Poor’s and Fitch Ratings have both commented favorably on the city’s financial management and have continued to give the city a high investment grade credit rating of AA+.
The City of Westminster is in good condition moving forward into 2012. The use of debt financing is done strategically and never for operating expenses.
Thanks to a voter approved City Charter amendment in 2000, the City Council may adopt a two-year budget. The 2011/2012 Budget represents the city’s fifth adopted two-year budget. A public meeting on the Adopted 2012 Budget was held at the September 12 City Council meeting, where residents could provide feedback and make budget requests. No citizen requests have been received as of Sept. 21, 2011. City Council will conduct a review of proposed amendments to the Adopted 2012 Budget at the September 26 Post City Council meeting.
Additional information about the city’s finances is available online:
September 12 Adopted 2012 Budget presentation
City and its business subdivisions’ current debt summary
City and its business subdivisions’ current reserves summary
City’s Comprehensive Annual Financial Report (CAFR) (also known as the annual audit)