Kannapolis city audit shows healthy fund balance despite economic woes

Published 12:00 am Wednesday, December 2, 2009

By Hugh Fisher
KANNAPOLIS ó Despite tough economic times, the city of Kannapolis still has a healthy fund balance, accountants told the Kannapolis City Council Monday.
Marcie Spivey, of the firm of Martin Starnes and Associates, P.A., said its outside audit of the city’s finances found no findings or questioned costs and no material internal control weaknesses.
“As you can see, your revenue increased about 16 percent over last year and your expenditures increased about 4 percent,” Spivey said.
The fund balance ó essentially, the city’s savings on hand ó totals $3.3 million in unreserved funds.
Although that appears to be a decrease from last year’s figure of $4.1 million, Spivey said, in reality, there are funds that will be refunded once the TIF bonds are sold and money put down on public works projects is repaid to the fund.
The current state of financial markets has delayed the sale of the bonds.
Spivey said the Cabarrus County property revaluation would have an impact on next year’s income figures.
In other news, the audit showed public safety remains Kannapolis’ biggest expenditure, taking 39 percent of general fund outlays.
Councilman Roger Haas thanked the firm for its work and asked the biggest question of the evening:
“How would you state our ability to weather economic circumstances that are coming?” Haas asked.
Spivey said the city seemed to be in a good position.
City Manager Mike Legg echoed that assessment.
“We haven’t put a mandatory freeze on hiring or expenditures, but we advise our department heads to be frugal,” Legg said.
“We’re sort of internally building up some savings by not spending, but we run on a fairly tight budget,” he said.
He said the biggest issue was the money laid out for TIF-funded projects.
Legg agreed now is not the optimal time to sell the bonds but looks forward to their sale.
“The big ticket is the TIF,” he said.
In other action, the Kannapolis City Council:
– Unanimously passed a resolution opposing an idea by the N.C. General Assembly’s 21st Century Transportation Committee to discuss returning so-called “tier three” roads to local maintenance.
Although still in the planning stages, the idea was put forward by a committee as a means of saving state money, with the justification that local governments could better respond to local road needs.
“When you think about Highway 29, Highway 3, Kannapolis Parkway, those are the types of roads they would be keeping and maintaining,” Public Works Director Wilmer Melton said.
“All of their other roads, they are talking of transferring to our maintenance.”
Under the proposal, the state would pay Kannapolis about $6,000 per mile for the roads affected.
But it currently costs the City of Kannapolis about $21,075 per mile to maintain its roads.
“We’ve evaluated this and we’re certainly not in support of this,” Melton said. “It needs to go back to the drawing board.”
Other ideas from the board’s discussions include highway use taxes, increased registration issues, bonds, toll roads and devices that would measure highway use and charge a per-mile fee, Legg said.
Mayor Bob Misenheimer said the idea of handing control of roads back to municipalities seemed to be off the table for now.
“But if we are likely to get a funding source, it is likely to come with strings attached, which may include taking over the roads,” he said.
“Or, if the state decided they would quit robbing the Highway Fund to pay for other expenditures, maybe they would have some money,” Councilman Darrell Hinnant said.
– The council unanimously authorized Legg to execute a lease on the former Fifth Third Bank building at 234 Dale Earnhardt Blvd. for use as the city’s new customer service facility.
The city will pay Atlantic American Properties $3,641 per month for 18 months, with up to two optional nine-month extensions for a total potential term of 36 months.
The original lease presented last month had the same rental rate but no extensions, which council members questioned.
The new center is slated to open by the end of February 2009.