Washington’s City Council wants to reduce, if not eliminate, the city’s reliance on borrowing from the city’s reserve funds to help balance the city’s annual budgets.
That desire surfaced again during the Jan. 9 audit-report presentation on the 2010-2011 fiscal year that ended June 30, 2011. The audit was performed by Martin Starnes & Associates. The report was presented by Crystal Waddell.
In the general fund (day-to-day city operations) for fiscal year 2010-2011, expenses outpaced revenues by just under $1.4 million. Revenues in the general fund came to $10,537,750, with expenses totaling $11,929,828, according to the report. The shortfall was covered by transferring revenue from other funds into the general fund and dipping into the fund balance of the general fund.
At the beginning of the 2010-2011 fiscal year, that fund balance was at $8,516,983, declining to $7,967,639 at the end of that fiscal year. In recent years, the city has dipped into its fund balance to help balance its budgets.
Councilman Doug Mercer, in referring to page 141 of the report, told his council colleagues “you will find, for the last seven years, the expenditures in the governmental funds have exceeded the revenues.”
“For seven years running, we have spent more than we have taken in. We cannot — and Councilman (Bobby) Roberson and I have said this — we cannot continue to operate with the philosophy that we can spend more than we take, if we can take it out of our savings account. … We’ve got to spend less than we’re taking in and put it back in the savings account. We’ve just got to change that philosophy of doing business.”
Mercer and Roberson have been the more vocal of council members when it comes to reducing or eliminating the amount of money borrowed from the city’s reserves to help balance a budget. Roberson has said he will not vote for the 2012-2013 budget (which takes effect July 1) if taking money from the city’s reserves is recommended to balance that budget.
The report shows that in the past two fiscal years (2009-2010 and 2010-2011) the city’s reserves (general fund) declined after seven years of growing each fiscal year in that seven-year span. During that span, those reserves grew from $4 million to $9.4 million. At the end of the 2010-2011 fiscal year, those reserves were at $7.9 million.
However, not all of that money is available to the city in case of an emergency or for using to help balance the budget. State and federal laws and requirements associated with some grants the city has received prohibit the city from spending some of its reserves.
Of that $7.9 million, the city has access to $5.8 million, according to the report.
The Local Government Commission, which keeps an eye on the fiscal affairs of local governments, recommends a local government have at least 8 percent of its overall general fund (about a month’s worth of revenues) in its reserves (fund balance). The city’s general-fund reserved is about 45 percent of its overall general fund.
Overall, the city’s financial books are in order, Waddell said.
“We issued an unqualified opinion, which means there are no material misstatements in your financial audit report,” Waddell told the council. “There also were no significant deficiencies or findings in your compliance package which relates to your grants, your federal and state grants. So, overall, a clean report, no findings.”

Revenues versus expenses
in past seven fiscal years

FY 2004-2005
Revenues: $10,376,518
Expenses: $11,057,369
Difference: ($680,851)

FY 2005-2006
Revenues: $10,769,375
Expenses: $11,589,621
Difference: ($820,246)

FY 2006-2007
Revenues: $11,749,451
Expenses: $11,934,076
Difference: ($184,625)

FY 2007-2008
Revenues: $11,418,804
Expenses: $13,306,884
Difference: ($1,888,080)

FY 2008-2009
Revenues: $11,860,695
Expenses: $12,304,515
Difference: ($443,820)

FY 2009-2010
Revenues: $11,103,367
Expenses: $11,741,018
Difference: ($637,651)

FY 2010-2011
Revenues: $11,025,550
Expenses: $12,660,834
Difference: ($1,635,284)