Fresno will soon learn if it can stomach prosperity.
Mayor Ashley Swearengin on Monday trumpeted a new report that shows the city once again to be in the land of sound finances.
The document — called a Comprehensive Annual Financial Report, or CAFR — says the value of the city’s assets as of last summer totaled more than $3 billion for the first time in Fresno’s history. It says revenues are up, the bottom line has no red ink and the general fund reserve actually has money in it.
Best of all, Swearengin said, nowhere in the 300-plus pages of the 2013-14 CAFR are the words “going concern” to be found, at least in an ominous context.
“Going concern” is an accounting term of particular interest to money markets. Fresno’s past two CAFRs included a “going concern” statement. In essence, City Hall and its outside auditor said things were so bad in Fresno that no one should be surprised if the city became insolvent.
That concern is gone.
“We are breathing a sigh of relief now that the ‘statement of going concern’ has been removed by the city’s outside auditors,” Swearengin said. “This is positive news and adds to the steady improvement we are seeing from 2014, including our balanced budget, paying off the negative fund balances, improved ratings outlook and national recognition for job growth.”
Controller Michael Lima said the absence of the “going concern” statement “validates that many of the difficult decisions and sacrifices made over the last four years were necessary in order to survive and begin the long journey back to financial viability.”
Lima will deliver the new CAFR to the City Council on Thursday. Among his expected highlights:
• Revenues rose 6.5% from the previous year to $710 million.
• Citywide liabilities decreased by $20 million.
• The general fund reserve, once next to nothing, now has $1.5 million. Not great, but headed in the right direction.
There’s really nothing new about Fresno’s sunnier finances. That was the big message to come out of last June’s budget hearings. The administration and the City Council had argued throughout the Great Recession over who should get pink slips. Then, in seemingly a heartbeat, tax revenues perked up and the big snit became whether the local arts community should get a modest subsidy.
And bidding farewell to the “going concern” statement probably means little to the rest of America. Fresno had no hope of improving its abysmal credit ratings until “going concern” disappeared from the CAFR. But it’s doubtful even now if City Hall is in a hurry to take on more debt, at least of the general fund variety.
But the term “going concern” figures to resonate for a while at City Hall on two levels.
The first is Swearengin’s legacy. She took office in January 2009 with ambitions for revitalizing Fresno’s core and giving the local economy a big shove in new directions. She didn’t appear worried over a dozen or so financial landmines, the Granite Park and the Metropolitan Museum loans being just two.
Then the home-loan industry imploded, nearly taking the world economy with it. Fresno danced next to the bankruptcy abyss, but didn’t fall. Swearengin last fall ran a strong but unsuccessful race for state controller based on her knack for leadership in a crisis. Bye-bye “going concern” figures to burnish that self-analysis.
The second is temptation.
“The immediate crisis may be over, but it doesn’t mean the work stops,” Swearengin said. “The road to complete recovery can only be built by complete success.”
Brave words while the budget hearings are still over the horizon. Those hearings will come, and they will be full of tales of yawning potholes, darkened streetlights, employee sacrifices, aging fire engines, broken patrol cars, crumbling convention halls and water-starved parks, to merely scratch the surface.
No “going concern” may come to be defined at City Hall as no need for restraint. It’s certainly happened before.
The mere presence of Lima at the council chamber microphone on Thursday is a sign of Fresno’s improved finances. Swearengin for years had a terrible time finding someone with the will to take the controller job full-time. Fresno’s allure couldn’t overcome salary constraints. Lima in September came over from airports to give it a shot, buoyed by a hefty raise.
Fresno will see if he’s got the political chops to stand alone and give his blunt message to council members.
“The immediate crisis is over,” Lima said. “We should celebrate. But we still have work to do.”