Portola City audits well; financial cushion shrinks
At the Jan. 26 regular meeting, the Portola City Council heard a report of the 2009-10 audit and found it good.
Gallina Certified Public Accountants have been auditing the city’s affairs for many years, pointing out flaws and potential flaws along the way. Finally, they are left with little to say except, “an unqualified opinion, as in prior years.”
For the past two years, city Finance Officer Susan Scarlett has presented the report rather than the Gallina representative, who stayed home in Sacramento. Scarlett pointed out some highlights in the management’s analysis. Top of the list: assets exceeded liabilities as of June 30, 2010, by $17,350,658. Of this, $4.5 million may be used to meet the city’s ongoing obligations.
The unreserved fund balance for the General Fund was $3,317,851 or 187 percent of total general fund expenditures. That’s healthy, said Scarlett, but it needs to be put into perspective. Two years ago, the fund level was 333 percent of expenditures and last year it was 264 percent.
The cushion is shrinking. And the $300,000 rainy-day fund instituted eight or nine years ago by the council, asked council member John Larrieu? Still there, Scarlett told him.
The city has been able to weather the recent financial storms that have brought much bigger cities to their knees, largely due to the fortuitous 2005 sale of a property called Woodbridge.
As the state of California struggled and delayed budget approvals each year, Portola, along with other cities, has been reluctant to begin projects without knowing how much of the governmental pie the state was going to let it keep. During the uncertainty, the city spent Woodbridge money earmarked for specific uses, like the Gulling Street improvements along City Park and the new fire truck.
Thus, the city was able to continue progress during economic down times. The surplus has remained strong, although not intact, as the city has trimmed the budget and refrained from taking on new commitments. Of four goals central to the city’s financial planning, the city concentrated on one: sustaining the level and quality of services currently being provided to residents.
“The city has been diligent in remaining as debt-free as possible. We have not tried to sell (out) our children’s children. We do have one water loan for $1 million that’s not paid until 2037,” Scarlett told the council and residents in attendance, “as well as two small loans in the water fund — $126,00 and $23,000, finished in 2017 — and one sewer loan for $211,000 that will be finished in 2018.”
The water loan referred to was for water meters.
For the current budget in operation, the City Council directed city staff to prepare cost estimates for continuing to improve the aesthetics of the city, to prepare the city for eventual conversion to “green” building and maintenance practices and solar energy, and to update salaries and benefits to city employees.
Scarlett brought the council into the current fiscal year with a report of the financial situation to date: the city has received 45 percent of expected revenues and paid out 55 percent of budgeted expenses, some of which, Scarlett pointed out, are paid for the entire year, like insurances.
With $2.6 million in cash, Scarlett said, “We are in good shape.”
Enterprise funds are only at 42 – 49 percent of expected revenues so far this year and the water fund has exceeded its budget by $200,000, primarily due to water line repairs. The General Fund has been covering the shortfall.
Planning has already begun for the new budget to take effect in July 2011, and it will come before the council several times in the next few months.