Fiscal Policy Institute’s recent “Fiscal Health of Indiana’s Larger Municipalities”

The Indiana Fiscal Policy Institute’s recent “Fiscal Health of Indiana’s Larger Municipalities” study was released on December 8, 2015, and after careful review of the document, we are proud with what it says about New Albany’s fiscal health.  Here are some highlights of the study, and what they mean for the City of New Albany.

  1. “The Fiscal Capacity Index identified six of the 18 selected municipalities as ‘gainers’ – those whose 2015 core income exceeded their 2008 core income after adjusting for inflation… Three more, Kokomo, Elkhart and New Albany, could be categorized on the Index as ‘modestly falling behind…’ Surprisingly, some of the municipalities categorized by the Fiscal Capacity Index as either “modestly falling behind” or of “concern” were among the financially strongest from the perspective of year-end fund balances… This demonstrates both the necessity of examining multiple indicators when considering a municipality’s fiscal health and the diversity of profiles offered by the 18 selected municipalities.” – pgs. 45-46

What does this mean for New Albany?  When compiling the “fiscal capacity index” of a given city, the study weighted certain factors highly, including assessed value and increases through annexation.  Given that New Albany has had little to no increases through annexation, this would lead to a “modestly falling behind” categorization.  However, this single factor does not in any way translate into the City of New Albany’s fiscal health as a whole.  Even with modestly falling assessed values and tax revenues, the Mayor and his staff have increased services and projects without any additional taxes being placed on the citizens of New Albany, all while maintaining a balanced budget.

  1. “The City of New Albany lost ground in both real and actual terms on cumulative core revenue but not as badly as some of the selected municipalities. It experienced a relatively lower Circuit Breaker impact than many of these municipalities but has not benefited from an increase in income tax rates and is in the middle of the pack on the Fiscal Capacity Index. Yet New Albany was able to increase its General Fund and Rainy Day fund balances by a combined $5.5 million between 2008 and 2015.” – pg. 49

What does this mean for New Albany? The City of New Albany has not increased its income tax rates, yet still maintains a middle of the pack rating on the Fiscal Capacity Index.  This is especially telling, considering that New Albany is the smallest City by population that was included in the study.  In an era of no tax rates increasing, the City of New Albany has still been able to increase its savings balances by $5.5 million over the seven year study period through strong fiscal management.

  1. “Many financial experts suggest that maintaining a balance of between 5 and 15 percent of annual revenues in the General Fund is appropriate fiscal management.” – pg. 36

What does this mean for New Albany?  As stated in this report, the City of New Albany is within those parameters, proving that Mayor Gahan and the City Council are being appropriate with their fiscal management.

  1. “There is a relatively large range in the net assessed valuation per capita across the 18 municipalities… Among other factors, it appears to indicate the declining importance of industrial development to the total tax base and the growing importance of high-end residential development.” – pg. 12

What does this mean for New Albany?  The City of New Albany is actively pursuing high-end residential development, through projects like the Coyle development in downtown New Albany that will bring nearly 200 units of high-end residential development to the urban core.

 

Here is a link to the study: http://www.indianafiscal.org/resources/IFPI%20Fiscal%20Health%20of%20Cities%20FINAL.pdf

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