Lindsay cleans up past mistakes in new audit

Lindsay receives their cleanest audit since 2009 financial calamity that revealed almost 40 findings from grossly misspent funds

LINDSAY – Lindsay’s financial storm is beginning to break according to their most recent financial audit. Where the city once had almost 40 findings from their 2008-2009 fiscal year audit, the city now has no major findings, but were found to be in noncompliance as of the end of the 2019-2020 fiscal year.

There is still a mountain to climb before the city could claim they are financially healthy, but according to the city’s auditor they are on the road.

At the city council’s Feb. 23 meeting certified public account, Ahmed Badawi with Badawi and Associates presented his findings for the 2019-202 fiscal year. Badawi has produced the last three audits for the city and said Lindsay is improving their financial position. In his presentation to the council he announced that he issued the city an “unmodified audit opinion” and said the city is no longer a “going concern.”

“One of the highlights of this year is that we decided to remove that ‘going concern’ paragraph,” Badawi said. “The reason for that is because the city was able to negotiate settlements about some of the advances and payables they owed to [California Department of Housing and Community Development] and the Tulare County Transpiration Authority.”

The auditor added that the “non-compliance” tag on the city should be removed after next year’s 2020-2021 fiscal year audit. He said the only reason why it appeared on this audit was because the city had not finalized settling with the department of housing and community development or the county’s transportation authority until last fall.

Badawi said since the city converted their largest debts to long term obligations the city was able to free up more of their general fund.

“That is an upgrade from the following year,” Badawi said.

Lindsay city manager, Joe Tanner issued a press release last week highlighting the news.

“The favorable result is…good news and reflects the council’s proactive steps to improve the city’s financial situation and outlook for the coming years,” the press release stated.

“If we wanted to take out new debt, or refinance existing debt, or partner with somebody, you know, one of the things that they look at is the audit…So with a much better audit…it shows that we’re doing better and we’re in a much better position than we were 10 years ago,” Tanner said.

While Lindsay’s long term financial health looks brighter than it has in a decade, last year’s net position looks like it took a major hit on paper. In 2018 the city’s net position ended -$402,209 in the hole, but rebounded to $2.2 million by the end of 2019. However, after negotiations with the California Department of Housing and Community Development, and the Tulare County Transportation Authority their net position dropped by more than $5 million to -$3 million by the end of the 2020 fiscal year.

The city’s most important discretionary fund, the general fund, saw an increase in revenues at the end of the 2019-2020 fiscal year. According to Badawi’s report, overall on-going general fund revenue came in higher than the previous year. The total tax revenue was $5.944 million which was an increase of $260,000 over the 2018-2019 fiscal year. And additional revenue is expected in the current 2020-2021 fiscal year.

At the end of December 2019, the city collected half of their total expected general fund revenue at $2.76 million. Lindsay’s general fund was up more than $200,000 over the previous year’s midway point where the city collected $2.5 million. However, the city’s expenses in the second half of 2020 were also higher than they were in 2019.

Now that the current, 2020-2021 fiscal year is almost three-quarters of the way through, the city indicated there were some encouraging signs on the horizon.

In terms of enterprise funds, Badawi showed that the water fund struggled financially and ended the last fiscal year $150,000 in the hole. But as of last December the city had collected on 60% of their revenues for the water fund, amounting to $959,700 out of the $1.597 million they expect to have by June 30. The city’s 2020 collection was 4% higher than it was at the end of December 2019 where the city had gathered $925,600. The driving factor was the sale of the city’s surplus water, presumably from the Friant-Kern Canal. Lindsay is expected to sell $25,000 worth of water when they created the budget last June, but instead sold $63,300 worth of water as of December—a 253% increase over projections.

According to Badawi the sewer fund ended last fiscal year with an operating profit of $407,000. In December the city had collected $720,200 out of their budgeted $1.3 million in revenue.

Lindsay’s refuse fund—which is outsourced to third party Mid Valley Disposal like many other cities in Tulare County—was healthy midway through the 2020-2021 fiscal year. According to Badawi’s report the refuse fund totaled $1.025 million at the end of the previous fiscal year which was a 7% increase. The increase nearly matched the increase in expense of 6%. In December last year the funds had spent only 20% on their expected costs giving them a healthy $334,700 surplus at the six-month mark.

Badawi noted that the city’s Wellness and Aquatic Center’s revenues came in at $280,000 at the end of the 2019-2020 fiscal year. Total expenses came in at $790,000 which was a 5% over the previous year. The difference between total revenues and costs was covered with intergovernmental grants and contributions. The Lindsay Hospital District makes an annual contribution of $233,000 and the rest are city transfers.

However, at the midway point of the 2020-2021 fiscal year, the city had collected exactly 50% of their projected revenues amounting to $394,100. That is 60% more than they collected at the half way point of the 2019-2020 fiscal year where they collected $158,600. In total the city expects to collect $792,800 in revenue.

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