By David Tulis
The resignation of Chattanooga’s chief of police at year’s end came amid uncertainty imposed upon Bobby Dodd by a proposed shakeup in the departments pension program. Mayor Andy Berke and his staff have considered trimming payouts in the fire and police retirement scheme. Fleeing with Chief Dodd were three lieutenants and several others.
Perhaps the local peacekeepers acted too quickly. City government’s retirement trust accounts are valued close to half a billion dollars, a comprehensive annual financial report for 2013 says.
As an investor through its pension fund alone, the city has F$111.22 million in stock markets, F$113.35 million in mutual funds, F$94.08 million in hedge funds. Assets are F$465.54 million (the dollar F indicates the assets are in Federal Reserve System dollars, the fluctuating American medium of exchange of private issue). The half-a-billion-dollar total is after F$40 million were paid to participants and half a million went for administration (pp. A-15 A-16). The fair market value of investments in the fire and police pension fund is F$216.044 million, enough to pay out retirees for five years. The general pension fund has investments valued at just under F$250 million.
Chattanooga, incorporated in 1839 and home to about 168,000 people, pays into three retirement funds — a general one, a second for fire and police and that of EPB. It is trustee for the first two only (A-37).
Chattanooga’s capital base sound
The city is worth F$3.1 billion, the CAFR says. But most assets are illiquid — not readily available to pay off liabilities. Capital assets include land, buildings, equipment and infrastructure (p. viii).
The CAFR divides its report between governmental and for-profit. Government activities cost F$266.8 million; they brought in F$283.34 million in taxes, grants, charges and investment income. But commercial government is twice as rich. City business interests grossed F$743.84 million and had F$722.29 million in expenses. Total revenue for the year was F$1.03 billion, with the ending net financial position at F$1.9 billion (p. x).
City government is richer this year than last. “Assets and deferred outflow of resources exceeded liabilities and deferred inflow of resources by $1.9 billion ***, an increase of $37.8 million, or 2.0 percent, from last year.” (p. viii).
Annual budgets, the focus of media coverage and political wrangling, are miniscule. The 2013 budget was a hair over F$238 million.
Corporate profit centers
The city has two major businesses that are legally distinct but for whose finances it accounts, namely an airport and a bus operator. (See C-7). The airport authority has F$11 million in cash and cash equivalents, total assets of F$113.6 million and a total net position of F$103.14 million. The total net value of CARTA is F$24.59 million (p. A-17). City government also has a legal interest in convention hall and parking garage overseer Carter Street Corp., whose net position at year’s end is F$11.67 million, with more than F$1 million in cash.
Another set of profit centers are called proprietary funds, and include EPB and the Chattanooga Downtown Redevelopment Corp. The most lucrative is the Electric Power Board, which is a middleman in the electricity market and a telecom competitor of such businesses as Peace Communications and Revtel. Cash and cash equivalents at year’s end are F$124.48 million. Net cash from operating activities is F$73.73 million (p. A-14).
Net cash from six city enterprise funds is F$107.28 million. A tally of revenues, expenses and changes in the net position of enterprise funds is over half a billion dollars — F$571,722,305 (p. A-12).
Half of capital assets held for governmental purposes are depreciable; they are worth F$1.05 billion. Nondepreciable assets such as land and construction are worth F$1.18 billion (p. A-29). Those for business: non-depreciable F$88.46 million. Depreciable are F$1.41 billion before depreciation, or F$822.64 million after.
American collective governments number nearly 200,000 and are worth more than F$110 trillion, according to Walter Burien, who began exposing CAFRs amid a media blackout that has affected Chattanooga. He suggests composite or commercial governments in the U.S. are so wealthy they can halt taxation. That would unburden the people and let localities compete as tax-free zones.
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