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Lebanon gets good news from 2013 audit, but concerns for future [Lebanon Daily News, Pa.](Lebanon Daily News (PA) Via Acquire Media NewsEdge) Sept. 23--Lebanon City Council Monday received a positive report from the city's 2013 financial audit, officially closing the books on that year. But after the meeting, Mayor Sherry Capello warned there are some dark clouds beginning to gather on this year's financial horizon as she begins the process of creating next year's budget. Lebanon finished 2013 with its revenues and expenses balancing at $10.7 million, despite an original budget that anticipated a large revenue shortfall, said Pamela Baker, a Certified Public Accountant for Barbacane Thornton & Co. "What that all means is that you anticipated using $871,000 of your fund balance, but you actually almost broke even," she said. "That means the budget was monitored very closely, I would say." Baker was effusive in her praise of financial administrator Helen Westphal and her staff, who helped gather the information evaluated by the team of auditors. "For a government the size of Lebanon -- from our perspective, because we deal with a lot of governments, small ones, really small ones, mid-sized ones, really large ones -- the work that gets done here with the staff that you have is pretty amazing," she said. "You have a very small staff that does a whole lot of work." Baker also noted that the city's assets jumped $14 million, largely due to the completion of the Norfolk Southern overpasses. "You had a lot of infrastructure projects that got completed last year and got placed into service," she said. "So your capitol assets increased to $53 million from about $39 million." The one area of concern mentioned by Baker is a common one being heard in many government chambers these days. The city's fire and police pension funds are not fully funded. The Fire Fighter's Pension Fund, as of the beginning of 2013, was 85 percent funded and would have needed a contribution of about $1 million to fully fund it, Baker said. The Police Pension Fun as of Jan. 1, 2013, was 71 percent funded and would have required a contribution of $5.2 million to fully fund it. Despite those actuarial shortcomings, Baker said the city's finances are in generally good order. "The type of auditor's report that was issued was an unmodified," she said. "And that's commonly referred to as a clean opinion. In terms of your internal controls we identified no material weaknesses, no significant deficiencies, and no noncompliance that would be considered material to your financial statements." Chairman Wiley Parker was told that Lebanon stacks up well when compared to other cities its size. "You run it very lean," she said. You stay within your budgets. You set what must be realistic budgets, because you have a fund balance. And I think you also manage federal programs well. You bring in a lot of grant money; there is a lot of money that comes into here. We don't see it to the level that you have, honestly." Despite the relatively rosy report about 2013, Capello said after the meeting that she is concerned about this year's budget because of rising pension fund obligations and unexpectedly high overtime expenses in the fire department due to some injuries and a vacancy that is taking longer to fill than anticipated. "I'm definitely more concerned than last year," she said. "We have been really conscious of our spending. If we go over in one area we need to cut back somewhere else. And all of the senior staff work hard at that. But there is one area where we are going to be way over budget, and I don't know if I am going to be able to compensate enough, and that is in our fire overtime." Capello and her staff are already working on next year's spending plan in preparation for budget hearings in November. The budget will have some uncertainty, the mayor said, because she is negotiating with the city's three unions -- police, firefighters and non-uniform employees -- all of whose contracts expire at the end of the year, and it is unlikely that deals will be reached before passage of the budget. "I'm proposing to put the budget together with what we believe is a fair and reasonable offer and go from there. Because I don't know what else to do," she said. In other business, Capello said she has contracted with Fourth Economy Consulting to create an economic development strategy to determine ways to boost private investment in the city. The company, located near Pittsburgh, will be paid $63,750 for the work, which should take about eight months, Capello said. The city will pay about $16,000 of the cost with the rest being covered by a Pennsylvania Department of Community and Economic Department grant. "We were extremely pleased with the price. We thought it would be much higher," she said. Developing an economic strategy was a recommendation included in an Early Intervention Plan council commissioned last year by the Civic Research Alliance to determine the city's financial outlook, the mayor said. ___ (c)2014 the Lebanon Daily News (Lebanon, Pa.) Visit the Lebanon Daily News (Lebanon, Pa.) at www.ldnews.com Distributed by MCT Information Services |