Auditors: City Still In Good Financial Shape

Fairhope, Alabama 

 

Auditors present findings.

ANNUAL AUDIT COMPLETED

Representatives from the Warren Averett. Llc. accounting firm said the city emerged from the Covid pandemic in good shape last year, during a presentation of the fiscal year 2022 audit to the city council Monday. (A "snapshot" of city finances on September 30, 2022.) 

Mayor Sullivan said she was pleased with the audit -- and work on next year's budget was just beginning now:

"We are just beginning to work on the budget. I expect most of the work to happen in June, July, and August. 

I was pleased with both the audit and the 6-month review. Kim Creech and her staff do a great job managing the audit and the leadership team does a good job managing expenses."

Some audit highlights:

Financial Highlights

•   The assets and deferred outflows of resources of the City of Fairhope exceeded its liabilities and deferred inflows of resources by $223,984,064 at the close of the fiscal year ended September 30, 2022. An unrestricted surplus exists in the amount of $39,908,454, which may be used to meet the government’s ongoing obligations.

•   The City’s total net position increased by $21,290,124, or 10.5% in comparison to the net position at the beginning of the year. Net position of governmental activities increased $12,669,092, or 11.9% and net position of business-type activities increased $8,621,032 or 9.0 %.

•   At the close of the current fiscal year, the City’s governmental funds reported a combined fund balance of $33,251,171. This was an increase of $8,970,705 or 36.9% from the prior year.

•   At the end of the current fiscal year, total fund balance for the General Fund was $27,063,115, an increase of $7,796,670 or 40.5% from the prior year. This is due to unbudgeted growth in tax revenue along with cost savings across departments.

•   Sales and use tax, the City’s single largest revenue source, increased $1,963,253 or 16.7% from the prior year primarily due to economic growth over the prior year.

•   In September 2022, the City entered into a note payable, to finance capital asset purchases, in the amount of $1,946,719.

Governmental Activities

Governmental activities for the current year increased the City’s net position by $12,669,092. Key elements of this change are as follows:

•   Sales and use tax increased by approximately $1,963,253, or 16.7%.

•   Lodging tax increased by approximately $302,116, or 22.1%.

•   Property tax increased by approximately $606,562, or 8.9%.

•   Operational grants decreased by $7,143,497 as a result of FEMA reimbursement from Hurricane

  Sally in FY2021.

  Business-type Activities

  Business-type activities increased the City’s net position by $8,621,032. The increase is due to current year operations as well as the growth of the City and an increase in utility customers. Business-type activities are shown comparing costs to revenues generated by related services. The Electric, Natural Gas, Water and Waste Water, and Sanitation business-type activities are self-supporting with user charges and other revenues designed to recover costs.