Auditing firm

OKs city's reports

Real issue is whether PUC

and city should continue filing

separate reports

By RON LARSEN

Journal Staff Writer

NEW ULM -- The City of New Ulm and the Public Utilities Commission received their auditing firm's stamp of approval on their 2001 financial reports Tuesday.

In fact, the mood was so light during the joint city-commission informational meeting preceding the City Council meeting that the auditor told a joke.

"I'm happy to announce that the city did not own any stock in Enron," said Kyle W. Meyers, partner in Abdo, Eick & Meyers LLP, Mankato.

Later, at the council meeting where the reports were received, Council President Dan Beranek summed up the situation by saying, "Our auditor assures us our books are in order, and the city is in good financial shape."

The only real issue, according to Meyers, is whether the city and the PUC should continue filing separate financial reports.

"While the city and the PUC each have their own tax numbers, we're not sure that is sufficient to consider the PUC a legal entity," Meyers said. "We've suggested the city treasurer's office seek a determination. If the PUC is not a separate legal entity, it will show up blended into the city's annual financial report."

Total 2001 revenue for the Utilities Department was slightly over $30.6 million, nearly $3 million more than 2000 revenue. Increased costs whittled operating income to $1,732,539, compared with $1,881,818 in 2000.

Only one division -- Wastewater Treatment -- showed an operating loss for the year.

Increased interest on long-term debt and bond fees reduced 2001 net income to $1,512,348, compared with $2,103,599 for 2000. Equity rose by $1.5 million to $47,079,943 in 2001. Assets totaled $74,204,257.

The city's annual statement showed revenue from all sources -- general fund and special revenue and debt service funds -- totaled $12,301,000, representing a 6.06 percent decrease from 2000. The reduction resulted from a $1.6 million decline in intergovernmental revenue.

However, the city wound up the year with a positive cash flow in its general fund. A projected deficiency of $236,220 in revenue under expenses was turned into an excess of $109,221, a turn-around of $345,441.

After adjustment for operating transfers in and out, the general fund showed excess revenue totaling $202,250, compared with a projected deficiency of $185,500. That pushed the general fund balance, as of Dec. 31, to $2,076,512.

Meyers noted that with cash on hand amounting to $1,943,977 and a 2002 general fund budget of $5,800,984, the cash balance percentage of annual budget had improved to 33.51 percent, up from 30.85 percent the previous fiscal year.

"Financial consultants recommend a percentage of from 30 to 50 percent," Meyers told the council. "You're still at the low end, but you're climbing. That's good because you'll need nearly all of that to cash-flow operations into the next fiscal year."

In assessing the city's current situation, Finance Director Gary Gleisner said, "It appears that we've escaped a cut in local government aid for this year, but we don't know if we'll be that lucky in 2003."