Fiscal Year 2007 - 2008 Budget

City of Iron Mountain

Fiscal Year 2006 - 2007 Budget

City of Iron Mountain

GENERAL FUND BALANCE ISSUE 

FACT: Three years ago, when the current city council was elected there was a million-dollar deficit. PERIOD.  As of today, the city has a 1.2 fund balance. GENERAL FUND BALANCE.

I have in front of me a 75 page document entitled CITY OF IRON MOUNTAIN BUDGET,

F. Y.  2006-07.  This is the proposed budget City Manager Marquart gave to the city council with a cover letter dated March 27, 2006.  Anybody can get a copy from city hall.  They may charge you 10 cents a page or so, or about $7.50, but it's well worth it.  It is exhaustive and enlightening. 

On page 28 is a fourteen-year history of Fund Balances.  It starts in the year ending June 30,1994 and ends June 30, 2007.  The last two years are projections.

Here are the fund balances, by year, each ending on June 30 of that year. 

Year ending

June 30, 1994      $    240,923

June 30, 1995      $    161,426

June 30, 1996      $    303,002

June 30, 1997      $    424,999

June 30, 1998      $    369,357

June 30, 1999      $    391,666

June 30, 2000      $    440,022

June 30, 2001      $    299,715

June 30, 2002      $    296,384

June 30, 2003      $    288,973

June 30, 2004      $    289,971

June 30, 2005      $    728,609

June 30, 2006*    $ 1,006,193

June 30, 2007*    $ 1,130,726

 * (projected) 

First of all, there was NEVER a Fund Balance Deficit, much less a $1,000,000 one.  The city, historically, kept General Fund Balances in the $250,000-$400,000 range. The accounting firm of Anderson, Tackman LLC has been the city-auditing firm for many years and they do a very credible job.  Bob Schaut is the lead accountant (CPA) on the audit. 

He recommended that a continuing General Fund Balance of around $1,000,000 or so would be more appropriate for the city based on General Revenues of over $4,500,000, or close to 25% of those revenues. There is nothing wrong with this suggestion.  What it amounts to is a larger emergency fund or rainy day fund, although the lower earlier numbers never presented any real problem. 

On the surface, it would appear the city administration did a great job bumping it up from $ 289,971 on June 30, 2004 to a projected $ 1,006,193 by June 30, 2006, just two years later, or over $ 700,000. 

However, on page 14 of the proposed budget document is a letter from the Chief Financial Officer.  Here is a very disquieting paragraph from that letter: 

"While preparing the budget, I have great concerns of where the Capital Improvement, Health Insurance, Local Street and Motor Vehicle Funds are at this point in time.  While the General Fund has improved its fund balance significantly over the last two years, the above funds have continued to deteriorate.  The city manager is also aware of the state of these funds and the need to address the situation in the near future." 

In a nutshell, the City Manger starved those other funds to build up the General Fund Balance.  This is a case of continuing to drink in an effort to postpone the hangover, and at the same time bragging how he built up the General Fund Balance.  The day of reckoning is fast approaching. The City Manager makes the final decision on what to propose in the budget. The Chief Financial Officer clearly was worried enough to call it to the attention of the city council .  Of course, most of this probably went over their heads. In subsequent postings, I will show you the condition of the above mentioned funds.  Let's just say, "It ain't pretty." Get back to your homework, kid.  Some day you may get the hang of it.  Maybe you should find a different mentor.  The Mayor is using you as his patsy.  He's not doing you any favors. 

Then, again, Marquart, in his October 28 ramblings in The Daily News stated: "The city has a fund balance; previously there was a deficit."  He would never lie to us, would he?

 The Numbers-Cruncher