By Jim Bloch
“We issued an unmodified opinion, which is the best possible opinion you can get, a clean opinion,” said auditor Jordan Smith, a principal with the Lansing based auditing firm Maner Costerisan.
Smith presented the findings of his audit of city of St. Clair at the city council’s regular meeting April 7.
“Our purpose is to express an opinion about your financial statement,” Smith said. “Our job is not to detect fraud. Our job is not to give an opinion about your internal controls.”
The goal of an audit is to assess whether the city management’s presentation of its finances is free from material misstatement, Smith said.
The audit covered the fiscal year running from Oct. 1, 2023, to Sept. 30, 2024, when the fund balance – a kind of rainy-day reserve — of the city’s general fund stood at $8,789,490. Of that, $6,976,595 was uncommitted, meaning the city council could spend the money however it wanted — 114 percent of its annual budget, down from 124 percent in the previous fiscal year. In other words, the city could operate for 13.7 months even if its revenue dropped to zero.
“That’s healthy,” said Smith.
The Government Finance Officers Association recommends having a fund balance at least large enough to cover two months of operations.
In the fiscal year, the city spent $6,098,016 out of its general fund for the day-to-day operations of the municipality.
The general fund saw revenues of $7,016,518, an increase of about four percent over last year. About 24 percent of the city’s revenues came from property taxes, up one percent from the previous year.
In terms of expenditures, general government consumed 35 percent, up from 27 percent in 2023, largely because of the number of elections in the city and expenses related to the hail damage in July 2023. Public safety consumed 23 percent of outlays compared to 27
percent the year before. Capital expenditures accounted about 20 percent of the expenditures.
In terms of the proprietary or enterprise funds, which operate like private businesses with profits and losses, the net investment in capital assets in the sewer system stood around $7.8 million, with a negative net position of close to $200,000. In the water system, net investment in capital assets came in at $5,464,049, with a negative net position of $672,000.
“The harbor fund is very, very healthy,” said Smith, pointing to net investment in capital assets of $1,272,300 and a positive net position of around $1.25 million.
The audit results may have been ‘clean,’ but they were not unblemished.
For example, the city overspent its original budget, but did not officially amend it.
“Not a huge deal here, but state law says you should have amended your budget,” said Smith.
The city also budgeted for a deficit in the road fund, which the state does not permit. The fund ended up in the black, but that doesn’t matter. You can’t budget a deficit, Smith said.
Jim Bloch is a freelance writer based in St. Clair, Michigan. Contact him at bloch.jim@gmail.com.
