Audit report shows

Published 2:25 pm Sunday, December 7, 2008

By Staff
fund-balance growth
On a cash basis,enterprise fundsin black for ’07-’08
Contributing Editor
The audit results of Washington’s books for fiscal year 2007-2008 will be presented to the City Council on Monday.
That report, prepared by Martin Starnes &Associates, is expected to include some good news about the city’s finances.
Last month during an interview, City Manager James C. Smith said the auditor’s report to be presented Monday would show the city grew its fund balance, or rainy-day fund, during the 2007-2008 fiscal year, which ran from July 1, 2007, to June 30 of this year. Also last month, interim finance director Anita Radcliffe told the council the audit results should show all of the city’s enterprise funds (business-type activities) in the black on a cash basis, which would be a first for the city.
The report shows the city’s fund balance in the general fund (which pays for day-to-day operations of city government) increased by $632,132 from fiscal year 2006-2007 through fiscal year 2007-2008, coming in at $8,569,052 at June 30.
That does not mean the city has nearly $8.6 million in its rainy-day fund to spend as it wants or in case of emergencies. Some of the surplus has been reserved for obligations such as paying down debt or set aside for specific projects, programs and equipment purchases.
The unreserved, undesignated part of the fund balance comes to $4,987,212. A year ago, the unreserved, undesignated part of the fund balance came to $4,298,617.
At the end of the 2005-2006 fiscal year, the fund balance was at $6,879,970. At the end of the 2006-2007 fiscal year, it was at $7,936,920.
The growth of the fund balance is significant, according to city officials.
Because Washington is in an area prone to hurricanes, the city needs a significant rainy-day fund to help the city pay expenses related to storm recovery, Smith said in an interview last year. The state’s Local Government Commission recommends local governments have a fund balance (rainy-day fund) of at least 8 percent of their general funds. The 8 percent is almost equivalent to one month’s revenues.
Because it’s prone to hurricanes that can severely damage its electric system, Washington should have a surplus that’s at least 15 percent — about two months’ worth of revenues — of its general fund, Smith said then.
The growth of the fund balance could help ease some worries about the economic recession’s effects on the city’s budget.
Last month, the council modified the city’s budget to reflect an expected decrease in some projected revenues for the current fiscal year. The revenue reductions in the budget came to $221,602.
On a cash basis, the water fund’s total operating income was $149,154 for the 2007-2008 fiscal year. The sewer fund’s total operating income for that fiscal year was $106,933. The electric fund’s total operating income for the same period was $830,962. The remaining enterprise funds — stormwater management, Warren Field Airport and wastewater treatment — had a combined total operating income of $126,076 for fiscal year 2007-2008.
On a full accrual basis, the scenarios are different for the enterprise funds.
The water fund had an income of $496,604 for the 2007-2008 fiscal year. That fund’s expenses were $2,378,455, with its revenues at $2,875,059.
The sewer fund experienced a $97,997 loss during fiscal year 2007-2008. The sewer fund’s revenues for that fiscal year were $2,865,915 compared to expenses of $2,963,912.
The electric fund had an income of $2,214,518 during fiscal year 2007-2008. Its revenues were $33,185,887 against expenses of $30,971,369.
The other enterprises funds had a combined loss of $219,562 during fiscal year 2007-2008. Those funds had a combined $1,937,713 in revenues against a combined $2,157,275 in expenses.
Those business-type activities increased the city’s net assets by $2,109,366, accounting for 76 percent of the total growth of the city’s net assets, the report notes. That increase is a result on increased revenues in the water, sewer, stormwater and electric funds, according to the report. Rate increases and modest growth generated an additional $2,119,268 in charges for services provided by the enterprise funds, the report notes.
Other items on the council’s agenda for Monday include, but are not limited to the following:
The council meets at 4:30 p.m. Monday in the Council Chambers of the Municipal Building at 102 E. Second St.