Audit, financial report of 2021-22 city budget shows broadband fund expected to be out of deficit by 2023

Published 12:01 am Wednesday, January 5, 2022

By Natalie Anderson

SALISBURY — The city’s financial audit for the 2020-21 fiscal year shows that its fiber-optic network fund, or the broadband services fund, is on track to no longer be in a deficit by the end of fiscal year 2022-23.

Leann Bagasala, an accountant with Charlotte-based Elliott Davis PLLC, and Finance Director Wade Furches presented City Council members Tuesday with an audit and financial report of the city’s 2020-21 budget, which began July 1 and spanned until June 30, 2021. Bagasala said the audit “went very smoothly” in terms of communication and compliance. The firm gave the city’s audit an “unmodified opinion,” which she said is the “highest level of assurance” for financial statements.

The only “indicator of concern” and statutory violation was the broadband services fund deficit. Bagasala said the Local Government Commission now requires municipal bodies to respond to such violations in writing within 60 days detailing how they plan to correct that. Bagasala said the city will continue to be flagged for the deficit until the debt is cleared.

Furches said the city generated $822,978 in revenue from Hotwire during 2020-21. The 2019-20 fiscal year was the first time the fund generated a positive cash flow, and that amount was $802,201. The deficit now amounts to $2.7 million, down from $4.9 million in the prior year. In 2016-17, the deficit was $9.8 million.

With those numbers “trending in the right direction,” Furches said the city is on track to “be in the positive” by June 30, 2023, which will mark the end of the 2022-23 fiscal year.

The city’s available fund balance, or the money that can be appropriated from the general fund, increased for the 2020-21 fiscal year, reaching a little more than 36%. In the 2019-20 fiscal year, that rate was a little more than 32%, down from about 33% in the 2018-19 fiscal year. The state requires municipalities to have at least 8% of their general fund balance available, but the city has a policy of reserving at least 25%.

After meeting that 25% goal, Furches said the city’s available fund balance is around $4.7 million. That’s from the $15.1 million available to be appropriated from the total general fund amount of $22.09 million.

The city saw a substantial increase in revenue during the 2020-21 fiscal year compared to prior years. Furches attributes that to sales tax proceeds and property taxes that ended up being nearly $3 million more than what was budgeted. While the city’s expenditures and transfers amounted to $41.7 million, revenues totaled $44.8 million. By contrast, revenues amounted to $42.6 million in 2019-20, while expenditures and transfers amounted to $42.1 million. In 2018-19, expenditures and transfers exceeded the city’s revenues, with $39.6 million in revenue available to cover $40.9 million in expenditures and transfers.

“This financial statement does still contain a disclaimer that we don’t know what’s going to happen as a result of COVID-19 because we’re still not out of it,” Furches said. “But as of right now, we have been very fortunate that our revenue has stayed very strong.” 

Council member Anthony Smith said in reviewing the audit he was “taken aback” by how resilient the city and county has been throughout the pandemic.

The city has used Elliott Davis for a few years now, Furches said, but the firm is no longer conducting audits for governmental entities. The city will submit a request for proposals for a new auditor, with an anticipation to award a contract in early March.

Mayor Pro Tem Tamara Sheffield was not present during Tuesday’s meeting due to a death in the family, Mayor Karen Alexander said.

Also at the meeting:

• Council members approved Land Development District Map Amendment Z-03-2021 to rezone a .97-acre parcel at 1035 Mooresville Road from neighborhood mixed-use to corridor mixed-use. The request comes from Mark Kraus, owner of Integrity Auto Repair, who wants to expand his business.

• Council members adopted an ordinance amending section 13-40 and Section 13-41 of the City Code to increase the overtime parking fine from $5 to $15 and the repeat offender fine from $50 to $75.

• Council members approved several ordinance amendments to the 2021-22 budget, including a $25,000 grant from the North Carolina Governor’s Highway Safety Program to provide overtime funds for traffic enforcement; a $23,960 grant from the North Carolina Governor’s Crime Commission to replace outdated equipment in the booking area, a transport chair, mobile stop signs to aid in reducing traffic accidents in high crash zones when the power goes out, replacement Taser cartridges and digital optics; a $25,000 grant from the Duke Energy Foundation to support social justice and racial equity initiatives; and $69,814 to appropriate Edward Byrne Memorial Justice Assistance grants for 2019, 2020 and 2021 for the purchase of a benchmark management system, two interactive whiteboards, a license plate reader, duty pistol replacements, weapon lights and holsters, handcuffs and baton replacement.

• Council members appointed Greg Alcorn, CEO and owner of Global Contact Services in Salisbury, to the Rowan Economic Development Council. The city has two appointments, and one expired on Dec. 31. Appointees can serve two terms.

• Council members authorized Interim City Manager Brian Hiatt to execute a contract for $354,364 with Level Solutions Group, LLC, for the purchase of replacement technology equipment. Equipment has reached its end of life and funds for this purchase were approved in the 2021-22 budget.

• The council approved ordinances amending parts of the city code, including Section 13-338 regarding prohibited parking, Section 13-341 regarding reserved handicapped parking, Section 13-366 regarding loading zones and Section 13-362 regarding off-street parking lots. Changes are to match existing and updated markings from the Main Street Road Diet and for uniformity.

• Council members approved an ordinance amending Section 13-336 regarding general speed limits in the city’s code to lower the speed limit from 35 mph to 25 mph in the 600 and 700 blocks of North Ellis Street.

• Council members approved an ordinance amending Chapter 10, Article III of the city’s code to authorize filing a Notice of Lis Pendens, or notice of a pending suit relating to claims on properties, in minimum housing cases.

• Council members approved a right-of-way encroachment for Spectrum in the 100 block of South Ellis Street.

Contact reporter Natalie Anderson at 704-797-4246.

About Natalie Anderson

Natalie Anderson covers the city of Salisbury, politics and more for the Salisbury Post. She joined the staff in January 2020 after graduating from Louisiana State University, where she was editor of The Reveille newspaper. Email her at or call her at 704-797-4246.

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