City Works To Keep Tax Limit In Line
There were no surprises in the 2012 Jamestown audit.
This is what John Trussalo, certified public accountant, said to the Jamestown City Council recently when presenting last year’s audit. However, even though the audit was clean, Trussalo told council members they have to pay attention to the constitutional tax limit for the city.
The constitutional tax limit is 2 percent of the average full valuation of taxable real estate for the preceding five-year period. The constitutional tax limit for 2012 was 92.2 percent. In 2011, it was 91.93 percent and it was 89.44 percent in 2010. The constitutional tax limit for the city is $13,475,621. The 2012 Jamestown tax levy was $12,242,946. This made the constitutional tax margin is $1,050,675.
Trussalo said the constitutional tax margin needs to be kept in sight.
”I recommend that each decision should have this in mind,” he said.
Trussalo also stated in a management letter to the council his opinion when it comes to accounting and financial reporting for employers for post-employment benefits other than pensions. Other benefits besides pensions include health insurance and other health care benefits. In 2008, the city implemented a new accounting standard because the costs of these future benefits is part of the cost of providing public service today. Currently, the city, and most local governments, report only what was spent each year rather than actual costs of the benefits earned by employees in that year. Trussalo stated these two calculations are vastly different.
As of Dec. 31, 2012, the actual accrued liability for the post-employment benefits besides pensions for the city’s government totaled $96,294,473, which is currently unfunded. To account for this unfunded total, Trussalo stated the city should develop a long-term plan to fund, at minimum, the annual required contribution. The annual required contribution represents a level of funding, if paid on an ongoing basis, that is projected to cover normal costs each year and put money aside to pay the unfunded liabilities during the next 30 years. At the end of 2012, the city’s annual required contribution totaled $5,895,795, but only $2,979,573 was paid.