By David Meade – According to auditors, the Town of Williamston has run a deficit for the last three years but still has a healthy general fund balance.
During their annual audit presentation Monday, town officials were told that even though the town has seen a decrease of $152,000 in the fund balance since last year, it still remains “a strong fund balance.”
According to auditor Larry Finney, of the Accounting Firm of Greene, Finney and Horton, the Town received an “unqualified opinion,” which is “the best it can get.”
Finney said the town has a healthy general fund and is in good shape in the water fund but needs improvement in the sewer fund. He also advised the town to revise conflicting purchasing and budgeting policies.
The report confirmed recent statements by Mayor Carthel Crout that the town is in sound financial shape despite budget overages which have been pointed out by Councilman Mack Durham.
The report also reinforced statements by Councilman Mike Looper and Durham that the town is not following purchasing policies, mainly due to conflicting policies the town has for the Administrator and Council.
According to the audit report, the town’s fund balance decreased from $1,614,000 in June of 2011 to $1,462,000 in June, 2012.
Durham has repeatedly said that the town is overbudget in many areas and that the overspending is causing a deficit. Crout defends the town’s financial status, stating that he is following purchasing policies and that even though the town’s fund balance is being used to cover the spending, the fund balance remains in good shape.
According to the audit report, both men are correct.
Councilman Looper, who is also running for reelection to the Ward 4 seat, has stated along with Durham that the town’s purchasing policies are not being followed and continues to cite a contract for operations at the town’s upgraded wastewater treatment plant as not being approved by council.
The contract is reflected in the operational expenses for the sewer treatment plant.
During the audit report, Councilman Durham asked Finney if the general fund balance decrease was “a deficit’ to which Finney responded “yes.”
Mayor Crout then stated that the town had a “good healthy fund balance” to which Finney also agreed.
Both men have made cases for their views of the town’s finances during recent council meetings and in political ads. They are also running against each other in the mayor’s race which will be decided Nov. 7
Finney confirmed that the town has experienced higher expenses than revenues for the last two years and that the town is “over budget on expenditures.”
In his report, Finney said the water department has significant assets that need a lot of attention and that unrestricted funds for the department “need to be higher.”
The water fund and the sewer fund are known as Enterprise Funds and each must support their respective revenues and expenses without help from the other or from the general fund.
The sewer fund has increased revenues as the result of recurring sewer charges (billings) reflecting a sewer rate increase mandated by RUS to pay for a grant loan for the wastewater treatment plant upgrade the town has undergone.
Finney said the sewer fund has a significant net deficit of $534,000 and recommended a higher balance. “The sewer funds still needs some help,” he said.
At the close of his report, Finney pointed out several issues and recommendations listed in the management letters.
The report pointed out problems in the recording of capital assets and makes the recommendation to purchase software to help with the recording.
The report also states that the town’s current ordinances, policies and job descriptions surrounding the budgeting process and the purchasing process are not always in agreement.
According to the audit report, the budget ordinance does not contain any language regarding budget overages and who has authority to revise the budget and the related thresholds to correct for overages. According to the report, this could create confusion as to whether the Town is following their ordinances and policies when it comes to budgeting and purchasing.
The auditors recommended that ordinance policies and job descriptions be in agreement with each other.
They also recommended that the town consult with the Municipal Association of SC and the Town’s attorneys regarding language to be included in the budget ordinance and recommended budgeting practices.
Other highlights of the audit report include noting that the towns long term obligations were $320,000 less than last year. The 2002 sewer outfall line rebonding has a balance of $126,000 which will be paid off in 2013.
The town has completed construction of the new wastewater treatment plant and is now operating under a DHEC operating permit.
The town also has $329,000 left from the wastewater treatment plant upgrade project which town officials are requesting to be allowed to use.
The town has a CDBG grant of $448,000 to upgrade sewer lines.
The town also purchased the Milliken property which is valued at $150,000.
The audit reports significant improvement in financial reporting since the last audit, according to Finney.
When Finney concluded the audit presentation, Mayor Crout stated that the town budget is an estimate and it “is a plan to show council what direction we are going.” He said that the town is only 8 percent over budget, a fact the auditor confirmed.
According to Finney, the GFOA offers a very generic recommendation that municipalities have two months of operating capital in their fund balance, which amounts to about 17 percent.
He said that the town of Williamston has about five to six months of operating funds at 51 percent which he said, “is very healthy.”
Durham noted that it was good to hear that the town is not in immediate danger on the fund balance but described the deficits over the last two to three years as an “alarming trend.” He recommended the town follow the auditors suggestions to involve the Municipal Association and stated that the town may need some clarification on budget revenues and overspending .
During the followup discussion Looper questioned the budget numbers saying that they were not real. “I can’t understand how we can create a budget and have excessive expenditures,” he said.
Finney said the budget is a plan that should be based on good solid numbers.
“Well we didn’t follow that budget,” Looper said.