City Finance Director Dan Buffalo presented the report, which can be viewed below, in a special workshop preceding the regular meeting on Tuesday evening.
According to Buffalo's report, as of June 30 the city has $40.2 million in assets and $19.2 million in liabilities, for a total of $21 million in net assets. He said that total includes all land held by the city and its water and sewer enterprises.
Buffalo said the city has $11.5 million in unrestricted assets, which he said are available to meet ongoing expenses and commitments.
At the end of the 2010-11 fiscal year, there was a $204,684 decrease in net assets, while at the same time the city had a general fund operating surplus of $42,317 thanks to higher-than-expected revenues and cost-cutting measures. Buffalo said the asset decreases could be partially attributed to asset depreciation.
The city and its redevelopment agency have fund balances totaling $6.85 million, including $4.42 million in the general fund, $709,612 in the redevelopment agency and $597,150 in the redevelopment agency's low and moderate income housing set-aside, Buffalo reported.
He said the city's water and sewer enterprise funds reported decreases in net assets, with water down by approximately $4,875 and sewer down by $233,176.
The general fund reserve totals $2.39 million, which is 58.8 percent of operations. “It's a fairly health reserve,” said Buffalo.
A chart of general fund revenue and expense trends between 2004-05 and 2010-11, which can be found on page 17 of the report below, showed that both the city's revenues and expenses peaked in 2007-08, and in three of those seven years, expenses surpassed revenues.
One area of concern, according to Buffalo's report, is the city's water and sewer services. Current revenue streams aren't enough to meet expenses, and are experiencing hardship “in a way that is unsustainable,” he said.
Buffalo said $1.6 million, the “lion's share” of the general fund in 2010-11 budget, was spent on public safety.
Taxes and property tax were down slightly in the past fiscal year, with general revenues up slightly, Buffalo said.
If the California Supreme Court rules against redevelopment, Buffalo said the city can easily make the required payment – previously estimated at more than $300,000 – to the state from redevelopment funds, required as the result of legislation passed over the summer.
“We're facing uncertain fiscal times ahead,” he said, but added that the city is in a somewhat stable position.
Moving forward, “We have to plan prudently and accordingly,” said Buffalo.
Buffalo said that, according to best financial practices which recommend switching auditors every three to five years, the city has chosen a new auditor, JJACPA of Pleasanton.
He said nine firms – including a Kelseyville company – responded to the city's request for a new auditor. Four were interviewed and JJACPA, which was priced competitively, was chosen.
The company will begin its field work for a new audit in December, with new financial statements scheduled to be presented to the council in January 2012, Buffalo said.
E-mail Elizabeth Larson at
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