Failed to execute CGI : Win32 Error Code = 3
The budget process used by the City of Sisters received a clean bill of health
from the independent auditor the city hired to prepare its annual financial
report for last year, but city officials remain worried that the city is living
beyond its means.
The report for the year ending June 30, 1996, was presented at the Thursday,
November 21, city council meeting. It indicated that the city's budgeting
practices conform to legal requirements and that the city is financially
solvent.
"You have a $300,000 cushion," noted auditor Kristen Stauffer. "From our
perspective you're doing fine."
That "cushion" is an ending fund balance of $299,605, a kind of "savings
account" the city carries from one year to the next to fund operations until
tax revenues come in the fall.
But city officials are worried that the city is not, in fact, doing fine. The
auditor's report, presented by Gregor Professional Corporation of Eugene,
showed that the city spent $49,859 more than it took in last year. If the city
spends according to its budget this year, expenses will exceed revenues by
about $80,000.
City councilor Gary Miller expressed concerns that the audit report doesn't
make it clear enough that the city is spending down its "savings account."
"To get a rosy budget report that says everything is being done by procedure,
well that's fine," Miller said. But, he believes, the report should provide a
red flag for budgeters so that they can readily see a pattern of decline.
Auditor John Gregor noted that the format of the report is restricted by state
guidelines, but that a decline would be noted in the firm's management letter
to the city if it was of real concern to the firm.
"We've sounded the alarm in many cases," Gregor said. "We're not sounding it in
this case because you are living within your budget."
The city has already sounded the alarm on its own. City administrator
Barbara Warren reconvened the city's budget committee in September -- just
three months after the budget went into effect -- and the committee is at work
devising budget cuts and revenue increases to cope with the $80,000
shortfall.
"I don't think it (the report) changes anything," Warren said. "What we still
have to deal with is that we're spending more than we're taking in and
that cushion's going to continue to shrink unless we solve that."
Police administrative assistant Pat Davis acknowledged that the city is
presently living on its savings account, but she thinks a $300,000 cushion
ought to be enough to stave off budget cuts. Davis has said that the cuts
contemplated by the budget committee would make greater efficiency at city hall
impossible and verged on cutting into current services.
In a later interview Davis asked, "Why are we talking about budget cuts if we
have a $300,000 cushion?" She believes the city should focus its efforts on
increasing revenue to balance the budget.
The way the city designs its budget may change in the wake of the summer's
budget turmoil.
The budget currently overstates the amount of funds available in each
department budget, with the expectation that unspent funds are to be turned
back to the general fund to be used as cash carry forward for the next year's
budget. Those funds make up the city's "cushion."
Under that system, department heads do not know for sure how much they actually
have to spend and how much is really for the "cushion."
The auditors said that this practice is legal and quite common in cities
because it allows for fiscal flexibility in an emergency. A city can tap that
extra money without taking any extraordinary steps.
The auditors declined to make any recommendation about how the city should
construct its budget.
But, they noted, another way to build a budget would be to place the "cushion"
in a contingency fund that the city can use 10 percent of without council
action. The city can use the whole fund in an emergency if the council passes a
supplemental budget and holds a public hearing.
Warren told The Nugget she plans to recommend something like that
procedure for next year's budget.
"I still won't recommend an unappropriated ending fund balance because I don't
think we're in a financial position to do that," Warren said. "But I will
recommend having more contingency funds and tightening down the budget areas,
the line items."
That, she believes, will reduce confusion over what a department's budget
really is.
"The advantage to that is that the department head can look at his budget and
know what he has to spend," Warren said.
The trick, Warren indicated, will be in properly anticipating the needs of each
department.
"You try to budget where you think you might need something," Warren
said.
For example, the city has budgeted for two years to replace the roof on the
city-owned house next to the Sisters Firehall. According to Warren, they
haven't spent those funds yet, which makes the budget appear inflated, but at
some point that roof will have to be replaced and the money for it needs to be
in the budget.
The city has also budgeted for items ranging from new office equipment to an
administrative assistant's salary, but because the city was waiting to move
into a new city hall, those funds were never used.
