By RAELYNN RICARTE
News staff writer
February 15, 2006
The City of Hood River’s auditor has recommended that the budget be monitored more closely — and that more revenue be found or services cut.
Terry Smith from the local firm Arens and Associates said the city’s overall cash flow had improved, even with a $1.17 million deficit. In the past few months, the city has enacted cost savings measures in each department and raised fees for planning and ambulance services.
However, Smith said the city had several individual accounts still running deficits — including ambulance transports and municipal court — that were financed by borrowing from other funds.
He believed the city was too reliant upon borrowing against monies banked from system development charges paid by developers. Smith said the city needed to address the problem while that money was still available.
“My concern is that your (inter-fund) borrowing is being financed by construction in Hood River and if there was ever a downturn you wouldn’t have the ability to fund these deficits,” said Smith.
“You either have to find additional resources or you’re going to have to curtail the services you provide to the people of Hood River,” he concluded.
He also said the non-cash balance sheet accounts needed to be reconciled monthly instead of quarterly.
He said errors found in these accounts typically indicated that the revenue from an individual fund’s revenue or expenditure was wrongly stated.
“Detecting the cause of these errors and correcting the problem on a month-to-month basis should provide further assurance revenue and expenditure reports used to monitor funds’ financial position are accurate or at least not significantly misstated,” wrote Smith in a management letter that accompanied his audit report.
The Budget Committee, comprised of city councilors and citizens, took his recommendations to heart. Steve Everroad, finance director, agreed to meet monthly with four members of the committee.
Volunteering to scrutinize the ledgers of each department were Councilors Paul Cummings and Carrie Nelson. Joining them in that endeavor will be citizens John Phillips and Jamie Guth, both with professional financial backgrounds.
Following Smith’s presentation, City Manager Bob Francis presented his plan to reduce the budget deficit. He anticipated that $300,000-$350,000 could be shaved off the outstanding balance each year, beginning on July 1 when the new fiscal year begins. Francis is optimistic that amount of money can be trimmed off the next three annual budgets without cutting services or reducing staffing levels.
“That would certainly be a last resort. But, if things don’t work out with this budget, it is something you’ll certainly have to think about,” he said.
Francis wants to have city administrators bill each department for time spent on its issues. Since the deficit lies in the general fund, he said money is available in dedicated accounts that the law will not allow to be moved. However, staff time can be charged for oversight of those funds and that amount of revenue placed in the general fund.
For example, the city, as a utility provider, can generate about $95,000 per year by charging a franchise fee to its water and sewer accounts.
Francis also wants to refinance the bonded indebtedness at a lower interest rate. And reduce expenses by 5 to 10 percent while increasing revenues by that same percentage. He said the council’s recent decision to triple most planning fees and add another $100 to ambulance transports was already paying off. He was given the go-ahead at the Feb. 13 meeting to add a fire suppression fee of about 50 cents to monthly utility bills. Francis anticipates that a stormwater maintenance fee will follow in the near future.
He was also granted permission from city leaders to investigate the sale of unused municipal properties.
Also on his list of budget reduction measures was better collection of delinquent accounts. And convincing the three public employee unions to sign on to a health care plan that would save $55,000 this year.
“I think that for right now we’re pretty much on track,” said Francis.