Page 44 - 2018 Comprehensive Annual Financial Report - City of Winston-Salem

Management’s Discussion & Analysis

Our discussion of the City of Winston-Salem’s nancial performance is intended as an overview of the City’s nancial
performance for the scal year ended June 30, 2018. The nancial statements and notes included in this report present
the nancial position and operations of the governmental and business activities and duciary responsibilities of the City.
During the scal year, the City continued its sound current and long-range policies for nancial management. These
policies are intended to:
• expand and diversify sources of revenue other than property taxes;
• maintain relatively low-property tax rates;
• facilitate capital improvements by maintaining adequate resources and reasonable nancing capacity;

• augment resources by astute cash management;
• enhance management techniques to improve productivity and e ciency;
• provide self-su cient public services that are similar in operation to private enterprises; and
• continue City-funded a ordable housing initiatives to supplement federal housing programs.
City policies encourage the use of local revenue to provide basic services instead of depending upon uncertain federal
and state sources. We encourage readers to consider the information presented here in conjunction with additional
information furnished in our letter of transmittal.

Financial Highlights

Highlights of the City’s scal year ended June 30, 2018, include:
• City of Winston-Salem total net position increased approximately $41.9 million from $947 million to $989 million.
• At June 30, 2018, total net position of $989 million included $246 million (unrestricted net position), which in large part,
have been reserved for speci c purposes or needed for working capital to meet the City’s ongoing obligations to citizens
and creditors. The unrestricted net position should not be used to fund ongoing operations other than working capital
because major nancial stress would be likely as the assets are depleted.
• At June 30, 2018, the City’s governmental funds reported combined fund balances of $218.6 million. Approximately
11.13% of this amount is unassigned and is available for spending at the government’s discretion.
• Unassigned fund balance of the general fund (approximately $24.7 million) continues to meet working capital
requirements. The City has adopted a nancial policy to maintain a minimum unassigned fund balance of 14% of
estimated expenditures in the general fund. At year-end, unassigned fund balance was 12% of 2019 estimated
expenditures. Due from other funds was $3.7 million because of reimbursements outstanding. These amounts are
reserved in stabilization of state statute in general fund. Legal provisions and nancial policies of the City restrict fund
balances in other funds to the purposes of those funds.
• The City’s total long-term liabilities increased by $104.6 million to $1 billion. Several key factors contributed to this increase:
the issuance of general obligation bonds of $63.8 million and the retirement of $7.6 million in general obligation bonds,
the issuance of $56.3 million in revenue bonds and the retirement of $23.3 million in revenue bonds, the retirement of $3
million in special obligation bonds, and the retirement of $36.8 million in limited obligation bonds. The City entered into
a $25 million equipment lease and received funding from Clean Water State Revolving Loan Fund for $8.5 million. Also,
the City implemented GASB Statement 75 this year. With the new reporting change, the City has a net OPEB liability of
$15.6 million.
• Property taxes supported 52.72% of governmental services to citizens and the community, and 52.99% to be used
for mass transportation in 2018. The City increased the tax rate to $0.5974 for scal year 2018 from $0.585 in scal
year 2017.
• City of Winston-Salem maintained its AAA bond rating from all three major rating agencies.

38 2018 AN NUAL R E P O R T