Clear79° WeatherClear79° Weather

Mayor Rick Baker says St. Petersburg is 'fiscally strong'

The following are some points that expand on the Times' recent discussion of the city of St. Petersburg's finances:

•The primary loss that the city sustained in its operating portfolio (presently valued at $420 million) in the fiscal year ending Sept. 30, 2008, was from $15 million in Lehman Brothers notes. Governments and private investors throughout the country had invested in Lehman Brothers, including the state of Florida which, according to Times reports, invested more than $500 million in Lehman Brothers stocks and bonds.

• After writing down the city's Lehman Brothers investment, and all other losses from that fiscal year, the city still made a net of more than $500,000 on its investments from fiscal year 2008 despite the nation's dramatic financial downturn. Presently over 80 percent of our $420 million portfolio is in government-backed securities — the average return on this portfolio since 2000, through the difficult 2008 year, was 4.28 percent.

• At the advice of our investment oversight committee, St. Petersburg over one year ago began the withdrawal of most of the city's $110 million invested in Florida's State Board of Administration pool shortly before it fell into sharp decline — according to a Times report, by November 2008 the SBA's assets had fallen by $62 billion, one-third of its value. After we withdrew our SBA deposits, I asked our outside auditors to review our investment policies and make recommendations. The auditors confirmed that the city's investment policy framework "appears consistent with the Florida statutes and incorporates the required policy elements found in major U.S. municipality's investment policy framework." The auditors also made two policy language recommendations dealing with liquidity and due diligence — both recommendations had already been put into practice, and our legal department followed up to memorialize them with written policies which were presented to the investment oversight committee for review last fall. They were recently approved and are now moving forward for City Council adoption.

• The securities lending agreement through First Union Bank was approved by the city's investment oversight committee in 2000. Securities lending had been adopted as an authorized investment under the city's fiscal investment policies, which were approved in 1997 by a unanimous vote of the City Council. The city has retained legal counsel to determine whether Wachovia, First Union's successor, violated the conditions of the securities lending agreement in the manner in which they committed the city to the Lehman Brothers and other investments.

• The city administration has consistently submitted the city's quarterly investment reports to the City Council by delivery of them to the council chair of the budget, finance and taxation committee who also serves as the chair of the city's investment oversight committee — for review by the oversight committee at their quarterly meetings.

• Our outside auditors, at a City Council meeting held March 19, responded to a City Council inquiry by confirming that the city is "a well run organization fiscally sound." Also, on Feb. 26, Moody's reconfirmed the city's bond issuer rating of A-1 and included the following comments in the report: "A-1 issuer rating reflects the city's sizable, relatively built-out tax base, satisfactory financial position and low debt position … Moody's believes that officials are taking proactive and necessary steps to address revenue losses associated with property tax reform … Positively, the city did not rely on one-time revenue sources or use of reserves to balance operations. … Moody's expects the city's financial position to remain satisfactory given conservative budgeting practices and established reserve policies. … Moody's expects the city's debt position to remain manageable given the city's pay-as-you-go approach to capital projects and rapid amortization of existing principal."

Like every other government in Florida, St. Petersburg will encounter budget challenges in coming fiscal years due to a decrease in revenues resulting from property tax changes and the state of the economy — however, the city is fiscally strong despite the challenges of the nation's financial industry.

Our auditors have continued to confirm that the city's investment policies are consistent with state and local investment rules and policies. Over the course of the past two years, some city investments have lost value — however, unlike many investors, our financial condition has been strengthened due to our high percentage of holdings in government-backed securities — and the individual investment reductions have been mitigated by our investment returns. We actually made a positive return during the volatile 2008 fiscal year and the average returns over the past several years have been competitive.

Also, as all investors should be doing, we have adopted policies and procedures requiring a closer look at the investments within government pools and bank programs to ensure that they are consistent with our objectives.

Our staff, senior administrators, investment oversight committee, and council budget, finance and taxation committee, along with our external auditors, are reviewing each step in these difficult times. Presently, we are limiting new investments primarily to government-backed securities. We also are constantly reviewing, challenging and adjusting all investment policies in light of the change in world economic events.

Rick Baker is mayor of St. Petersburg.

Mayor Rick Baker says St. Petersburg is 'fiscally strong' 03/31/09 [Last modified: Monday, November 7, 2011 5:41pm]

© 2014 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...