THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, February 18, 1996 TAG: 9602180010
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY TONI WHITT, STAFF WRITER
DATELINE: PORTSMOUTH LENGTH: Long : 114 lines
For the first time in years, Portsmouth isn't living from paycheck to paycheck. It has enough money in the bank to cover costs when the cash flow is slow.
Gone are the days of borrowing from the school's lunch fund to make sure teachers got paid.
For five years, Portsmouth struggled to get by.
Then 18 months ago, in the midst of unpopular layoffs, former City Manager V. Wayne Orton created the position of chief financial officer and hired Johnna Whitaker. She had been the school board's budget director and before that had audited Portsmouth's and other municipal finances for a national accounting firm.
In her first few months on the job, Whitaker looked at revenue projections, deemed them unrealistic, and asked city employees to purchase only essential items.
The layoffs that came as she was being hired helped save money, but there were other actions as well, some as simple as taxing people on automobile options or changing how Portsmouth stashed what money it had.
Before she arrived, the city had sought to spread its wealth to all the banks doing business in Portsmouth. The result, though, in tight times was that few of the scattered accounts had enough money to earn interest and most actually got so low that the city was charged fees for the banking privilege.
The intention may have been good, but citizens were being penalized.
Under Whitaker, the city consolidated all of its accounts into Signet Bank, where it not only earns interest, but it is compounded daily. The penalties and fees are gone.
Now Portsmouth has $9.1 million in cash reserves. And as the amount grows, Whitaker said, she hopes Portsmouth will be able to invest some of it in higher-yielding 6-month investment accounts.
``Now we've got the maximum investment potential,'' Whitaker said. ``Our accounts are easier to monitor, we have less transfers to make and more effective administration of the accounts.''
Whitaker said the city has saved money by better controlling overtime - a controversial move that some officers claim has hamstrung the police department.
Last year the city settled a lawsuit by police officers who sued the city for forcing them to take compensatory time rather than paying for the overtime they worked. The settlement cost the city money that was earmarked for the financial reserves.
So while the layoffs were projected to save the city $2 million annually, the city has not been able to put that much in reserves.
In the past eighteen months the city has tightened up on all overtime. Several citizens have come to council meetings concerned over public safety because they said that officers told them they weren't allowed to answer calls during breaks or at the end of their shifts because of the new overtime rules.
City Manager Ronald W. Massie said the city is ``working to effectively manage overtime'' but that public safety has not been jeopardized.
``In an emergency we're not asking people to cut off and go home,'' he said.
Massie credits Orton, the former city manager, for steadying and then turning around the city's finances. But the new city manager has already begun working to improve the city's financial future.
He recently worked with Whitaker and other financial advisers to get the city a low-interest rate on bonds that will be used for the I.C. Norcom High School project and other long-term projects.
The city borrowed $40 million in bonds at a 5 percent interest rate by offering insurance with the bonds. That insurance gave the city a higher credit rating.
``That really was a team effort,'' Massie said. ``A lot of my impact (on city finances) has not been felt yet.''
Massie said the upcoming budgets will give citizens a clue to how he plans to continue improving the city's finances. He said the budget will include a lot of technological advances that will help make employees more efficient and effective in their jobs.
He said he also would like the city to sell land that it owns but doesn't need and acquire land that is more useful. He also plans to push for more economic development.
``We'll have a wise land-use policy,'' Massie said. ``We'll also be governing and monitoring expenses in a careful way. I don't want to build any recurring costs.''
Whitaker said her office will continue to make conservative revenue estimates to keep city finances healthy. When she first took on the city's financial mess, she admitted last week, she was scared.
``Having worked with the city in different capacities for so long, I knew what I was getting into,'' Whitaker said. ``I knew it would be a challenge. I jumped in with both feet and made a lot of different changes all at once.''
By the end of the last budget year, the city was able to add $1.5 million to its fund balance - bringing reserves to about $9.1 million.
Whitaker said the city should be able to add another $700,000 to its reserve accounts by the end of June. That would give the city nearly $10 million in its reserves and enough cushion to meet bills when revenues are not coming in immediately.
The city's goal is to have $11 million in reserves, and Whitaker believes it will have those funds in just a few years.
Whitaker also believes that within the next three years, the bond rating company, Moody's, will improve the city's rating, which dropped from A1 to A last year.
``We've really done tremendous things that have really just improved the financial situation,'' Whitaker said. ``We've taken the mystery out of city finances. We've been up front with the council and with the department heads in getting them to help us. We've shared the burden as well as the successes.'' ILLUSTRATION: Color photo
City manager Ronald W. Massie recently worked with chief financial
officer Johnna Whitaker to get the city a low-interest rate on
bonds.
KEYWORDS: PORTSMOUTH CITY BUDGET by CNB