During an audit review of Allegan City finances for the fiscal year ending June 30, 2018, Dan Veldhuizen of the CPA firm Siegfried Crandall PC said the city is in good shape and praised the city’s financial team as being better than ever before.
Here are some of the highlights:
The City’s total net position increased by $1,002,829 (3 percent) as a result of this year’s activities.
The net position of the governmental activities increased by $341,601 and the net position of the business-type activities increased by $661,228.
Of the $34,460,286 total net position reported, $3,281,776 (10 percent) is available to be used at the council’s discretion, without constraints established by debt, legislation, or other legal requirements; $27,266,246 represents a net investment in capital assets; and $3,912,264 is restricted for various purposes.
The general fund’s unassigned fund balance at the end of the fiscal year was $1,968,892, which represents 23 percent of expenditures.
“You want to have three to six months set aside, and, at 23 percent of current year expenditures, you’re right at that base,” Velhuizen said. “It would have been higher but a grant monies came in right after the year ended.”
Changes in net position
The city’s total revenues for the current fiscal year were $14,021,784, which is $4,369,080 higher than the prior year. In the current year, nearly 38 percent of the city’s revenues come from charges for services, primarily utility charges, and more than 16 percent come from property taxes. Operating grants represented 35 percent of total revenue in the current year due to substantial one-time grants.
The total cost of the city’s programs, covering a wide range of services, totaled $13,018,955. More than 33 percent of the city’s expenses relate to providing utility services. Public safety and general government expenses account for 13 and 11 percent of the city’s total expenses, respectively.
Budgetary highlights
The city amended its revenue budget to increase total revenues by $227,943, primarily to increase property tax revenue to expected amounts. The city also amended its appropriations during the current year so that budgeted expenditures decreased by $362,873 to reflect changes that occurred over the course of the year. The most significant amendment reduced capital outlay expenditures by $416,721, as project costs were too high in the original budget.
Total revenues were $3,718,297 more than budgeted, primarily due to $2,716,846 of unbudgeted federal grants and $1,006,250 in unbudgeted private contributions related to projects.
Expenditures were $3,809,829 more than the amounts appropriated, as public works and community and economic development costs exceeded appropriations by $3,523,828 and $501,194, respectively. The public works expenses were related to a hazard mitigation project, involving riverbank stabilization, and the community and economic development costs related to a blight elimination project. The revenues and expenditures related to these large projects were not included in the city’s budget since the projects had no net cost to the city.
These variances resulted in a net $91,532 negative budget variance due to a $431,804 decrease in fund balance compared to a budgeted decrease of $340,272.
The sewer fund experienced an increase in net position of $666,975 in the current year, primarily because user fees have been set so the fund is covering its costs. Total net position is $8,450,141 at year-end, of which $1,031,104 is unrestricted.
The water fund experienced a decrease in net position of $5,747 in the current year. User fees have been set so the fund is typically covering its costs; however, additional meters were purchased during the year which caused the decrease. Total net position is $11,296,987 at year-end, of which $1,307,535 is unrestricted.
Major capital asset events during the current fiscal year included the following:
• A building was purchased, for future city offices, for $269,570
• A parking lot was constructed at the riverfront at a cost of $195,167
• Improvements were made to Griswold Auditorium at a cost of $100,293
• Paving at Oakwood Cemetery for $42,200
• Street improvements were made in the amount of $139,726
• Sewer equipment was purchased at a cost of $58,956
• Water tower painting costs of $167,689
• Equipment fund capital additions amounted to $109,336
At the end of the fiscal year, the city had total long-term debt outstanding totalling $16,457,434, a net decrease of $1,312,780 due to principal payments that were made in a timely manner. No new debt was issued during the fiscal year that ended June 30.
The city’s charter authorizes a maximum levy of 17.50 mills for operating purposes. It is currently levying 16.4884 mills.