March has been a busy month at city hall for the finance team as we finished closing the books for 2012 and completed all the work involved with having the books audited.
An annual audit is required of local governments by the Colorado Revised Statutes. The goal of this requirement is to provide assurance for citizens, legislators and others that government funds are accounted for properly and that government organizations are in compliance with applicable laws and regulations.
The annual audit is completed by an independent accounting firm hired by the City. They were on site all last week. The auditors review agreements, read minutes from meetings, and conduct a variety of detail and analytical testing procedures on the City’s financial records in order to express their opinion as to whether the City’s financial statements and supplemental information are essentially accurate.
Within a few weeks, the auditor’s final report will be ready and the 2012 financial statements will be presented to the city council as one of the agenda items at a regular council meeting. A preliminary report will be discussed at the next council work session.
The City maintains separate sets of books for its five different areas of operations. The general fund represents basic government services paid by tax revenue. The water and wastewater enterprise fund is treated as a business that must generate sufficient revenue to pay the costs of operations and capital needs. The SteamPlant is also accounted for as a business, although it is currently disqualified as an enterprise fund according to TABOR because of the level of general fund subsidy it receives. Finally, the Conservation Trust Fund receives state lottery money each quarter that can only be used for parks, open space and recreational facilities. The audited financial statements show information about each fund separately and combined for a government-wide view.
Similar to other organizations with different operating divisions, the financial performance of each fund can vary significantly each year.
General fund reserves improved during 2012. The financial results for the general fund was better than expected primarily due a delay in making a major capital purchase. Positive sales tax revenue combined with costs savings due to staff vacancies contributed to the surplus for the year.
As planned during the budget process, the finances of the City’s enterprise funds were stabilized during 2012 as a result of recent rate increases. Debt for both water and wastewater capital projects was secured in 2011 and partially expended during 2012. An uptick in development activity at the end of the year and the commercial tap fees paid by the US Forest Service led to a better than expected year for the water system. The current revenue level is sufficient for operations; however, major capital expenditures and the burden of debt payments for capital projects combined with the relatively low level of development activity will continue to put a strain on the water and wastewater enterprise fund.
The SteamPlant Event Center generated $214,000 in revenue and was the location for a total of 582 events during 2012. Approximately half of the total revenue was generated from room rentals with the balance coming from beverage, food and ticket sales along with support from Friends of the SteamPlant.
The City added the lottery proceeds received by the Conservation Trust Fund in 2012 to reserves for future recreation projects.
The full financial report for 2012 will be available at city hall and on the website once it has been presented by the auditors to city council next month.