An Inside Look at City Finances
A basic attempt to compare the financial health of our two largest cities in Miami County
Every year, local governments throughout the state go through a financial auditing process. Traditionally, this includes the government hiring an outside firm, approved by the State of Ohio, to come in and look at the city’s books. The final report that is authored by the auditors isn’t as interesting as the materials put forward by the local government.
Most of the larger local governments, including Troy and Piqua, issue what is called a “Consolidated Annual Financial Report”. These reports must meet the guidelines of in the federal Generally Accepted Accounting Principles (GAAP). These principles are a set of guidelines and rules that local governments use to account for their finances. The Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB) are responsible for establishing these accounting standards.
While the Consolidated Annual Financial Reports are a little different between communities, there is enough similar information between reports that allow for some comparisons. While these comparisons, aren’t exactly oranges-to-apples, they aren’t exactly apples-to-apples either. It’s more like looking at the difference between a Granny Smith and a Golden Delicious; both apples, but both certainly with different tastes.
It’s with that grain of salt, that this publication is going to look at some of the basic financial statements in the Consolidated Annual Financial Report for 2023 between the City of Troy and the City of Piqua.
Revenue Sources:
Both cities rely heavily on income taxes as their primary source of revenue. Troy collected $26,968,015 in income taxes, which represented about 56.5% of its total governmental funds revenue. Piqua, while collecting a smaller amount of $15,413,720 in municipal income tax, saw this source account for a larger proportion (56.8%) of its total revenue.
Property taxes play a more significant role in Troy's revenue structure, bringing in $2,634,797 compared to Piqua's $1,670,874. However, when considering the cities' total revenues, property taxes represent a similar percentage for both (5.5% for Troy and 6.2% for Piqua).
Intergovernmental revenue is a crucial source for both cities, though Troy received significantly more ($7,213,388) than Piqua ($2,416,767 in state shared revenues). This difference might be attributed to varying levels of state and federal funding for different projects in the communities. For example, Troy’s reconstruction of West Main Street is receiving considerable state funding for the project.
Investment earnings stand out as a major difference between the two cities. Troy reported $3,738,624 in investment earnings, while Piqua's investment income was $865,300. This substantial difference shows that Troy has a larger investment portfolio or more aggressive investment strategies.
Expenditures:
Public safety represents the largest expenditure category for both cities, reflecting the priority placed on police and fire services. Troy spent $12,324,372 on public safety, about 31.9% of its total expenditures. Piqua allocated $11,183,252 to public safety, which accounted for a larger proportion (44%) of its total spending.
Both cities invested significantly in capital improvements. Troy's capital outlay was $10,484,876, while Piqua spent $4,660,908 on capital costs. This difference might reflect varying infrastructure needs or different phases of long-term capital improvement plans. Again, Troy’s West Main Street project is on top of the list along with improvements to the city’s Waste Water Treatment Facility.
Transportation and street repair is a major expense for both cities, though categorized differently. Troy spent $1,609,239 on "Transportation and Street Repair," while Piqua allocated $3,824,280 to "Street repairs and maintenance." The higher spending in Piqua could indicate a greater focus on infrastructure improvements, as the community has a strong tradition of repairing and maintaining secondary streets and even alleys.
Debt Service:
Troy's debt service payments totaled $586,465 ($295,000 in principal and $291,465 in interest), while Piqua's were significantly lower at $47,685 ($22,705 in principal and $24,980 in interest). This difference implies that Troy may have more outstanding debt or has undertaken larger capital projects financed through borrowing.
Fund Balances:
Both cities ended the year with positive changes in their fund balances, indicating that revenues exceeded expenditures. Troy saw a substantial increase of $8,728,332 in its total governmental funds balance, ending the year with a balance of $91,742,179. Piqua's increase was more modest at $4,025,197, with an ending balance of $31,342,289.
The significant difference in fund balances suggests that Troy has built up a larger financial cushion over time, which could provide more flexibility in addressing future needs or weathering economic downturns.
Other Financing Sources and Uses:
Troy reported net negative other financing sources and uses of $274,496, primarily due to transfers out exceeding transfers in. Piqua, on the other hand, had positive net other financing sources of $2,305,585, largely due to the issuance of $2,050,000 in debt and associated premium. This difference highlights varying approaches to financial management, with Piqua taking on new debt to finance activities while Troy relied more on existing resources and inter-fund transfers.
Overall Financial Health:
Both cities appear to be in stable financial condition, with revenues exceeding expenditures and positive changes in fund balances. Troy's larger fund balance and higher investment earnings suggest a stronger overall financial position, which could provide more flexibility in future budgeting and planning.
However, Piqua's willingness to take on new debt indicates a proactive approach to financing needed improvements or projects. The city's decision to issue bonds suggests confidence in its ability to manage and repay debt while addressing community needs.
While Troy and Piqua share similarities in their revenue sources and expenditure priorities, there are notable differences in the scale of their operations and their approaches to financial management. Troy's larger budget and fund balance suggest a more robust financial position, but both cities demonstrate responsible fiscal management by maintaining positive fund balances and investing in critical areas such as public safety and infrastructure. The differences in their financial activities likely reflect not only the varying sizes of the communities but also different local priorities, economic conditions, and long-term financial strategies.
You can look at the source documentation for today’s analysis below, both the basic financial information from the City of Piqua’s and the City of Troy’s Consolidated Annual Financial Report are below.
What do you think?
This publication tried something different today: an analysis of our two largest communities here in Miami County and we provided the source documentation for our analysis (yes, we learned how to attach PDF files!). What do you think? What other numbers are interesting to you. What other information do you want to know? Be a part of our discussion! Our paid subscribers are more than welcome to leave their ideas and insights in the comment thread!
Tell Us How You Feel About Your Community!
Our reader survey for November is looking for responses! Feel free to share your thoughts and ideas on your hometown! You can access the survey here: https://www.surveymonkey.com/r/PF6SPPN
You Can Help Support This Work!
Our readers and subscribers have been asking for a new way to support the work being done here at Civic Capacity! Some of our readers do not like the idea of having to sign up for another subscription service. Some of our subscribers occasionally want to give more support through a one-time transaction.
Civic Capacity is partnering with “Buy Me A Coffee” to give our readers, subscribers and friends an opportunity to give one-time support to Civic Capacity. Personally, I don’t like coffee, but I will never turn down a nice iced tea. If you feel compelled to support this effort, just click the button below.
Thanks for reading today’s Civic Capacity Newsletter! Please feel free to share this information with your friends and neighbors.
Also, please consider subscribing to our work. If you are a free subscriber, please consider becoming a paid subscriber. For less than $1 a week, you can get timely and conversational updates about the decisions that are impacting you and your community.