Politics & Government

Novi's 2010-11 Audit Shows City's Financial Health

The City Council reviewed the audit for the 2010-11 fiscal year at its meeting Monday.

The city of Novi's comprehensive annual financial report shows that Novi is in the black for the 2010-11 fiscal year that ended June 30.

Novi City Manager Clay Pearson said the report is very solid and reflects the excellent stewardship of the government.

Novi received a Standard & Poor's bond rating of AA+, which means "having excellent financial security and being highly safe."

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The city’s financial report was prepared by city staff and was validated by an independent auditor. The City Council discussed the report at its meeting Monday night.

"I'm not a betting man, but I'd be willing to wager that there are a whole lot of cities that wish they had that document in front of them representing their city," said Novi Mayor Bob Gatt. "I think this is a testimony to the manager and his staff and the City Council for being so economically tight when we had to be."

Find out what's happening in Noviwith free, real-time updates from Patch.

The table below shows a summary of the government's budget for the past five years. Novi had a $16 million increase in funding in 2008 due to money taken in from bonds for the new library. Most of this money was then spent in 2009 and 2010.

City of Novi Governmental Funds for the Past Five Fiscal Years

2007 2008 2009 2010 2011 Revenue 58,017,395 55,752,435 55,584,602 51,377,714 49,026,436 Expenditures 50,265,599 59,480,866 60,083,728 60,532,737 48,415,962 Excess Revenue 7,751,796 -3,728,431 -4,499,126 -9,155,023 610,474 Ending Fund Balance 50,327,342 62,598,911 58,099,785 48,809,690 49,420,164

Financial highlights

Council member Terry Margolis said the financial report has many indications of Novi's financial health. Here are some highlights from the audit:

  • Numbers from the 2010 census showed that Novi’s population increased by 16.5 percent since 2000. This results in an increase in constitutional state revenue sharing, which is money provided by the state from sales tax and distributed to towns based on population size. This past year, Novi received $3.7 million, up from $3 million in 2009-10.
  • Statutory state shared revenue decreased again this year; Novi did not receive any of this funding, down from $37,000 in 2009-10.
  • The city continues to see a decrease in revenue from decreased property values. Property tax revenue decreased by 12 percent, or approximately a $5 million in the past fiscal year.
  • Novi reduced its debt obligations by $8.7 million to $56 million.
  • The city continues to spend 50 percent to 60 percent of its budget on public safety, which saw a 2 percent decrease in spending from 2009-10.
  • Approximately 33 percent less was spent on recreation and cultural services from 2009-10.
  • Net assets of all government activities increased by $5.5 million to $331 million.  

Looking back and forward

Pearson said the 2010-11 report was much clearer than in the past few years. He said several decreases in funding have bottomed out, making future budgeting more predictable.

Novi did not receive any statutary state shared revenue in 2010-11, and interest earnings also bottomed out. 

“The last budget was as challenging as it has been, but we did not have to make any big cuts,” he said.

Pearson said revenue will go down again next year, but not as much as this year.

He also said Novi has been successful at diversifying its tax base and fostering economic growth, making for a more stable source of revenue.

The health care cut city employees took in 2011 will also be reflected in next year's budget and is estimated to save the city more than $300,000.


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