Williams Prefers a Greater "Cushion" Between Revenue, Expenses; Stock Market in Watch Mode

Updated 31 weeks ago by Tony E. Rutherford, News Editor
Mayor Williams notes a citizens concern during council meeting
Mayor Williams notes a citizens concern during council meeting

Mayor Steve Williams’ decision to freeze hiring and non-essential purchases comes in a stock market climate where in his words a “systemic” bump is taking place. Translation: the market has had two down months, which have investors worried that a correction (drop) is underway.

Although the recently filed unaudited financials ending December 31, 2013 reveals revenue collection at about 50% and expenses of about 47%, Williams determined a proactive intervention was necessary.

“I’d like to have a bit more of a cushion between revenues and expenses,” Williams explained, adding  that the financials are “a little closer” than the 50%-47% ratio. “Our sales tax has subsequently came in at a   figure higher than projected level.”

Early in the 2013-2014 fiscal year, the Mayor said “we had that (revenue to expense) cushion, it started to disappear, then (the cushion) started to stretch back out again. The best time to deal with a crisis is before it happens.  We don’t foresee a crisis, but from what I learned in the investment business,  one thing you expect is the unexpected , you better plan for it.” 

Trends show quarterly, but monthly reports give him “ebb and flow” of projecting outcomes.  When he announced the freeze, the Mayor noted that he had cash concerns in contingency based on other liquidities that under the right insurance scenario would become immediately necessary encumbrances.

Revealing the current market turbulence is “something to keep an eye on,” the mayor noted that in 2013 “the market went continuously upward. Some correction is expected. There’s also international concerns and uncertainty in the U.S. market  related to the Affordable Care Act. Businesses do not know what their expenses are going to be. Hospitals do not know what the expense is going to be. People don’t know what to expect.  When there’s uncertainty , (investors) just say no or wait.” The hesitancy of institutional investors “ripples” downward.

During the 2009 market bust, Huntington ran “about six to nine months behind the national trend,” the former investment broker explained.  Effects of the possible correction will not show up locally until Fall, Williams added. “This is even more reason to take careful steps now.” 

 

An unaudited version of Huntington's December 2013 expenses/revenue totals are now on line. A summary of revenue/expenses is available for PDF download.

For the full 50 page document, click: http://www.cityofhuntington.com/pages/aa-gov-financialreports.html

 

 

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