New audit reveals a city deficit

HARTINGTON — A new city audit report has revealed some big financial concerns for city government. The Council hired AMGL CPAs

The Council hired AMGL CPAs and Advisors of Grand Island in December as its new city auditor to replace long-time auditor Mike Pommer.

The firm presented a 65-page report at last week's City Council meetiing. The report looked at the city’s financial history and past accounting practices and gave recommendations for several changes and updates.

The firm's newly completed audit shows at the close of the 2020 budget year that the assets of the city exceeded liabilities by $2,454,796. However, 37 percent of the city's assets are comprised of land, buildings, equipment and infrastructure that cannot be liquidated and used to pay expenses.

The audit also shows that in that same time frame, the city had a deficit of $504,495 in its unassigned General Fund. "Effectively you guys are upside down about $504,000," City Auditor Kyle Overturf told the Council. "That is something you will need to correct."

Overturf said the imbalance is not new, but rather is something that has been going on for at least the past 12 years, and maybe longer. The city did have three major

The city did have three major expenditures last year that added to the deficit, the audit shows. The city spent $46,356 in street repairs; $41,127 on an ambulance cot; $29,500 on paving of the golf course parking lot and $21,981 for new playground equipment.

The report also showed a deficit of $455,106 in the city's unrestricted net position. This is a calculation of all of the city's assets and liabilities with the difference between the two reported as the city's net position.

Some of this deficit can be whittled down quickly by moving funds from seldom-used accounts and into the General Fund, Overturf said.

It will take time to totally eliminate the deficit, though, he said.

The city is also bringing in more funds by the recent increase in water, sewer and garbage rates. A recently enacted halfcent increase in the city sales tax is also expected to generate new revenue

Tbe audit also showed, despite recent increases in some city rates, the city is still spending more on these services then they are taking in.

"The water, sewer and trash all need to be able to support themselves," Overturf said. "You need to look at these as more like businesses."

Overturf also noted that his firm works with 62 other communities around the state. They use this information and information from the state to establish benchmarks so the various communities can see how they compare with other likesized communities in the state.

"Your water department is showing a deficit right now. Your fees here are quite a bit lower than other area communities," Overturf said.

The Auditor also noted that ideally, a community would have five months set aside for cash reserves. That equates to about $540,000.

"Instead of a cash reserve, you have a $500,000 deficit right now," he said. "So we are talking about having to make a million dollar swing."

After hearing the report, Mayor Mark Becker said the city "needs a plan to build up the general fund over the next five-eight years."

"We didn't get here over night. We aren't going to fix it over night," he said.

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