Hagerstown, founded in 1762, is a small town located about 72 miles to the west of Baltimore, covering about 12.1 square miles and home to 39,662 residents. The city is known as the Hub City because of the intersection of interstate I-70 and I-81, routes 40 and 11, and the railways for CSX Transportation and Norfolk Southern. It’s a small bedroom town for those that travel to Washington, D.C. or other surrounding cities for work. Although, a large majority of the city’s population is employed by the Washington County Public Schools as well as Meritus Health, which owns the recently constructed hospital. Based upon the most recent CAFR the city of Hagerstown seems to be in relatively ...view middle of the document...
The city seems to be doing quite well despite some of the noted factors that may potentially affect the financial condition. The national recession has shown no growth to the city’s assessable tax, but the local economy has seen a recent decrease in unemployment falling from 9.7% in 2011, to 8.5% in 2012. As a result of the recession, the housing industry has seen a drastic slow down, but commercial activity is still growing as they recently relocated the hospital and are planning a redevelopment effort for the downtown area, which will consist of the construction of a new multi-use sports and event center. According to the Management’s Discussion and Analysis, the city contains net assets which exceed liabilities by $246 million (Burker and Hepburn, 2012).
Government funds, which consist of general funds, capital projects, community development, economic redevelopment, excise tax, flexible spending and other related funds, reported a combined ending balance of $17.8 million, $7.8m of which are unassigned working capital. For the Governmental funds, the city adopts an annual appropriated budget for the individual funds. To demonstrate how well the city is able to comply with budgets, they provide budgetary comparison statements for each of the individual funds. The actual reported amounts are according to GAAP, and reconciled items are only shown on the General Fund statements. The largest of reconciled items being property tax revenues at ($785,636), based on the year end amended budget. Reconciliations between the governmental fund balance sheet and government wide statement of net assets show a total reconciliation of $22,485,413 (Burker and Hepburn, 2012). Combining statements report on the information for nonmajor funds, but no budget-to-actual comparisons are made, nor reconciliations. Outstanding encumbrances, if any, are reported as reservations of the fund balances and will not be considered in expenditures of liabilities since they are reappropriated and honored the following year.
Governmental Fund Revenues
The previously mentioned governmental funds must have revenues to continue. The governmental type activities that provide the most revenue for these funds are property tax, which provides 60% of revenue. Other revenues come from charges for services (19%), shared taxes (9%). Business-type activities that generate the most revenue are electric (50%), water (19%), and waste water (19%). Property taxes, due July 1 and delinquent October 1, is the most identifiable revenue producing activity at $24,077,697, at a rate of 2.758%. Real property is assessed at 83.90% of the fair market value. Property taxes have shown a 69.66% increase over the past ten years, as well, income taxes showed a 26.52% increase, producing $2,271,796 in revenue (Burker and Hepburn, 2012).
All of the revenues for these funds are recognized as soon as they are measurable and available and are accounted...