Despite rough times after a key redevelopment program came to an end, Signal Hill’s general fund operated in the black last fiscal year. Signal Hill councilmembers pored over their copies of the city’s latest annual financial report at the March 6 council meeting while Terri Marsh, the city’s administrative services officer and finance director, reviewed the numbers for the last fiscal year that ended June 30, 2012.
“Recovery from the Great Recession has been slow and steady,” Marsh told the Council, “but we still have a way to go. With the continued dissolution with the redevelopment agency, there has been so much uncertainty.”
Citing numbers available from the Comprehensive Annual Financial Report, also known as the CAFR, Marsh summed up a few key areas contained in the 154 pages of the independently audited report. The finance director highlighted good news about the general fund which accounts for the local tax revenues and also accounts for various municipal departments including police, public works, parks and recreation, planning and building.
The fund’s operating revenues exceeded its operating expenditures last fiscal year by more than $1.038 million. During the last fiscal year, the City generated over $16.96 million in revenue and recorded expenditures of over $15.9.
The full financial report notes a number of hurdles that the City faced in the fiscal year. Even after the State of California eventually eliminated the City’s redevelopment agency in February 2012, a number of development projects were still completed last fiscal year. The list of projects included the completion of a recycling and transfer station, administrative offices and truck service facilities for EDCO. That year also saw the opening of the Boulevard Cadillac auto dealership and the Fresh & Easy Neighborhood Market, according to the CAFR.
But in addition to the good news, Marsh also reported on a specific liability amount that has climbed to about $1 million in the last month. The finance director said that the City has set up a liability account to set aside the money eventually owed to the Water Replenishment District of Southern California (WRD). The amount owed back to the WRD is in dispute. Last month, the Signal Tribune reported that unpaid bills for the WRD are related to a lawsuit between the WRD and Signal Hill and several other cities. Marsh confirmed that the amount is held in the liability account pending the resolution of the lawsuit.
City Manager Ken Farfsing explained that it will take some time to finally resolve how much the City will be able to collect in damages, but he also added that the WRD sends the City a bill with a penalty amount and that the City does have sufficient funds.
“Our concern was that if WRD appealed, and we lost the appeal, we didn’t want to all of a sudden have spent that money somewhere else,” Farfsing said. “So we set it aside. I think that was a wise decision just to set it in the liability account.”
The finance director also noted that the City is continuing to rebuild its reserve account, stating that the City is back up to the levels it enjoyed in 2007. Signal Hill used some of the reserve in 2010, she said.
The City’s has a long-standing reputation for its ability to make the CAFR report easily understandable and comprehensive. The City has been awarded a certificate of achievement for excellence in financial reporting by the government accounting association for 17 consecutive years, according to the finance director. Marsh acknowledged that the City will be attempting to submit this report to win the award for an 18th time.
“We have prepared our CAFR to meet the highest standards in governmental and financial reporting,” the finance director said, explaining that the City has submitted the financial report to the government accounting association known as Government Finance Officers Association (GFOA) to determine whether the report is eligible to receive another award.
The Council will eventually discuss in April the possibility of establishing an audit committee to work with the Council to administer future audits, according to Farfsing. The idea of establishing an audit committee came as a recommendation from the Los Angeles County Civil Grand Jury in a report the jury submitted that addressed financial management and government practices in charter cities throughout LA County.
The possibility of eventually adopting a two-year budget for the city would not eliminate a yearly CAFR report, according to both the city manager and the finance director. Farfsing and Marsh confirmed Tuesday that if a two-year budget is adopted, a yearly financial report would still be completed.
The Signal Hill City Council voted 4-0 to receive and file the city’s annual financial report for the last fiscal year. The full financial report can be found on the Finance Department’s page at the Signal Hill’s website at cityofsignalhill.org .
The next Signal Hill City Council meeting will take place on March 19 at 7pm in the Council Chamber at City Hall.