Sad stories of small business bankruptcies and cash running out are all too common from the pandemic, but Mount Airy’s financial situation has actually improved over the past two years.
This is evidenced by the most recent independent audit of city books required annually, which shows that if it were a corporation, then the municipality would be consistent in black, not red.
However, city officials caution that monitors shouldn’t read too much into the bottom line, saying it reflects unusual factors and delayed road expenditures that will burden future budgets.
The latest audit, for the 2020-21 fiscal year that ended June 30, shows a key measure of Mount Airy’s finances – its available funds balance – aka its savings or surplus – significantly increased from the previous year.
It has risen more than $1.5 million, according to an audit presentation at a meeting of the Board of Commissioners in Mount Airy last week.
This comes on top of a similar disclosure for the previous fiscal year, 2019-20, when the fund’s available balance grew by nearly $1.7 million. This surplus fund is defined as funds not accompanied by any restrictions, which can be used for any purpose.
As of the end of June, it was nearly $12.6 million, up from $11 million in the previous fiscal year.
To put this in perspective, the state regulatory agency, the local government commission, recommends that the city maintain a surplus of 8% of its annual budget, covering what is needed to run things for about a month without generating any revenue.
In the case of Mount Airy, its surplus would be enough to sustain the municipality’s expenses for 12.5 months, based on 2020-21 general fund expenditures of just over $11.7 million.
“So the city is doing well in this area,” summed up Kelly Gooderham of Martin Starnes and Associates, the accounting firm of Hickory, which has been reviewing the city’s financial records since 2011.
Not your normal times
City councilors seemed pleased with the results given the coronavirus crisis, although Mayor Ron Neiland noted that the good show is somewhat artificial in nature.
“There are some factors behind these numbers – as we know, COVID and we are short on people and delaying expenditures we have to look at it” in the future, Nieland explained, also acknowledging the “good health report” provided.
He was referring to unfilled vacancies, for example in the Mount Airy Police Department, which correspond to savings that occur from salary and benefits but pose issues with the available workforce.
Thus, total costs for the public safety category in the municipal budget, which covers police and fire services, decreased 7% from $5.3 million in the 2019-20 fiscal year to $4.9 million for the year ended June 30.
Total expenses for 2020-2021 decreased by more than $575,000, or 5%, compared to the previous year, while revenue grew by $335,000, or 2%.
The revenue picture was buoyed by a property tax return of $149,000, or 2% a ton, which Gooderham said was due to increased property values. Among other audit highlights, sales tax revenue and revenue from ABC’s earnings also grew.
In response to a question from Commissioner Tom Koch, it was revealed that federal ARP funds allocated to the city government earlier this year were not included in the review period.
Meanwhile, the Mount Airy sewer operation—a user-subsidized institutional fund that is maintained separately from its general fund—also enjoyed a healthy year.
There was an upward change in its net position of $2.6 million over the 2020-2021 period, audit numbers show, taking into account factors such as cash flow from operations and required debt service.
The city’s chief financial officer, Pam Stone, said the sewage situation was enhanced by Mount Airy providing all of Dobson’s water needs for three months during the year.
Commenting on the audit’s overall results, interim city manager Darren Lewis noted that while the municipality came out worth $1.5 million in goodwill over the past fiscal year despite all the challenges, more is on the horizon.
He indicated expenditures of $642,000 for unfinished items that had been paid for in carrying forward and freezing 13 vacant posts for part of the budget period.
“Again, it’s been a great year,” Lewis added. “But it won’t happen this year – we won’t have $1.5 million for good.”
Lewis stated that approximately $1.3 million of the available fund balance had already been committed in the middle of the 2021-22 fiscal year.
It was earmarked for the costs of a Spencer redevelopment, downtown projects and a new truck at a cost of $185,000. Surry Arts Council is also set aside to receive $400,000 for a new building. Lewis stated that required vehicles such as fire trucks and stock dumpers should also be funded in the near future.
“Is it a clean audit and are there any recommendations?” asked Commissioner Joe Zalesek.
“It was a clean audit,” Gooderham replied. “Everything was good.” The review presenter praised the work of Stone, the city’s chief financial officer, for being accurate and direct.
Gooderham said of the review by Martin Starns and Associates no results were found for questionable costs.
“We have issued a clean, unmodified opinion, which is the best opinion we can provide.”