Lindsay audit early, in better shape

Lindsay reviewed their budget earlier than in previous year, showcases financial improvement

By Paul Myers

LINDSAY – Under interim city manager Bret Harmon’s oversight, Lindsay’s financial position has markedly improved. Early last month, the city council reviewed their 2018-2019 fiscal year audit. This was the earliest they had seen an audit in two decades according to Mayor Pam Kimball.

“Congratulations to you because in 20 years on the council we have never had an audit done before Dec. 31,” Kimball said. “Congratulations to [the staff].”

All but approved, Ahmed Badawi, partner with Badawi and Associates noted that the largest problem the city continues to face is their general fund. Although, according to his presentation the general fund is trending in the right direction. In 2017 the fund’s deficit was a stark $14.6 million, in 2018 it was in an $11.3 million hole and in 2019 it continued to climb out $10.7 million.

“We think the city is heading in a positive direction but as you are probably aware there is a considerable deficit… and it was a big deficit so we have that as a going concern,” Badawi said.

Albeit still ailing, the city’s ability to draw from reserves if needed is also heading in a positive direction. Badawi pointed out that the cities unrestricted reserves stand at a $4.1 million deficit, while total expenditures stand at $7.4 million.  

“If your revenue sources stopped coming it, which is very unlikely…you wouldn’t be able to pay bills at all. That is why the city is a going concern,” Badawi said. 

The situation is even more dire when adding pension obligations among other postemployment benefits (OPED).

“I don’t want to alarm you at that deficit but I don’t want to water it down either,” Badawi said at the Lindsay City Council’s Dec. 10 meeting. “But deficits, when we look at the overall city…deficits are common in local governments. The main reason for them is the pension and OPED liability…In your situation you also have a deficit in your general fund.”

Badawi also pointed the more positive reports Under government-wide financial statements the city’s net cost of service to tax revenue is strong. In 2019 the city’s net cost of service was $3.4 million compared to the $4.88 million in tax revenue. And tax revenue has also gone up considerably. In 2018 the city received $4.2 million whereas in 2019 they received $4.88 million. 

Early this spring Badawi presented the 2017-2018 financial audit and hit many of the same notes when the general fund deficit was over $11 million. Only in March the city council was mired in controversy between borrowed money from restricted funds that were never repaid.

While the general fund was not able to keep up to its now previous financial obligations, councilman Brian Watson still boasted about the general fund’s improved position, noting that the City is attempting to right their financial ship.

“We are well on the way of correcting those transgressions and creating a system that is far more transparent than we’ve had in the past,” Watson said.

“I wouldn’t say well on the way. But yes, what we are seeing is the City is trying to find new revenue sources and stop that type of accounting that was done,” Badawi responded.

Former city manager Bill Zigler said it had been the mission of senior staff to identify and solve problems as best they can when they are revealed. He added that it has taken several finance directors plus the tutelage of former Visalia finance director Eric Frost – who offered his services for free – to get where they are now.

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