Auditors: Sidney in sound financial health

An external audit of the last fiscal year proved that the city is in good financial shape.

Robert Rauner, from Rauner & Associates, the company which performed the audit, spoke to the city council at Tuesday’s meeting.

As of Sept. 30, 2013, the end of Sidney’s 2012-2013 fiscal year, the city’s assets outpaced its liabilities by around $57 million.

Governmental expenses decreased by around $450,000 from the previous year and revenue increased by $429,000.

Expenses for business activities, which include the utilities that the city provides to the public, increased by around $300,000 last year while revenue increased by only $24,000. Charges for services went up by around $325,000.

“So the charges for services went up to cover the expenditures, but we’re still down a little bit,” Rauner said.

When it comes to covering governmental expenses, the city’s biggest sources of revenue are property tax and sales tax.

“Taxes should only cover the governmental activities,” Rauner said. “Propriety funds, business type activities should always be stand alone, in which they do here.”

Typically, a city’s business activities should support themselves.

For the city’s business activities, the majority of the revenue comes from the electric department. Other departments which typically bring in the remaining funds include the landfill, sewer and water services.

The landfill made a profit in 2011 and 2012, but much of that has to do with hail storms those years wherein large amounts of debris were brought to the facility.

“The landfill is actually showing an operating loss this year,” Rauner said

The only thing that kept the landfill out of the red this year was insurance money from a machine that the city elected not to replace.

Rauner added that the landfill needs to be monitored the most closely of all departments. The facility actually saw an operating loss of $150,000 in the city’s last fiscal year. The landfill rates were adjusted going into 2014, so councilman Mark Nienhueser expressed hope that this would help the problem.

“We should see improvement in that,” said mayor Wendall Gaston.

Of the city’s total revenue 59 percent comes from business activities and 41 percent is gained from governmental activities.

Mayor Wendall Gaston wondered if this was a standard break down for cities like Sidney. Rauner answered that it varies from city to city depending on whether the city runs its own utilities or not.

“In a city like this, this would seem normal to me,” Rauner said.

Sidney’s long term liabilities are decreasing steadily each year, which indicates that the city has been consistently reducing its debt.

In the governmental side of things the city has $26 million in assets and $4 million in debt. When it comes to business activities the city has almost $47 million in assets and around $11 million in liabilities.

Nienhueser expressed concern over the amount of reserves the city had for business activities.

“It still appears that while we’re OK on the electrical side, we have no reserves built up in the water or sewer department at this point,” Nienhueser said.

Rauner explained that the city has been more focused on paying down the debt in those departments instead of backing reserves. Nienhueser expressed a desire to continue to bring down the city’s debt while also and stocking reserves for unexpected repairs.