By David Meade
During their regular monthly meeting Monday, Williamston Town Council heard the annual audit report covering the period June 30, 2012 – June 30, 2013. Auditor Larry Finney, of Greene, Finney and Horton CPAs told council that the town had received an “Unmodified Opinion” which is the best they can get. In the past the term “Unqualified Opinion” was used. The Town’s General Fund revenues for 2013 were $2,470,000, while General Fund expenditures were $2,535,000, resulting in a $65,000 deficit.
The shortfall was covered by the town’s fund balance, a trend seen for the previous two years.
According to Finney, highlights in the presentation for each of the town’s three funds were:
The General Fund balance decreased by $53,000.
The Water Fund is in good shape.
The Sewer Fund has a small deficit (in unrestricted net position.)
In the details of the presentation, Finney reported that the town’s General Fund balance decreased from $1,462,000 in June of 2012 to $1,409,000 a year later.
Of that, $1,318,000 is designated as the unassigned fund balance while $91,000 is set aside for the cemetery fund and victim’s assistance.
According to Finney, the unassigned amount is 52% of the actual expenditures for 2013, and 48% of the budgeted expenditures for 2014. Finney said the town is well above the GFOA recommended minimum of 16.7 percent, or two months of expenditures, to be kept in a reserve fund.
Finney explained that a healthy fund balance benefits the town in a number of ways including helping with cash flow in the second half of the year; being available for significant emergencies and unanticipated expenditures; and allowing flexibility for discretionary funding needs. He said it also results in better interest rates should the town borrow funds.
It also helps the town cover potential state funding shortfalls should there be budget cuts or a change in legislation.
According to Finney, “it is extremely important in uncertain economic times.”
General Fund Revenues
The Town’s General Fund revenues for 2013 were $2,470,000, which reflects a decrease of $103,000 from 2012. The decrease is the result of a $42,000 reduction in police fines and a $59,900 decrease in grant revenue compared to the previous year.
Hospitality tax revenues, sanitation collections and grant income were 11.1 percent more than budgeted. Hospitality tax revenues were $54,000 more than budgeted, sanitation collections were $56,000 more than budgeted and grant income amounted to $69,000 more than budgeted.
Town officials said the difference is a reflection of budgeting practices of the last administration.
According to the audit, the town received $946,000 from property taxes; $330,000 from licenses and permits; $317,000 in franchise fees; $207,000 in sanitation fees; $189,000 in hospitality taxes and $481,000 in other revenues.
General Fund Expenditures
General Fund expenditures for the Town were $2,535,000 for 2013, down slightly from the previous two years.
2013 Expenditures included $1,180,000 for public safety; $483,000 for general government; $411,000 for public works; $283,000 for recreation and $178,000 in capital outlay.
Total expenditures were down by $189,000 (6.9 percent). The decrease included a reduction in general government of $150,000 and a decrease in capital outlay of $91,000. There was an increase of $45,000 in parks/recreation expenditures which auditors said were paid from the hospitality tax fund.
General government expenditures were $81,100 (3.2 percent) overbudget. Police Department expenditures were over budget by $72,156, primarily because of overtime requirements which were discovered and corrected about midway into the budget year. Capital outlays by the town were $56,359 less than had been budgeted.
While Finney said the town’s water fund was in good shape, the audit showed Water Fund revenues were down and expenses were up.
Revenues for 2013 were $51,000 less than 2012 at $962,000. Recurring water charges (regular customer billings) were down by $48,000. The decrease was due to less water being used by customers, probably due to the amount of rain experienced during the year, town officials said.
Expenses for the fund were up by $58,000 to $884,000, up from $826,000 for 2012.
The fund showed net income of $77,000 for 2013, compared to $186,000 for 2012 resulting in a $2,452,000 water fund balance.
Sewer Fund revenues were $1,070,000 for 2013, a decrease of $43,000 from 2012 revenues of $1,113,000. Operating expenses were down $87,000 to $816,000, compared to $903,000 for 2012.
The fund showed operating income of $253,000 compared to $209,000 for 2012.
The fund had non-operating income of $556,000 for 2013, reflecting the town receiving grant funds for the Waste Water Treatment Plant (WWTP) upgrade.
The same line item showed a nonoperating loss of $63,000 for 2012 due to expenses paid out on the WWTO project before the grant funds were received.
Total grant revenues for the fund amounted to $709,000.
As a result of finishing the WWTP project and the related grant/loan, the sewer fund saw a net increase of $810,000. As a result of paying the related expenses for the project, the town now has a sewer fund deficit of only $33,000 (a decrease of $501,000 in the deficit from last year).
Other items of note; the town’s total outstanding long term debt obligations as of June, 2013 were $3,668,000, a decrease of $187,000 from the previous year.
A Refunding Revenue bond taken out in 2002 was paid off during the year. (The bond reflected a refinance on the Outfall line and other items which resulted in a lower interest rate and savings for the town. The loan was paid off early by the previous administration and the town is no longer paying the $25,800 monthly payment.)
The town is now paying on two sewer bonds for upgrades to the WWTP. The total bond amount is $3,638,000. Monthly payments of $3660 and $9850 will be made on the loan until 2051.
Total debt service payments for 2014 on the town’s outstanding debt is expected to be $162,000.
The town paid compensated absences of $30,000 during 2013.
The audit report had two recomendations made to town officials in the management letter.
According to Finney, recommendations include bringing town ordinances, policies and job descriptions into agreement, specifically in the areas of budgeting and purchasing.
It also recommended meeting collateral requirements for bank balances, or having accounts within insured amounts. Finney said that had already been corrected.
Mayor Mack Durham said the audit report was, “good news for the town.
“It was a very positive audit and shows the operations continue to improve,” he said. “Williamston has a very bright future ahead.”