A report by accountant Michelle Drew, of financial consulting service BDO USA, gave Kenai a good evaluation for its handling of municipal finance. Drew, who conducted an audit of the city’s finances for the fiscal year ending June 30, 2014, said that her company’s examination of its expenses and revenues discovered “no big scary monsters.”
The report, presented to the city council on Wednesday, valued the city’s assets near $45.8 million, 93 percent of which were in cash or investments. Its liabilities were near $2.6 million, and its total equity — “the difference between what you have and what you owe,” Drew said — was $43 million.
Analyzing the city’s sources of revenue, Drew said that the Airport Land Sales Permanent Fund was “the big winner,” contributing “just under two million dollars to the bottom line.” This fund is made of invested money earned from the sale of airport land. As a permanent fund, the city is unable to use the fund’s principal, but can spend the earnings it produces through interest and investment returns.
“At year end, it had a little over $24 million in it,” said city finance director Terry Eubank, of the Airport Land Sales Permanent Fund. “And with the stock market and things doing as well as they’ve been doing lately, it had significant investment earnings this year.”
Drew said that in total, the city’s revenue, which it had originally budgeted at $14.5 million, came to $14.2 million. The three biggest revenue contributors were the general sales tax, fish tax, and ambulance fees.
“On the expenditure side … with limited exception, almost every line item, and certainly every department, came in under budget,” Drew said. “The city’s final budget anticipated spending $15.4 million, and you actually spent, at the end of the year, $14.1 (million).”
City manager Rick Koch asked Drew to clarify the gap between the budgeted and actual expenditures.
“I don’t want the council to be left with the impression that we ended up leaving a pile of a million dollars sitting on the table with our expenses,” Koch said. At his request, Drew confirmed that the numbers she presented did not show the lapse that the city builds into its annual budget. According to Eubank, the city plans that each department will spend “about 95 percent” of their given funds, and so the gap between actual and expected spending was no surprise.
Drew also reported that she received full cooperation from all city staff and recommended no changes in accounting policy. After Drew’s report, council member Rob Molloy commended Eubank for the good results.
In addition to hearing the audit report, the city council approved an upgrade to the municipal park and passed two resolutions and five ordinances, including two appropriations directed toward the airport for airfield marking, taxiway, and tie-down rehabilitation, an award for design of taxiways and tie-downs to engineering company Wince Corthell Bryson, an authorization for airport vending machines, the adoption of Alaska state plumbing codes, appropriation of funds in excess of the budgeted amount from the Personal Use Fisheries fund to other areas of the city budget, and an amendment to the city’s rules for vacating unused right-of-ways on land to be developed.
Reach Ben Boettger at ben.boettger@peninsulaclarion.com.
