2-19-13 News Release - Financial Ratings

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The chart above demonstrates the property tax revenue reduction that occurred as a result of State of Indiana enacted property tax reforms, which began to take effect commencing in fiscal 2009. The loss in property tax revenue collected in 2010 was down by $10.0 versus the baseline period in 2006, and is clown $12.2 million versus 2008, the year before the property tax reform legislation took effect. As previously discussed, the City, in conjunction with St. Joseph County, enacted an increase in local option income tax, effective in the fourth quarter of 2009, to partially offset the loss of property tax revenues. This local option income tax increase included a new public safety local option income tax, specifically enacted to fund public safety expenditures. Key Revenue Trends -2006 to 2011 $90,0a0,a40 $80,000,000 $70,000,000 $sa,aaa,aaa $30,000,000 $�o,aa0,ao0 $�o.0aa.a00 $20,000,000 � $10,000,000 13 8thei Revenue E $0 ❑h4eie t Earniil[gs 2006 Actual 2007 Actual 2008 Actual 2009 Actual 2010 Actual 2011 ■Income Taxes Estimated ❑Pioperty Taxes The City believes that the financial information previously discussed demonstrates that the City has met the challenge of the property tax caps through hard work by staff to find efficiencies and cut costs, and through responsible action by the South Bend and County councils to replace some of the revenue lost to the caps with local income taxes; a new LOIT to provide property tax relief; a Public Safety LOIT to support police and fire department budgets; and an additional EDIT which allows us to invest in capital and economic development initiatives. By taking these actions the City has been able to meet priorities for public safety, economic development and parks. Cash reserves have been secured in accordance with established City reserve policies for cash flow needs and to cover unforeseen extraordinary circumstances. The City has also established a new baseline for the city budget that will support positive growth and investment in the future. In 2010, two financial rating agencies (Moody's & Fitch) increased the city bond rating, citing prudent fiscal management, sufficient cash reserves and spending reductions as well as diverse and stable revenue sources. These high quality ratings (AA+ stable and Aa3) will not only save interest costs on future bonds, but also reflect the fiscal strength of South Bend. The Management Discussion & Analysis and accompanying financial statements, contained in section II of this CAFR, presents in full the financial activities and condition of the City of South Bend. 15