Audit confirms suspicions
Staff writer
Few deficiencies were noted in Marion’s annual independent audit Monday night.
For the second year in a row, auditor Scot Loyd faulted the city for undocumented and apparently unreviewed journal entries.
Perhaps his biggest finding, however, was a recommendation tacitly suggesting that the Record was right when it reported 16 months ago that the city was losing out on interest revenue by keeping all its money in checking accounts.
When the Record story was published, current council members pooh-poohed it, citing a previous audit by Loyd that they said showed the city was making plenty of interest on its checking accounts.
Monday night, however, Loyd’s latest report said: “The city currently has all cash sitting in checking accounts. We recommend that the city keep six months cash in checking and move the rest of CDs or some other higher interest rate account in order to maximize earnings on idle funds.”
That’s exactly what Marion County, Hillsboro, and many other local governments do — and what Marion used to do.
More than a decade ago, the city’s cash reserves of $2.1 million were invested in $1.4 million in certificates of deposit — half at Central National and one-quarter each at Marion National and Tampa State.
An additional $0.7 million was in interest-bearing savings accounts, two-thirds of them at Marion National.
Only $0.5 million was kept in checking accounts at Central National.
For the past 15 years, however, the city has had no CDs and no savings accounts. Instead it keeps nearly all of its approximately $2.5 million in a single checking account at Central National.
The change perhaps coincidentally occurred around the time that Todd Heitschmidt, then president of Central National in Marion, became a council member.
Putting more money in savings would reduce pressure on property taxes, Loyd told council members in an oral presentation of his report Monday.
Although he did not directly say so, he also lent support to claims by former council members Ruth Herbel and Jerry Kline and resident Ruth Lange that padding the budget with more money than needed would fail to create the type of reserves Loyd always argues governments need.
When the city’s budget for 2024 was debated, a majority of council members parroted Loyd’s earlier advice about padding the budget to build reserves.
Prominent citizens like Jeremiah Lange and Roger Hannaford were brought in to support the idea.
But Herbel, Klein, and Ruth Lange warned that if extra money were put into the budget, it simply would be spent.
Loyd’s report Monday night seemed to bear out that warning.
Leftover money is measured each year in the form of what’s called unencumbered cash balances — money that isn’t being set aside for future bills.
Despite the extra appropriations in the city’s budget for 2024, the city ended the year with more than half a million dollars — $553,837 — less in its unencumbered cash balance than it had in that category at the start of the year.
Among significant changes noted in Loyd’s report for 2024 were:
- A 216% increase in personnel spending for cemetery maintenance and a 113% increase in cemetery commodities.
- A 161% increase in museum spending.
- A 233% increase in capital outlays and a 19% increase in commodities for streets and alleys while wages and personnel costs in that area increased only 0.7%.
- A total of $55,487 spent on “industrial development” even though the city no longer employs an economic development director whose salary used to come from that line item.
- A 57% increase in airport funding even before a crack-sealing project was undertaken there.
- A 30% increase, to $95,479, in recreation funding even though the city turned its recreation program over to the school district, which imposes a separate property tax to support recreation.
- A 9% increase in library funding.
- A 43% decrease in capital improvements.
One number Loyd stressed was that the city’s utility fund operated at a net loss of $505,335 after transferring $430,000 to other funds.
Last year, the utility fund transferred only $230,000 and recorded a net profit of $431,654.
Loyd suggested that this might indicate it was time to increase city electric rates, but the city’s electric operation remains a moneymaker.
The city’s total revenue for electricity was $3.6 million last year while its total expenses for electricity were just $2.5 million, according to his figures.
Water, on the other hand, brought it $764,342 while it cost $908,702. Sewer brought in $309,959 while it cost $174,025. Refuse brought in $174,965 while it cost $172,899.
Loyd’s audit also acknowledges for the first time that the city’s finances could be impacted by pending lawsuits, the awards or settlements of which could exceed the amount for which the city is insured.
It states that since no awards or settlements have yet been made in the suits, including four brought over the disavowed raid Aug. 13, 2023, on the Record newspaper and two homes, no money is being set aside to cover damages the city might be obliged to pay.