The finance department is responsible for preparing and maintaining the operating and capital budgets, cash management and investments, purchasing, payroll, and income tax collections. The finance department consists of income tax collections, payroll and accounting.
In 2021, Montgomery's All Funds Budget was $51.1 million. This includes the capital projects budget of $2.8 million that is cash funded and over $20 million financed by special revenue bonds for the Montgomery Quarter project.
Revenue and Expenditures
The charts titled "Where the Money Comes From" and "Where the Money Goes" provides a snapshot of how resources are collected and programmed for expenditures. In 2021, the finance department was responsible for the collection of approximately $10.8 million in income tax revenues and $10.7 million in property tax revenues. Also, the department is responsible for managing an investment portfolio of more than $20.4 million.
As with most municipalities, public safety, property protection, and emergency services are the most important governmental functions. General government and public works, including solid waste and recycling, account for over 17 percent of the remaining expenditures.
The finance department prepares quarterly and annual reports, including the Annual Comprehensive Financial Report (ACFR). In 2021, for the twenty-fourth consecutive year, the City was awarded the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting for the City’s 2020 ACFR. Moody's Investor Services continues to recognize the City's creditworthiness by assigning an Aaa credit rating to our debt. Montgomery is one of only ten communities in the State of Ohio to be rated in this category.
Income Tax Revenue
As depicted in the graph, income tax revenues have been increasing each year since 2011 with 2021 revenues exceeding collections from 2020 by 6.8 percent.
For purposes of balancing operations with capital investments and related debt service, income tax revenues are distributed into two funds according to the following allocation: 80 percent to the General Fund and 20 percent to the Capital Improvement Fund.
Total Revenues and Expenditures
The line chart titled “Total Revenues and Expenditures including General Fund 2011-2021" provides a historical perspective of the City's ability to program and budget services, capital improvements and related debt service within the resources provided through the annual budget process. The reason for the large increase in 2021 is due to the issuance and expensing of special revenue bonds related to the Montgomery Quarter project.
Sound Financial Policies
To maintain a healthy fiscal environment, the City Council has adopted an array of financial policies:
City Council adopted a conservative investment policy which applies to cash management and investment activities of the City of Montgomery. The policy is reviewed periodically, and City Council adopts updates. The primary objective of the City's investment activities is the preservation of capital and liquidity, maximizing investment income, and conforming to State laws governing the investment of public funds. Investment Income is based on treasury yields and have ranged from $1,350,943 in 2007 to revenue of $158,771 in 2021.
Fund Balance Policy
The fund balance is an essential measure of the City's overall financial health. City Council adopted a policy requiring maintenance of a six to twelve-month reserve of operating expenditures for both the General Fund and Fire/EMS Levy fund, a minimum cash balance of $1,000,000 in the Capital Improvement Fund, a targeted fund reserve for Arts & Amenities is established at $376,237, and one-year reserve of debt service payments in the General Bond Retirement Fund.
On December 31, 2021, the City had $46.8 million of outstanding debt. Of this amount $39.6 million is special obligation debt, $45,000 is for assessments and $7.1 million is general obligation debt.
In December 2020, Montgomery City Council authorized the issuance of Special Obligation Revenue Bonds for the Montgomery Quarter development project. The Series 2020 Bonds were issued for the purposes of (i) paying the cost of acquiring and constructing public infrastructure improvements including, acquiring real property and constructing parking facilities, public streets, street lighting, landscaping, and other related improvements; (ii) and paying certain costs related to the issuance of the Series 2020 Bonds.
The 2020 Bonds are special obligations of the City and are expected to be paid from service payments in lieu of taxes payable by certain owners of residential and/or commercial property in the Montgomery Quarter. Residents may anticipate continued public improvements at the site, including additional streets, curb cuts, and lighting.