Household buying level at 111 percent of nation
Standards and Poors considers Rockford’s financial practices good under their Financial Management Assessment (FMA) methodology. “In our opinion the city’s overall debt burden is moderate at 4.3 percent of market value and $3,632 per capital,” read a credit report provided after a review of the city’s bond rating. “In our view, debt service carrying charges were a moderate 10 percent in fiscal 2010.”
The financial monitoring company reported that Rockford’s financial future is deemed stable and that the city will continue to make budget adjustments it deems necessary, despite continued decline in state-shared revenues and taxable value reductions. It noted that the city has been cutting expenditures to maintain reserves that “we consider very strong.”
Standards and Poors notes that Rockford residents “have strong income levels and benefit from employment opportunities throughout Kent County and the greater Grand Rapids area.” It said the city, population 5,502, has a median household effective buying income as strong as 111 percent of the national level. T The unemployment rate in Kent County in 2010 was 10.2 percent compared with the State of Michigan’s 12.5 percent. Although the city’s taxable value has decreased the last two years, but the market value of $84,688 is still considered very strong by Standard and Poors. “In our opinion the city’s tax base is diverse, with the ten leading taxpayers making up 23 percent of taxable value, although shoe manufacturer Wolverin World Wide Inc. makes up ten percent.”
The report noted the city expects an increase in state-shared revenue based on an increase in population, and is projecting break-even operations in the general fund for 2011. At the end of the fiscal year for 2010, (June 30) the city had an unreserved fund balance of $1.4 million (55 percent of expenditures), which Standards and Poors considers “very strong.” Fiscal 2012 budget shows a $75,000 surplus in the general fund and expects a $150,000 surplus because it did not budget for additional state-shared revenue. The city levies at 10.9 mils compared to the maximum allowed of 14.0311. “This translates to $620,000 in additional annual revenue the city could raise if city council approves. Management has no plans to raise the millage, however.”
City Manager Michael Young said the city has either lowered or maintained tax rates for the past nearly 20 years and is the third lowest in Kent County for municipalities that do not levy an income tax.
The AA rating reflects the city’s participation in the Kent County and greater Grand Rapids area; strong income levels and strong market value per capita; very strong reserve levels combined with revenue-raising flexibility (given that the city does not levy for property tax at its Headlee limit) and good financial management.
“The City Council and Management have made the necessary financial adjustments over the last several years to maintain the City’s strong financial position,” said Young. “These changes have been difficult, for instance cutting staffing by 20% or the recent wage concessions agreed to by our Police and Public Works Unions. However we will continue to make the changes required to meet the harsh financial realities we all face in this struggling Michigan economy. The rating review just published by Standard and Poors is great news for the City and its residents.”