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Paynesville Press - May 17, 2006

Audit reports city coffers still in good shape

By Michael Jacobson

The city of Paynesville continues to have a sound financial footing, the city council was told last week during the presentation of its annual audit. The city's assets now total $18 million, including combined fund balances totalling $6.5 million.

"What you're seeing is the city really is in a pretty good financial situation," auditor Loren Viere of Kern DeWenter Viere, Ltd., told the council last week.

In 2005, the city budgeted for revenues of $1,507,000 and expenses of $1,255,000, expecting revenues to exceed expenditures by $252,000. They actually received $1,519,000 in revenue and spent $1,223,000, yielding a excess, or profit, of $296,000.

The city's general fund balance, as of Dec. 31, 2005, is $1.9 million, up from $1.6 million on Dec. 31, 2004.

This is the highest balance for the city's general fund since 2002, when it reached $1.95 million. (The city absorbed state aid cuts in both 2003 and 2004.)

In addition to its fund reserves, the city's capital assets include: $6.3 million in infrastructure; $3.0 million in its sewer and water system; $1.4 million in its wastewater system; and $1.3 million in land. (Not all its capital assets are debt free.)

In 2005, the city's net assets included $9.5 million in net capital assets, $6.5 million in unrestricted funds, and $2.0 for debt service, totalling $18 million in net assets.

The city divides its operation into a number of government funds - ranging from the general fund to various capital improvement and debt service funds - and into proprietary funds, which are most business-like in nature. Proprietary funds include the water, sewer, and municipal liquor store.

The water fund yielded income of $124,700 in 2005, while the liquor store, based on sales of $718,500, yielded a profit of $15,000. The sewer fund showed a loss of $111,000 but this is really unfunded depreciation, since the depreciation on the sewer system was $316,000 in 2005.

City general fund revenues in 2005 came from: intergovernmental aid (42.9 percent); taxes (28.2 percent); charges for services (11.7 percent); licenses and permits (11.7 percent); and miscellaneous (5.5 percent).

Its expenditures in 2005 were: public safety (40.4 percent); general government (28.8 percent); public works, including the airport (20.3 percent); and culture and recreation (10.5 percent).

While the numbers for the city were positive during its annual audit, the auditor did issue a few warnings to the city. Once again, the auditor noted a lack a segregation of accounting duties; this is due to the relatively small city staff, which the auditors acknowledged.

The auditor also noted that the city is still issuing administrative fines, which the state auditor has ruled against, but the city is continuing to do, believing it is legal when enforcing city ordinances. And the auditor noted the city provided food for an employee luncheon.

The auditor also urged the city to adopt an official deposit and investment policy, even though the city follows all statutory requirements for its investments and reserves. The city actually might have such a policy, which they just have not shown to the auditors.

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