2005 Audit Comments

The City received the 2005 Audit in June of this year; two months later than normal. There were some interesting comments along with the status of the General Fund Year-End Balance. For perspective, the Balance represents our general fund savings account.

Here are the balances for 2000 through 2005: 2000-$17,774,778; 2001-$20,835,264; 2002-$20,222,105; 2003-$11,719,708; 2004-$8,418,836; 2005-$11,900,742. During 2005 many comments were made by us about the $12.4 million dollar deficit spending that occurred in 2003 and 2004.

We initially knew that city hall wages and personnel had bloated by thirty positions after Phil Nelson was hired as City Manager, but land speculation was the major single reason.

During those years, under Nelson’s and the Mayor’s leadership, over $5,999,000 was spent purchasing land and buildings north of the recreation center and Webster Lake. The land remains vacant today but big plans are in the hopper.

The Auditor also condemned the City Staff for co-mingling Federal grant money with the General Fund’s money in the niceness of terms.

“During our audit, we noted that the City does not track federal grant activity in a central series of accounts. We recommend that the City establish general ledger accounts specific to federal grants in order to better monitor such activity.”

On another subject the Auditor noted that the capitalization of the sewage treatment plant was not in accordance with acceptable procedures. Their advice was, “The City should analyze the plant project and capitalize the different systems separately, so that the various useful lives can be defined. For example, the heating and air conditioning system and certain mechanical systems used in the actual treatment process would have shorter lives than the building itself.”

Opinion: The fact that the Auditor pointed out these two deficiencies is indicative of a bigger problem in the City’s fiscal management and procedures.

A third comment by the Auditors concerning the condition of our streets will be addressed in the following posting.