Opinion ID: 1104071
Heading Depth: 1
Heading Rank: 4

Heading: The Municipality's Financial Ability.

Text: ś 108. The city claims it presently has the bond capacity and the cash reserves to fund the improvements offered to the proposed annexation area. These improvements include only water and sewer lines which, ironically, the city has denied to many of its current citizens for many years. ś 109. The Neals' expert, Michele Johnstone, prepared a chart which reflected the state of the City's finances. Her trial testimony included the following: Q. And what was this chart show us? A. This chart shows what's happened to the fund balance which I sometimes refer to as reserve interchangeably. I know that was used primarily in the other fund and not the general reserve fund here. But that there has been some dropping off of that particular fund over time starting in 1996 in my review of this, and that the city has had some deficits in the general fund and has had to go into fund balance in order to take care of those deficits over time. Q. What was the fund balance in 1996? A. Yes. Q. What was it? A. $816,250. Q. $816,250? A. Uh-huh. Q. And what was it at the end of the year 2000? A. $457, 386. Q. And what is the general fund. A. The general fund pays for things like police and fire and administrative costs. It does not include the water and sewer funds, utility funds. Q. And what is the significance of this chart in regard to the City's financial ability to deliver services as promised in thisâ as a result of this proceeding? A. Well, it shows that the city has not had good planning in paying for their services if they're having to do this and running a deficit each year in that. It's notâ although they're still at a level where it's safe, it's not a healthy thing to continue to dip into that fund over time. ś 110. While it may be true that the city can use its cash reserves, or borrow the money, the evidence clearly established that the city has experienced deficits in its general fund for at least the past five years. During the same period, its assessed valuation has decreased. This is true, even though the city has raised its millage rate. ś 111. These trends, together with the fact that the city has steadily declined for twenty years, paint a bleak financial picture. It is apparent that the city can afford to install unneeded water and sewer lines in the proposed annexation area, only because it continues to deny these services to many of its current residents. This factor weighs against the city.