BANGOR — One of the biggest concerns over the city’s plans to build a $65 million arena and convention center complex in Bass Park is economic uncertainty. The city simply does not have the financial footing to borrow such a large amount of money, arena critics say.
As it turns out, Bangor’s financial health is quite strong, according to an independent audit of fiscal year 2010 that was presented this week to city councilors.
The city’s tax collection rate, its debt service and its undesignated fund balance — some major indicators of fiscal strength — all are in line or better than other Maine communities of similar size.
The auditor, Roger Lebreux of the South Portland firm Runyon Kersteen Ouellette, concluded that the city’s finances were fairly and accurately stated and he found no weaknesses.
Councilors agreed that the audit was good news on a number of levels.
“Historically, we’ve had good audits, but lately we’ve had great audits,” said Rick Bronson, who chairs the finance committee. “This is a report from a substantial firm that has the ability to tell us bad news, that’s not just a cheerleader. And they said we have no real problems, no missing money, no accounts that fail to balance. I think citizens should be happy with the fiscal management of the city.”
Of the $93 million spent by the city in 2010, more than half went to education. Public safety was the next biggest budget item, accounting for 16 percent of expenditures, followed by public building maintenance and public works at 11 percent and health and community services at 5 percent.
On the revenue side, 53 percent of the city’s budget was paid through municipal property taxes, 32 percent from state and other intergovernmental revenue sharing and 13 percent from various fees charged for services.
The city’s undesignated fund balance — essentially its savings account — represented about 9 percent of the total budget for 2010. That was lower than Augusta (11 percent), Portland (9.8), South Portland (13.2) and Lewiston (9.7), the comparison communities used by the auditor, but still in a good range. Some councilors actually wanted to use some of Bangor’s undesignated fund balance last year to balance the budget, which was not recommended by finance director Debbie Cyr.
Bangor’s undesignated fund balance does not include money set aside from Hollywood Slots proceeds. That fund now has $8.1 million and has been targeted by councilors to fund the new arena project. The city has spent about $830,000 from that account toward the project, according to Cyr.
Bangor, at 8.5 percent, also was well ahead of Portland (12.5 percent) and Lewiston (14.7 percent) but slightly behind Augusta (7.3 percent) and South Portland (5.1 percent) in the category of debt service as a percentage of total budget. Most of the city’s debt is tied up in employee pension obligation bonds, Cyr said.
Bangor’s tax rate of $19.05 per $1,000 of property valuation has decreased considerably since a high of $23.75 in 2003, but other communities have cut their tax rates during that time as well. Portland went from $23.06 in 2003 to $16.85 in fiscal year 2010 and Augusta went from $24.60 to $16.70 during that time period.
In 2010, Bangor collected 96 percent of property taxes, which also is line with other comparison communities.
Cyr said the city’s financial position likely would make bonding for a new arena relatively easy.
City councilors have been progressing steadily with the arena project, which is in the design development stage, but voters will have a chance to weigh in later this year.
“From my perspective, this audit strengthens the financial case for the arena, because the same finance department that has been steering the city is making projections about the project’s costs and revenue streams,” Bronson said.