The City of Owensboro has received a clean audit report for the fiscal year, with plans to continue on its path toward a positive general fund balance after years of decreases. The clean audit report comes months after Moody’s Investors Service affirmed an A2 rating to the City of Owensboro, removing a negative outlook designation. All in all, Owensboro’s finances are looking positive for the beginning of 2019.
“We did give a clean opinion on your financial statements — in addition, we did not note any material weaknesses or significant deficiencies in internal controls, or any non-compliances with laws, regulations, grievances, that sort of thing, so it’s a very clean report,” said Jack Somerville, a representative from Alexander Thompson, PLLC to city commissioners at a Dec. 18 city commission meeting.
The clean report is something that the City of Owensboro’s Finance Manager Angela Hamric expects and hopes for each year. After months of hard work that Hamric and four other city finance employees put in toward balancing the city’s budget — among a long list of additional responsibilities — Hamric said it feels good to receive a clean opinion from auditors.
“We take a lot of pride in receiving no management comments, no things done wrong,” Hamric said. “We plan to always have a clean audit.”
Albeit the clean report, Somerville did offer recommendations that his firm felt could benefit the city and its finance department, especially. One of those recommendations included adding a formal minimum fund balance policy to the city’s finance report. However, Hamric said the city has included an informal minimum fund balance policy in their finance report for years.
“They gave a light-hearted recommendation, to have that formal minimum fund balance policy. We are looking to present this to the city commission at the next meeting in January,” Hamric said, adding that the formal minimum fund balance policy recommendation comes from the Government Officers Finance Association (GOFA), focusing on two months of the city’s expenditures.
Somerville also recommended that the City of Owensboro hire additional workers in the finance department, which he deemed as both understaffed and overworked.
“For 10 years they’ve been saying we’re understaffed in the finance department,” Hamric said. “Not only do we do more work, but we do it with less people.”
Hamric said it was an unsurprising comment to hear from the auditors, and admitted that those in finance had taken on more projects and more work, while simultaneously balancing the growing workload between fewer and fewer people.
“Everybody at the city is busier,” Hamric said. “Government accounting is unique — when we bring someone on board, we have to teach them government accounting. It just takes time to train because it’s so different.”
Aside from balancing the city’s budget, Hamric said those who work in government finance — and specifically for the City of Owensboro — must learn accounting that revolves around grants, the retirement system and the multiple other aspects that tie into the city’s finances.
“We do a lot there at the city — payroll, we work with the debt on behalf of other agencies. We are quite busy,” Hamric said. “It’s the same observations and comments we hear every year.”
Hamric said it can be difficult to be a city employee in a place like Owensboro because those who work in accounting and finance have so many different projects and responsibilities to take on, but Owensboro’s size and population isn’t quite big enough to add additional departments at City Hall
“The five of us do it all,” Hamric said. “We [the City of Owensboro] are too big to be small, and too small to be big.”
Regardless of being worked incredibly hard, Hamric and her team, including the city commissioners, were able to increase Owensboro’s general fund balance by $2.36 million, which was the first increase in the general fund balance after four years of decreases.
“I’d like to point out that this is reversing a four-year trend of decreases, and that’s primarily due to the increase in the occupational net profits taxes,” Somerville said. “Those increased by $6 million in 2017 and had been decreasing for the prior four years, at a decrease total of $5.3 million.”
As of June 30, Somerville said the ending fund balance in the general fund was $11.2 million, which represented 81 days of expenditures.
Although the public generally looked at the occupational tax increases as a negative, Hamric said the increase was very minimal. In order to keep up with inflation rates, pay for the rising costs of goods and maintain a strong police and fire department, the tax increase was necessary, and it was a big reason why Moody’s removed Owensboro’s negative credit rating.
“The property tax — it was a very, very minimal increase. We can only raise the tax rate so the total revenue for the city goes up 4 percent,” Hamric said. “Assessments have gone up quite a bit, so the rates we raised were very minimal. We did not raise taxes for eight years. It’s always in the city’s best interest to take the property tax increase.”