Each year the city does an annual audit. The audit is a means for an independent accountant to look at the records and clarify the financial position of the city. In doing so they look at all funds making sure revenues and expenditures were coded correctly, expenditures were valid and we have met other requirements of law regarding municipal finances.
This year was a bit different in that we have restructured our accounting slightly to deal with better accountability in reporting and also start a long range financial plan for capital expenditures. We also had established a finance committee to oversee the finances on a monthly basis. This in itself does not create change but as we discuss and deal with the city finances we have developed different approaches to some accounts, which prompt journal entries to better acknowledge the situations.
The audit went well with only a few items that needed discussion. With the change in the budget and financial statements format there was some confusion about where things go where. When working through these we came to the final amounts for reporting.
The general outcome is the city is in good financial shape. The general fund, which includes debt service and the revolving capital fund, has net assets of $2,360,379. A portion of these funds are earmarked and some are strictly reserved for specific purposes. The sewer fund, which is an enterprise fund, has reserved funding that can only be used for sewer activities. Here the overall balance is $2,610,926. Most of this is reserved for sewer capital expenditures.
A statement was made regarding the state auditors fund balance reserve amount should be between 35% and 50% of the budget amount. The budget for 2010 was set at $1,671,975. With fund reserves at $816,570 we have 48% reserve which meets state recommendations. This reserve increased by about $60,000 from that of last year.
Looking forward one recommendation was to decrease debt service. This can’t be done immediately. It is anticipated that with the call date on two bonds approaching in the next couple of years that we call bonds and retire them. This would free up a substantial amount of cash on an annual basis.
One area of concern is that of tax collection. This was not discussed at the council meeting but collections of levied taxes are not 100%. The city saw a collection rate of 92% overall for 2010. A good portion of this has to do with foreclosed properties. We are seeing properties selling which provides for the payment of past due taxes, which is helpful. The other part of this concern is with a tax appeal we’ll see in 2011 a rather large amount of taxes unpaid in addition to the general tax collection. The outcome of this concern is to be really prudent about spending. I believe the city will manage it well but the audit for next year will show a rather large decrease in tax collection to budget.
The good news is we’re doing OK but could always be better. The not so good news is a stressed economic future for 2011 based on revenues. We do however have some control with expenditures which are being watched closely. Breezy Point is not a rich city but we are managing within budget and revenue constraints.
