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EXHIBIT P 7 -18 -2002 MEMORANDUM TO: COUNCIL SUB - COMMITTEE AND STAFF FROM: GENE ANDERSON, FINANCE DIRECTOR SUBJECT: FIRE DEPARTMENT COMPENSATION I have reviewed the letter from the International Association of Fire Fighters dated August 21, 2001. The letter conditioned its comments with the following statements. 1. "The primary objective of a local government is to provide services to its constituents within budgetary constraints..." 2. "We would also like to see revenue increasing over time and sufficient to meet expenditures, a manageable level of debt, and the other funds in good enough condition so the General Fund, which is the fund of last resort, is unlikely to have to cover the expenses of those other funds." 3. "...we usually cannot comment on priorities or on the appropriate level of funding for particular departments or projects because these are political decisions and are unique to the jurisdiction." 4. "...these [financial] statements do not always tell us everything." 5. "The financial reports usually tell us little about local or regional economic conditions..." 6. "...we cannot say with absolute certainty that the city does or does not have sufficient resources..." 7. "...cities and counties must keep a certain level of fund balance to maintain a favorable bond rating. A favorable bond rating is desirable because a high rating enables it to borrow money at a lower interest rate." 8. "It is also simply good management to maintain a reserve to cover emergencies and unforeseen circumstances." I would agree with the above comments. The writer's other comments are so general in nature and contain so many qualifiers that they are of little value. The following points concerning this letter should be.noted. 1. The most recent financial data used is almost two years old (September 30, 2000). 2. The eight comments noted above support the City of Paris position. 3. I noted five errors in the financial data extracted by the Association. Addressing the writers contention that the City can afford to fully grant the fire fighters' petition request, I have the following comments. 1. The City's general fund balance decreased $1,503,094 in the year ending September 30, 2001. Fund balance is projected to decrease again in the year ending September 30, 2002.