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City fund balance balloons to $13.2 million

Despite challenges posed by factors such as COVID-19 in recent times, the city of Mount Airy remains in a solid financial position including its surplus, or savings, continuing to grow.

However, the savings gain occurring during the most recent fiscal year of $634,481 — in what officially is known as the city’s available fund balance — was less than half of that recorded for the previous fiscal year.

This finding was presented in an annual audit report for the municipality during a meeting of the Mount Airy Board of Commissioners earlier this month.

It covered the 12-month period ending on June 30, the 2021-2022 fiscal year.

In presenting the report from the independent audit, Kari Dunlap of the Martin, Starnes and Associates accounting firm that has checked the city’s books since 2011, said Mount Airy not only is solidly in the black with its various accounts.

There also were no questionable costs or other issues — known as “findings” — uncovered during the municipal audit, which places Mount Airy in a unique class.

“I think you are in the minority of municipalities by far,” Dunlap of the net effect from accounting methods and procedures employed within city government.

Surplus stands out

The available fund balance of the municipality, aka savings, is defined as money accompanied by no restrictions which may be used for any purpose.

It has been a topic of much interest in recent decades, including times when its has dipped to dangerously low levels and more recently when a sizeable surplus has been maintained.

At the end of the last fiscal year on June 30, the total stood at $13,208, 941, 5% above that of the previous 2020-2021 funding period, $12,574,460.

This involves the available balance for Mount Airy’s general fund covering day-to-expenses of running the city government, which is kept separate from its water-sewer fund. The latter is an enterprise fund supported by user fees.

The available general fund balance had grown by more than $1.5 million during the 2020-2021 fiscal year and by nearly $1.7 million the year before that.

When the last audit report before the most recent one was presented near the end of 2021, Mount Airy officials had warned that significant annual growth in the fund balance of $1 million-plus was due to unusual budgetary factors. That included 13 employee vacancies being frozen for part of the 2020-21 fiscal year.

Unfilled vacancies in certain city government areas such as the Mount Airy Police Department artificially increased the surplus temporarily, but it was expected to be corrected down the road as the personnel situation became more stabilized.

Another factor was the delaying of certain high-dollar expenditures that in turn would burden future budgets.

The public safety category in the general fund municipal budget, covering both police and fire services, consequently decreased by 7% from $5.3 million in the 2019-2020 fiscal year to $4.9 million for the year ending on June 30, 2021.

For the most recent fiscal year ending on June 30, 2022, that category reflected a more-normal situation with public safety spending rising to $5.9 million, not far from where it was during 2019-2020.

Public safety is the single-most-costly portion of the municipal budget that totaled slightly more than $16 million revenues for the year ending in June. That net revenue figure eclipsed total expenses of $14 million, according to the audit presentation.

Property tax proceeds grew by $555,511 during 2021-2022.

Finance director praised

In late 2021, Darren Lewis, then Mount Airy’s interim city manager, had warned observers not to expect another $1.5 million “to the good” in the fund balance due to the unusual factors affecting the audit that year, which proved to be prophetic.

Yet despite Mount Airy’s available fund balance not rising as much as in previous years, Dunlap said it remains well above levels recommended by the Local Government Commission (LGC) in Raleigh.

The LGC, a division of the Department of State Treasurer which provides oversight of North Carolina localities’ finances, recommends that a fund balance be at least 8% of general fund expenditures for a 12-month period.

In Mount Airy’s case, the city government could run on its fund for about 10 months if no tax or other revenues were collected, which Dunlap said was well above the state recommendation.

Newly installed Mayor Jon Cawley was happy about the fact no questionable expenses or other “findings” were unearthed during this year’s audit process.

“In 14 years we’ve never had a ‘finding,’” Cawley said of a period including his total tenure on the city council which began with him being appointment to a North Ward commissioner post in the fall of 2008.

“Way to go, Pam,” he said to Finance Director Pam Stone seated a short distance away. Stone is a longtime city employee and former accountant in the private sector who has played a big role in Mount Airy’s fiscal management for much of that 14-year period in her present position.

Dunlap said it is more common to discover problems with the books of county government units, which are more extensive due to including social services and other complex programs.



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