Kannapolis looks at 2018 audit
KANNAPOLIS — As Kannapolis Finance Director Eric Davis presented the city’s 2018 financial audit Monday, he said the most important piece of information came in a one-word descriptor.
Unmodified — meaning the city had a clean audit with no findings or questioned costs. Auditing firm Martin Starnes and Associates needed no modifications or qualifiers to explain discrepancies, Davis said.
“This is representative of a standard of excellence that the public should expect from us while handling the city’s products,” said Davis.
In fiscal year 2018, which ran from July 1, 2017, to June 30, 2018, these products included $43.6 million in general fund revenue and $43.5 million in expenditures.
That was a 1.7 percent increase in revenue year-over-year, said Davis, the continuation of five years of upward trends.
“In five years, we’ve gone from $34 million to a general fund of $43 million,” he said.
Expenditures saw a much more significant jump, rising 15 percent from $37.8 million in 2017.
Davis said this was due to one-time expenditures such as two firetrucks and $1.3 million in economic development incentives, including those offered to Amazon. The city also saw a $1.6 million increase in health insurance and workman’s compensation claims, he said.
The city’s fund balance, or savings, saw modest gains, increasing $715,000 from 2017 to total $18.8 million.
Of this, $9.6 million was unassigned, a $300,000 decrease from 2017.
But Davis said overall, the fund balance was still “fairly healthy in (its) growth.”
While percentages of the balance to the city’s general fund have decreased since a peak in 2016, Davis said he expects to see a rebound at the end of 2019.
“The percentage has gone down because our operational costs have gone up,” he said. “We’re continuing to grow.”
Other details from the audit included the city’s revenue sources, with top incomes coming from property taxes, other taxes and licenses, and unrestricted intergovernment funds.
Some 58 percent of the city’s revenue came from property taxes, 23 percent from other taxes and licenses, and 7 percent from intergovernmental sources.
Property taxes increased over $500,000 year over year. Davis said this is due to growth in assessed value rather than revaluation.
The city’s biggest expenditures were for public safety, general government and debt service.
Public safety accounted for 41 percent of the city’s spending; general government expenses, 24 percent; and debt service, 17 percent.
Public safety saw an $2.1 million increase from 2017, said Davis, with much of this attributed to new firetrucks. One was an engine, and the other, a ladder truck.
“Not many cities our size are buying multiple trucks in a year,” said Davis.
“Even though we spent $1.3 million on economic development and incentives, … we still grew our fund balance in the general fund by the raw number of over $700,000,” he said. “… We’re able to now do or make those types of investments in the community that in years past we couldn’t even dream of doing.”
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