Sad stories of small businesses being bankrupted and towns depleted of cash are all too common from the pandemic, but the financial position for the city of Mount Airy actually has improved over the past two years.
That is evidenced by the most recent independent audit of the city’s books which is required annually, showing that if it were a corporation the municipality would be firmly in the black and not the red.
However, city officials caution that observers shouldn’t read too much into the bottom line, saying it reflects unusual factors and the delaying of expenditures that have been kicked down the road which will burden future budgets.
The latest audit, for the 2020-21 fiscal year that ended on June 30, shows a key barometer of Mount Airy’s finances — the available fund balance — aka its savings or surplus — increasingly significantly from the previous year.
It rose by more than $1.5 million, according to an audit presentation at a meeting of the Mount Airy Board of Commissioners last week.
This is on top of a similar disclosure from the previous, 2019-20 fiscal year, when the available fund balance grew by nearly $1.7 million. That surplus fund is defined as money that is accompanied by no restrictions, which may be used for any purpose.
As of the end of June, it stood at roughly $12.6 million, up from $11 million the fiscal year before.
Putting this into perspective, a state regulatory agency, the Local Government Commission, recommends that a city maintain a surplus representing 8% of its annual budget, covering what would be required to run things for about one month with no revenues generated.
In Mount Airy’s case, its surplus would be sufficient to carry the municipality for 12.5 months, based on its 2020-21 general fund expenditures of just over $11.7 million.
“So the city is doing pretty well in this area,” summed-up Kelly Gooderham of the Martin Starnes and Associates accounting firm of Hickory, which has been auditing city financial records since 2011.
Not your normal times
City council members seemed pleased by such results given the coronavirus crisis, though Mayor Ron Niland suggested that the good showing is somewhat artificial in nature.
“There are some underlying factors to those numbers — as we know, the COVID and us being short on people and delaying expenditures we’re going to have to look at” down the road, Niland explained, while also acknowledging the “good healthy report” presented.
He was referring to vacancies that have gone unfilled, for example in the Mount Airy Police Department, corresponding with savings occurring from salaries and benefits but posing available manpower issues.
Total costs of the public safety category in the municipal budget, covering both police and fire services, consequently decreased by 7% from $5.3 million in the 2019-20 fiscal year to $4.9 million for the year ending on June 30.
Overall expenditures for 2020-21 fell by more than $575,000, or 5%, compared to the year before, while revenues grew by $335,000, or 2%.
The revenue picture was aided by property tax proceeds rising by $149,000, or 2%t, which Gooderham said was due to increased values of property. Among other audit highlights, sales tax proceeds and revenues from ABC profits also grew.
In response to a question from Commissioner Tom Koch, it was disclosed that no federal American Rescue Plan (ARP) Act funds designated for the city government earlier this year were included in the audit period.
Meanwhile, Mount Airy’s water-sewer operation — an enterprise fund supported by user fees which is maintained separately from its general fund — additionally enjoyed a healthy year.
There was an upward change in its net position of $2.6 million during 2020-21, audit figures show, weighing such factors as cash flow from operations and the required servicing of debts.
City Finance Director Pam Stone said the water-sewer situation was boosted by Mount Airy supplying all of Dobson’s water needs for a three-month period during the year.
In commenting on the overall results of the audit, Interim City Manager Darren Lewis pointed out that while the municipality came out $1.5 million to the good during the last fiscal year despite all the challenges, more loom on the horizon.
He cited $642,000 in expenditures for items not completed and paid for being rolled over and the freezing of 13 employee vacancies for part of the budget period.
“Once again, it was still a great year,” Lewis added. “But that’s not going to happen this year — we’re not going to have $1.5 million to the good.”
Lewis mentioned that about $1.3 million already has been committed from the available fund balance just midway through the 2021-22 fiscal year.
It has been allocated for Spencer’s redevelopment costs, downtown projects and a new grapple truck costing $185,000. The Surry Arts Council also was designated to receive $400,000 for a new building. Lewis mentioned that needed vehicles such as fire, dump and leaf trucks also must be funded in the near future.
“Is it a clean audit and are there any recommendations?” Commissioner Joe Zalescik asked.
“It was a clean audit,” Gooderham responded. “Everything was good.” The audit presenter praised the work of Stone, the city finance director, in being thorough and straightforward.
There were no findings of questionable costs, Gooderham said of the audit by Martin Starnes and Associates.
“We issued a clean, unmodified opinion, which is the best opinion we can provide.”