“You’re burning through too much cash.”
Independent Auditor Gary Bailey gave the Clinton City Council this warning, and other recommendations, at Monday’s workshop meeting.
As a result, council adopted a “freeze” on the city’s budget.
That retains it at last year’s level while city staff, over the next 45 days, develops an entirely new spending plan to guide the city until June 30, 2024.
The City’s General Fund, which pays for everything except utility operations, has suffered a $663,000 loss as of June 30, 2022.
Bailey, with Love Bailey CPAs in Laurens, performed this audit pretty much as a courtesy to the city, said Tom Brooks, the city manager. Bailey said the city not having a finance director for 6 months caused problems in payments and revenues not being entered in the proper accounts; but, he said, those issues are being resolved now as accounting software can be updated and new procedures put into place.
The Council earlier this month gave a “budget” 1st reading approval but no spending and revenue figures were announced publicly. Now that projected budget is gone and this year’s budget is being maintained — Brooks said a new 2024 budget will be developed by city staff within the next 45 days. Then, it will be presented for the Council’s ordinance-mandated 2 readings, a public hearing, and final approval - no action is expected that the council’s July meeting.
Bailey gave the City Council a look back at city spending and revenues to 2018 - showing how the city consistently has run in the red in the General Fund. The Utility Fund is stable, Bailey said, but the Council will have tough decisions to make about how much money to transfer from Utilities to General, and keep both funds solvent.
“That’s good we have a good look that many years back,” Mayor Randy Randall said. “We’ve been catching up slowly but surely (after not having a finance director) - we’re one town that’s very property tax poor - so much of our property is tax exempt - it’s always been a challenge, this is the balance we have gotten out of whack.”
Stability with staff should help address this issue, Randall said.
But Council Member Anita Williams said at some point saying “we’re all new” to city positions is not going to cut it. She said accounts must be reconciled monthly because if this is done quarterly, spending problems persist for four months before action can be taken.
She sharply questioned Bailey about the auditor’s statement that records show the City gave $100,000 (two $50,000 payments) of unbudgeted money to the to-be-renovated Martha Dendy Community Center. Bailey indicated the center was simply the first item listed in the “culture, recreation, tourism” account, which includes other expenditures like to the YMCA, but the Council was concerned that this money, apparently, had not gone through the normal Council appropriations process.
In the end, Council agreed with Brooks’ proposition to reverse course from 1st reading and approve a “budget-freeze” on 2nd reading.
“It will be a whole other budget,” Brooks said about what’s coming to council in 45 days.
“That is a very, very smart decision,” Williams said.
As a result, Council did not state what the City’s budget is right now, and going forward to June 30, 2024.
Government bodies generally are approving their budgets now to have the spending and revenue plans in place by July 1.
The Clinton City Council’s next meeting will be July 17, to focus on how the city can sell surplus electricity in conjunction with the Piedmont Municipal Power Agency.
THE MEETING, just over 52 minutes, can be viewed here.
