In the most recent Comprehensive Annual Financial Report produced by Parmell Poirier & Associates, LLP, dated April 1, 2016 they summarized the “Financial Highlights” as follows:
“At the close of the fiscal year, the liabilities of the City of Warwick exceeded its assets by $298,263,772”. The City’s total net position (debt), increased by $333.2 million during fiscal 2015, due primarily to an increase in the City’s liabilities attributed to the full net pension liability for each of the City’s pension plans.
“Over time, increases or decreases in the City’s net position are indicators of whether its FINANCIAL HEALTH is improving or deteriorating, respectively”.
The following table (below) taken from a decade of city financial reports, display changes in Warwick’s Net Position. Clearly the trend is not good.
The ability of city leaders to hide these facts by not including these liabilities in the city books has finally come to an end with new accounting standards being imposed by the Government Accounting Standards Boards (GASB) that require city leaders to disclose the real liability numbers in the annual financial reports. Take a look at how dramatic a shift occurred reflected in the table below from 2014 to 2015.
The net effect of this increase is that more and more tax dollars are being allocated to pay for this debt then for city and educational services.
A review of the city and school budget over that last decade proves this point and it is only going to get worse as the unfunded liabilities continue to grow.
That was the point of former Warwick city councilman, Bob Cushman's December 2014 presentation before the City Council, and sadly almost two years later, nothing has changed to combat the problem.
Borrowing, spending and increasing taxation more, while debt continues to increase due to failure in implementing any type of comprehensive fiscal management plan, is a clear path to municipal fiscal suicide.
Year Assets Liability Total Net Position
2006: $451,018,002 $310,173,288 $140,844,714
2007: $453,215,005 $323,626,492 $129,588,513
2008: $448,783,583 $338,846,050 $109,937,533
2009 $435,356,400 $344,429,551 $90,926,849
2010 $430,514,151 $351,265,067 $79,249,084
2011 $436,992,698 $375,548,627 $61,444,071
2012 $430,481,871 $377,200,984 $53,280,887
2013 $427,219,132 $380,661,078 $46,912,971
2014 $422,487,917 $387,829,891 $34,942,636
2015 $458,539,465 $770,260,326 -$298,263,772