City ends year with revenue up

The city of Owensboro ended Fiscal Year 2023-24 financially strong, according to its records.

Angela Waninger, city finance and support services director, said Thursday, attributed the better-than-expected fiscal position to a larger budget surplus than previous years, and strong returns on interest income, insurance premium fees and net income.

While the city’s occupational tax revenue was under what had been budgeted, the city still collected more than $750,000 in occupational taxes than in Fiscal Year 2022-23, Waninger said.

The city ended the year on June 30 with a budget surplus of $7.467 million, up from the $6.1 million surplus last year. Part of the surplus comes from American Rescue Plan Act dollars. But the city saw increases in its major streams of revenue, bringing in $82.329 million, which was $3.851 million more than had been anticipated.

Waninger told commissioners earlier this week the city had “record highs in our major revenue categories” in the fiscal year.

The city collected $2.5 million in interest income over the year, which Waninger said likely will not happen again, with the Federal Reserve anticipated to begin lowering interest rates.

Waninger said there’s an “80-plus percent chance” the Federal Reserve will begin lowering interest rates next month, and the anticipation is for up to five interest rate reductions over time. The city will also be receiving less interest through its new banking contract, Waninger said.

The city received $8 million in insurance premium license fees, which is a fee on insurance policies. The city received $800,000 more in insurance premium fees than in the prior fiscal year.

Waninger said the increase is due to home owner’s policies increasing as home values rise, and as insurance companies pass along the cost of natural disasters to policy holders.

Revenue from net profits fees was $6.40 million, up $552,000 from the previous fiscal year.

Overall, expenses were down $8.226 million over what was anticipated. Part of that is from not spending funds allocated to projects that were still underway at the end of the fiscal year, Waninger said. Those funds were carried over to the new year.

Waninger said $1.6 million in savings on expenses came from unfilled city vacancies, which were largely in emergency services such as police, fire and 911 dispatch.

Waninger said the city’s efforts to attract more people to those professions has already resulted in many vacant positions being filled.

“It’s not a surplus the city will continue to see year after year,” Waninger said. “With the police academy, our vacancies are being filled, and with the wage study, we are filling vacancies in dispatch.”

The city created its own police academy for OPD, with the first class starting earlier this year. The idea was to attract potential officers who didn’t want to travel to Richmond to attend the state law enforcement academy.

The city conducted a wage study last year, comparing city worker salaries to other cities and entities such as Owensboro Municipal Utilities and Regional Water Resource Agency, and created new salary schedules to raise employee pay to make the city more competitive for workers.

Improvements to Owensboro Fire Department stations and the fire training center have already resulted in more fire recruits, Waninger said.

Although much of the savings in personnel were through vacant police, fire and dispatch positions, “our level of service was never impacted,” Waninger said.

The city had its bond rating reduced twice — in 2014 and a second time in 2016 — but its bond rating was upgraded in 2019. Waninger told commissioners this week she felt the city was overdue for Moody’s, the bond rating agency, to raise the city’s bond rating again.

The city’s bond rating is currently A1.

Waninger said Thursday the city will revisit the idea of raising its bond rating either in February when Moody’s does its annual review, or when the city issues new bonds. Those bonds would be for OFD station projects at Station 1 and Station 4.

“Our last bond issue was in January, 2022, but (Moody’s) kept the bond rate the same,” Waninger said, and that, “We are advocating for an increase every time we get an opportunity.”

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