By By MIKE VOSS
mike@wdnweb.com
Contributing Editor
An audit of Washington’s financial books for the 2009-2010 fiscal year resulted in a “clean report,” said Crystal Waddell with Martin-Starnes &Associates in her audit-report presentation to the City Council on Monday.
Waddell said the report shows the city’s financial reporting is in compliance with state and federal guidelines.
The report shows the city ended the 2010 fiscal year on June 30 with an $8,407,407 fund balance in its general fund, which pays for day-to-day operations of city government. That fund balance was down from the previous fiscal year, when it was at $9,414,678.
The $8.4 million fund balance on hand at June 30 doesn’t mean the city has that entire amount in its rainy-day fund to spend as it desires or to cover emergencies. Part of the fund balance, $2,643,875, has been earmarked for obligations such as paying down debt or reserved for specific projects, programs and equipment purchases. The unreserved, undesignated segment of the overall fund balance comes to $5,763,532.
The unreserved, undesignated fund balance may be used for several reasons, including helping balance the next budget if there’s a serious shortfall in expected revenues for that budget.
On June 30, 2009, the unreserved, undesignated part of the fund balance came to $5,536,430.
For the 2009-2010 fiscal year, the unreserved fund balance was 53 percent of expenditures in the general fund. That percentage far exceeds the 8 percent recommended by the Local Government Commission, which oversees the finances of counties and municipalities.
The commission recommends local governments have a fund balance (rainy-day fund) of at least 8 percent of their general funds in case of financial emergencies. The 8 percent is almost equivalent to one month’s revenues (on average).
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, city officials have said.
Among the city’s enterprise funds (operated like a business), the water fund, under the modified accrual system, finished the fiscal year with $161,173 in operating income, with the sewer fund finishing with $186,557 in operating income, according to the audit report. The electric fund finished the fiscal year with an operating loss of $80,381, according to the audit report. The city’s nonmajor enterprise funds — stormwater, airport and others — finished the year with operating losses totaling $87,704.
Councilman Bobby Roberson believes the audit report shows the city is taking its financial situation — specifically addressing its electric department’s finances — in the direction that city taxpayers want it to go.
“I think we are making strides toward eliminating the transfer of funds from the electric fund to other funds in the budget,” said Councilman Bobby Roberson on Wednesday.
In previous fiscal years, the annual transfer from the electric fund to the general fund was a little more than $1 million. The electric-fund transfer in this year’s budget amounted to around $973,000, about $200,000 less than transfers from the fund in the previous fiscal year.
Council members have said they want to eventually wean the general fund from transfers from the electric fund.
The audit report notes the state faces a budgetary shortfall of $3.2 billion going into fiscal year 2011-2012, which begins July 1, 2011. Measures the state may take to reduce or eliminate that shortfall could affect some state revenues that go to local governments, according to the audit report.
A copy of the audit report may be viewed at the Municipal Building, 102 E. Second St., Washington, during normal business hours.
For additional coverage of the council’s Dec. 13 meeting, see future editions of the Washington Daily News.