Hopefully the City Commission will use the most recent audit and financial statement as a starting place, not the past budget.
This is especially important in Truth or Consequences, since City Manager Morris Madrid does not give budget updates or quarterly reports, making it difficult to know how expenses and revenues are tracking compared to what was planned.
The budget for fiscal year starting July 1, 2018 and ending June 30, 2019 can be compared to what really happened now that the audited financial statement became public at the end of March.
It was published on the Office of the State Auditor’s website, where multiple past years are also available.
A city’s finances are divided into two categories; governmental activities and business-like activities.
Governmental activities don’t make money. They include administration costs, such as salaries and benefits for the city manager, finance officer and city clerks. They also include the police force, fire department, culture and recreation and health and welfare services.
In total, Truth or Consequences’ governmental activities cost $6.7 million in fiscal year 2018-2019.
The business-like activities are the electric, water, wastewater and solid waste services, which do make money, sustained by user fees. A few of the City’s business-like activities don’t make money. The airport cost about $57,000 and the golf course cost about $100,000.
In total, the City’s business-like activities cost about $9.1 million, and had a little over $1 million left over after paying expenses.
On page 19 of the 117-page audit, it shows what was budgeted for the general fund compared to what actually happened in fiscal year 2018-2019. The general fund is the checking account for governmental activities.
What was planned for and what actually happened varied wildly.
The expected revenue for the general fund was $2.54 million, but $3.8 million came in, $1.26 million more than budgeted.
Most of the revenue came from gross receipts, which were about $860,000 higher than budgeted. The State operating grant was $241,000 higher than budgeted. Licenses and fees were $41,000 higher and “miscellaneous” revenue was $50,000 higher than budgeted.
On the expense side, “general government” spending was budgeted at $1.5 million, but went over by $553,000, the causes of which should be of interest when drafting the up-coming budget.
Other governmental activities spent less than budgeted, making up for the excesses of “general government.”
The police were budgeted to spend $2 million but spent $1.8 million, or $245,000 less. Public works was supposed to spend $906,000, but spent $710,000, or $196,000 less. Culture and recreation was supposed to spend $489,000, but spent $432,000, or $57,000 less. Health and welfare was supposed to spend $224,000, but spent $103,000, or $121,000 less.
It looks like general government or administrative costs expanded while services for the community contracted and the budget or plan for how the money was to be spent was way off in each category.
The frugality of the community-services spending resulted in the general fund being about $64,000 under budget. The general fund was budgeted to spend $5.24 million, but only spent $5.18 million.
Nevertheless, revenues were still short of spending in the general fund, which is typical for Truth or Consequences, unfortunately. In the seven years this reporter covered the City from 2006 to 2013 for the Herald, the general fund was in deficit. A review of financial statements and audits from 2013 to 2019 show the City’s general fund was in deficit for those years as well.
To make up for deficit spending the City has transferred money from its utilities—mostly from the electric fund—into the general fund.
The budgeted deficit spending was $2.7 million, but because of the $1.26 million in unbudgeted, unexpected revenue, the general fund was only $1.47 million in deficit.
However, the budgeted transfers in and out of the general fund far exceeded deficit spending. The City budgeted $5.34 million to be transferred into the general fund and $5.74 million to be transferred out, which would have cut into general-fund reserves by $409,000.
What really happened was far more rational. Nearly $1.47 million was transferred into the general fund from utilities and $528,028 was transferred out, but that still cut into general-fund reserves by about $438,000.
Page 19 of the 117-page audit report, which compares what was budgeted for the general fund versus what happened, demonstrates the City didn’t have a handle on revenues or expenses for fiscal-year 2018-2019. The budget for transfers from the money-making side of government operations was also massively different from actual transfers, making the budget’s usefulness as a plan questionable.
Hopefully the new board can plan better than prior budget makers, who missed general-fund revenue by $1.26 million, deficit spending by $1.3 million, transfers in by nearly negative $3.9 million and transfers out by $5.2 million.