This article originally appeared in the May 3 issue of the Progress Times
An accountant walked the Mission City Council through the annual audit report Wednesday, calmly explaining the city’s precarious financial position.
Ricky Longoria, a partner at McAllen-based accounting firm Burton McCumber & Longoria, informed the City Council that Mission didn’t adopt a balanced budget last year, which resulted in an approximately $3 million budget deficit; failed to comply with city policy, which requires Mission to keep two months of operating cash in the bank for an emergency; and nearly depleted a fund that covers employee health care expenditures.
“Between the utility fund and the solid waste fund, you have $6.4 million that you transferred to the general fund,” Longoria said. “And so those funds have supplemented the general fund. But even despite those transfers, the general fund still lost over $3 million.”
Longoria walked the City Council through the 2018 Comprehensive Annual Financial Report, which covers the fiscal year that started on Oct. 1, 2017, and ended Sept. 30, 2018, on Wednesday night.
All four elected officials who attended the meeting Wednesday — Mayor Armando “Doc” O’caña, City Councilwoman Jessica Ortega-Ochoa, City Councilwoman Norie Gonzalez Garza and City Councilman Ruben Plata — served on the City Council with former Mayor Norberto “Beto” Salinas when they adopted the budget.
The city received a “clean” opinion, Longoria said.
“I don’t want the public or you all to confuse — a clean opinion is not an opinion of financial health, per se,” Longoria said. “A clean opinion just says that the numbers that you all are looking at are fairly stated in all material respects.”
Highlights from the audit included:
> In 2011, the City Council adopted a policy that required Mission to keep a minimum of two months worth of operating expenses in the bank for an emergency.
Mission didn’t meet that requirement last fiscal year.
The city had an unrestricted fund balance of about $3.3 million, according to the audit report. Mission needed about $4 million more to meet that requirement.
In the 2017 fiscal year, Mission missed that goal by a couple days, Longoria said. In the 2018 fiscal year, Mission missed the mark by roughly 30 days.
> In the 2018 fiscal year, which ended on Sept. 30, the city’s general fund ran an approximately $3 million deficit.
“And for the year ended Sept. 30, 2018, for the general fund, expenditures exceeded revenues by $3,076,000. So that caused the general fund to decrease by that amount,” Longoria said.
Without transfers from the utility fund, the solid waste fund and other funds, the general fund would have recorded a $6.7 million deficit.
“And that’s just the normal operations,” Longoria said.
> The city Group Health Employee Plan Fund, which covers employee health care expenses, lost nearly $1.4 million last fiscal year.
It ended the year with just $157,000 in the bank, Longoria said, adding that another bad year would force the city to find money elsewhere.
“If that fund has another year like it did in ‘18 and you only have $157,000 to cover the loss, that fund too would also be in the negative,” Longoria said.
With other city funds struggling, it’s not clear where Mission could find the money to make up the difference.
“But I wanted to point out that fund because that too is starting to trend in a manner that needs attention,” Longoria said.
Longoria spent about 45 minutes briefing the City Council.
“Mayor, commissioners, those were what I consider to be the highlights,” Longoria said, adding that some people might consider them “lowlights.”