City's funds
getting extremely low
No
employee pay raises,
No
capital purchases:
Is
the city
going
bankrupt?
By Fred Mramor
of
the Desert Journal
“In
reviewing your financial report ending March 31, the (city’s) general
fund balance is extremely low ($6,372) and the joint utility fund, which
supplants the general fund to a great extent, was at $527,318,” Gloria
Gonzales of the New Mexico Department of Finance and Administration (DFA)
pointed out to Truth or Consequences city commissioners in her letter of
July 27.
“Your
joint utility estimated ending balance for the 2001-02 budget is $11,142.
How is the general fund going to survive in fiscal year 2002-03 without
the joint utility?” Gonzales asked.
Gonzales
in an interview this week said she has not gotten an answer to this
question nor has she received the city’s year-end financial report or
its final budget for fiscal year 2001-02.
“They
did tell me they will have to make a lot of cuts from their preliminary
budget because they have found that their cash balances aren’t going to
come up to what they had estimated. They said they will work at it and see
what they’re going to do. I have not yet received any documentation to
that effect,” Gonzales said.
A
normal figure (rather than $11,000) for the joint utility fund’s ending
cash balance should be what the city started with, $500,000, Gonzales
said, adding that T or C’s joint utility fund transfers over $1 million
to the general fund over the course of the fiscal year.
“If
they ended at $11,000, there’s no way they’re going to operate the
utility and general funds,” Gonzales said.
Gonzales
said the city will have depleted over $500,000 which she said doesn’t
mean the city will be out of money but will be nearly out of any savings.
They
need to plan for the future, they can’t live on a year-by-year basis,
Gonzales said. She said the city has already “maxed out” on its taxing
authority (except for one quarter percent for infrastructure which would
have to be put to voters in a referendum). “And that’s a big
concern,” Gonzales said.
Gonzales
said city officials had asked her if they can take monies from other city
funds, such as an emergency fund, to make up any deficit in the general
fund.
She
told them it depends on the city’s own ordinances that determine which
of these funds can be tapped and in what amounts.
Gonzales
in her letter said also, “The city’s budget reflects estimated
beginning cash balances that appear to be excessively high (showing higher
than likely actual amounts) in the general and joint utilities funds,
therefore we are concerned that the city may not be able to award employee
raises and purchase any capital outlay items.”
Gonzales
explained that when she received the city’s third quarter report (ending
March 21, 2001), balances were substantially low and she couldn’t see
how the city could bring them up to the amount they had estimated.
Gonzales
said DFA has accepted T or C’s interim budget for FY 2001-02. She said
that operating under an interim budget, and because of DFA’s concerns
about the city’s cash balances, the city will be precluded from
increasing salaries or making capital purchases until its final budget is
accepted.
Gonzales
in her letter said final budget approval will be contingent upon
submission of the following by July 31:
1.
A resolution adopting the 2001-02 operating budget;
2.
Number of full-time positions;
3.
Average salary increase;
4.
Revenue bond schedule that reconciles with budgeted amounts;
5.
An insurance schedule that reconciles with budgeted amounts;
6.
Recap with un-audited beginning cash balances, for all funds, as per
year-end financial report;
7.
The year-end financial report for the period ending June 30, 2001.
Asked
if the city is in any trouble not having submitted the above information
by July 31, Gonzales said the city just won’t have an approved final
budget and will have to operate under the restrictions DFA has imposed
until the city submits its final budget.
She
said that last year one New Mexico municipality never got approval on its
final budget and operated the entire year on a restricted interim budget.
Asked
if she had received at least informal updates from the city, Gonzales said
she last heard from T or C Financial Manager Ray Ortiz in a July 31 memo
that said the city is trying to close out its books but is experiencing
computer glitches and is bringing in computer people for assistance.
Gonzales
said she’ll probably continue writing letters to the city and plans to
come to T or C in September to go over the budget process with the city
commission. She said she was supposed to come this week but that the city
called her back and canceled the meeting.
Asked
if the city can get its financial house in order if it’s headed for
serious trouble, Gonzales said, “I think it depends a lot on the new
city manager and getting the finance department in order, getting their
financial reports in and monitoring the budget. It seems to me that that
may have played a part in the cash balances.”
Gonzales
earlier this year advised city commissioners that they could be suspended
from their posts for malfeasance due to the city’s apparent financial
difficulties and its failure to submit reports on time.
But
Gonzales this week said that it’s unlikely to happen. “I don’t think
it’s that bad. We’ve had worse,” Gonzales said.
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