City has improved finances; still has much work to do

IT WAS WELCOME news to hear that the state's capital city, which has been taking steps to avoid another year with a general fund deficit, has managed to stay in the black so far this fiscal year.

The fact that a city the size of Columbia has managed to stay fiscally upright for half a budget year might not seem like much to some, but when you consider that the municipality failed to balance its books for several years and encountered countless bookkeeping problems, this is notable progress. Last fiscal year, Columbia spent $12 million more than budgeted in the general fund and ended with a $7 million deficit. That marked the city's third straight year ending with a deficit. Officials had to nearly exhaust reserves - to the tune of $24.7 million - to cover past deficits.

City officials entered this fiscal year on July 1 with an obligation to hold down costs to avoid another negative general fund balance. They've done that - and more. Through Dec. 14, the city was $4 million under budget. City Council wisely decided to put $3 million of the surplus back into the reserve fund.

If city leaders can keep finances on this track, Columbia would finish the year with a surplus of between $5 million and $6 million.

Not only does the $11 million swing thus far provide a little breathing room, but, more importantly, it might have prevented financial firms from downgrading the city's bond rating for its general fund. City leaders understandably were concerned that Moody's would downgrade the city's AA bond rating because of its history of deficits. A lower bond rating would mean the city would have to pay a higher interest rate when it attempts to borrow money next year for such things as fire and garbage trucks and police cars.

We commend City Council, staff and others who have worked to bring the city's finances under control. It has not been easy or pain free. Poor fiscal management and bad spending decisions - exacerbated by the faltering economy - forced the city to turn to outside accountants to help reconcile bank accounts and pay a team of accountants from the Municipal Association of South Carolina $1.5 million to handle the city's finances for well over a year.

The financial woes forced the council to approach this year's budget differently than it had in the past. Mayor Bob Coble asked fiscally conservative Councilman Kirkman Finlay to lead the 2009-2010 process, which focused on reducing spending. Among other things, the city bought out about 40 employees close to retirement, reduced overtime for police officers, cut services such as commercial garbage pickup, cut employee holiday pay and instituted furloughs and layoffs.

Of course, all those moves would have been meaningless if the city hadn't shown restraint and discipline once the budget was in place. Council members have been so pleased with the progress and with the leadership of interim city manager Steve Gantt that they've suspended the search for a permanent manager and hired Mr. Gantt, who had planned to retire next December, to serve another year.

While the city should be proud of the positive steps it's taken, this is no time to let up. There is still much work to do. Above all, the city can't return to its spendthrift ways. The devastating economy, constraints on cities' ability to raise revenue and public expectations dictate that city leaders must adopt and maintain a more prudent, responsible approach to spending.