An audit of the city's finances has revealed that the city's utilities and recreation funds are almost $3.2 million over budget.
According to the audit report for the city's fiscal 1989 budget, the city's utility and recreational enterprise funds had overdrafts of $3,153,630 - figures that reflect a growing concern with certain departments losing money, City Recorder Richard Manning said.More than $2.7 million of those overdrafts came from the city's sewer fund. "It's a stinky problem," City Councilman Matt Packard joked, but Manning said the council isn't being flippant while addressing such issues and knows the consequences of having the overdrafts.
"Over time, we've been concerned that the sewer department isn't pulling its weight," Manning said.
Overall, city utilities had a positive fund balance for 1989 after service and user charges for the city utilities garnered more than $8.5 million, Manning said.
Enterprise fund revenues (such as those from utilities) increased by more than $600,000, and the city turned an $880,400 profit in that area despite overbudgeting.
However, those revenues are far less than originally budgeted (the utilities made $2.7 million in 1988), Manning said. Because utilities are the city's major revenue source, those revenues are disappointing and disturbing, he said.
Adding to that revenue decrease is a $130,831 recreational fund debt - most of that incurred by the city swimming pool. City officials are less concerned with the pool operating in the red because residents wanted the pool built, Manning said.
Power and fuel purchases increased to a little more than $2.3 million (up more than $800,000 from 1988). The council is concerned by those increases, Manning said.
In addition to the overdrafts, the city owes $19,458,171 for debt service on bonds, notes and contracts payable, according to the report. City officials see that as a positive sign, because it indicates the city has made a $911,364 dent in that area over the past year.
However, if the interest on those bonds keeps increasing, the city could still owe $37 million on the bonds by 2005.
Outstanding bonds include $120,000 for construction of the city swimming pool and $12 million for power plant improvements.
General fund expenditures for the year were $3,635,302 - up almost $300,000 from last year. But those expenses were offset by $3,658,044 in revenues - an increase of more than $1.3 million - which leaves the general fund operating in the black and allows the city to bite into the bond debt, Manning said.
One area that could turn out to be less of a concern than originally thought is impending litigation, according to the audit by accountant J. Niel Strong. "The city is facing lawsuits involving a claim for personal injuries suffered by a juvenile while in the custody of the police department, and a claim by neighboring property owners for improper actions by the city in rezoning property.
"In the opinion of the city's legal counsel, the city will not be liable beyond the deductible amount of its insurance contract."