Chelsea receives 'qualified opinion' from auditors
Editor's note: This story has been updated to add information about the city reducing its general fund millage after passage of a Chelsea Fire Authority millage.
Chelsea’s finances were given a “qualified opinion” for the fiscal year ending June 30 by auditors Plante/Moran.
At the Chelsea City Council meeting Tuesday night, a two-year comparison of the general fund showed a decrease of 19 percent in property taxes, a decrease of 18 percent in state and federal revenue-sharing funds and a 47-percent decrease in interest and other income.
In anticipation of decreased revenues, the city reduced its expenses by 8 percent in almost every department with the exception of public safety, where there was a slight increase because of wages and benefits.
In 2009, the city’s general operating year-end revenue was $5.135 million while in 2010 that total was $4.325 million. Expenses were $4.684 million in 2009 and $4.342 million in 2010.
City Manager John Hanifan said the city reduced its general fund millage by 1.8 mills when voters approved a Chelsea Area Fire Authority millage.
"This also contributed to the 19 percent reduction in property tax revenue ... roughly half of the 19 percent," he said in an e-mail.
A five-year comparison of the city’s fund balance showed $253,000 in 2006, $321,000 in 2007, $1.205 million in 2008, $1.584 million in 2009 and $1.567 million in 2010.
The auditors called the city “proactive” in increasing its fund balance, which had been lower than they thought it should be. Auditors typically like to see a fund balance of between 10-15 percent of a municipality’s operating budget.
The auditors did not give the highest "unqualified" rating because Chelsea has not included a $2.8 million judgment against the city in its books because it has appealed the decision to the Supreme Court.
Comments
Rod Anderson
Thu, Oct 28, 2010 : 7:33 a.m.
The pending award against Chelsea was actually $2.8 million, not $2.4 m. Also, this sum does not include interest accrued since the award. I believe the amount now at risk is well above $3 million.