The city of Weslaco is in good financial shape, despite a global pandemic that saw public safety costs skyrocket and businesses temporarily shutter their doors.
Not only has the city weathered the pandemic well, it has continued a decade-long trend of growth, with both sales and property tax revenues continuing a steady climb while the city’s administrative leadership have maintained a positive balance of public funds.
That’s according to a report of the city’s 2020 fiscal audit, as delivered by Matthew Montemayor, a certified public accountant with Carr, Riggs & Ingram, during a city commission meeting last week.
Montemayor explained that his firm was tasked with evaluating the city’s accounting practices for its “governmental activities” — all the public services Weslaco provides, including police, fire and public works services, as well as its “business-type activities” — those revenue-generating services such as utility billing collections and airport operations.
The firm also analyzed how well the city accounted for the use and expenditure of any federal funds it received during the last fiscal year.
The auditors found that Weslaco performed well during 2020.
“We provide an opinion on the fair presentation of the financial statements, and in that opinion, we have issued an unmodified opinion, which is a good, very good, clean opinion,” Montemayor said of the firm’s audit of the city’s governmental activities.
Similarly, the city also received an unmodified opinion of its compliance with federal awards requirements.
“We also issued an unmodified, or a clean opinion, which is a very good opinion and provides the highest level of assurance of your spending those federal awards,” Montemayor said.
Among the highlights revealed by the audit are signs that Weslaco — which fashions itself as the “city on the grow” — continues to do just that.
Since 2016, Weslaco’s assets have grown by $14 million — from $182 million in 2016 to $196 million in 2020. And over the last year alone, revenues for governmental activities have grown by $5 million — from $31 million in 2019 to $36 million in 2020, Montemayor said.
The city has also kept a good handle on maintaining an excess in assets compared to its liabilities, or its debt obligations.
“Your assets, $196 million, exceeded your liabilities of $118 million, and the difference between the two being your net position of about $78 million,” Montemayor said.
Though Weslaco experienced an increase in operational expenditures of approximately $3 million last year, Montemayor said the majority of that increase was due to the pandemic.
And of that, relief funding from the federal government via the CARES Act not only covered those unexpected expenditures, but also contributed to the growth of the city’s fund balance — those monies which are unrestricted and generally considered to be part of a municipality’s rainy day fund.
Despite the pandemic throwing a curveball in the city’s expenses, that rainy day fund saw an increase of $2.6 million.
“The biggest factor is that $4.8 million in coronavirus relief funds that passed through the county of Hidalgo in response to the CARES Act. That contributed greatly to your increase in fund balance during the year,” Montemayor said.
But pandemic relief funds only account for some of Weslaco’s good financial health. Throughout the last fiscal year, the city saw a 3% increase in both its sales and property tax revenues.
Property tax revenues increased by $1 million compared to 2019, largely due to existing properties receiving higher valuations; however, Montemayor attributed the 3% jump in sales tax revenues to the diversity of the city’s economic generators.
“What caused that? Well, I personally think it had to do with people staying home and closer to home, and shopping closer to home,” during the pandemic, he said.
“It also goes to show you that, I think, the city of Weslaco has a thriving business economy and retail market where citizens could stay close to home and shop here in their own city.”
The city’s steady governance also contributed to its good financial health. Montemayor said he saw “no major swings” in operational costs year over year, indicating that city operations are consistent.
“… (I)n the past 10 years, you can see the city’s on an upward trend in building their fund balance,” Montemayor said.
“That goes to show that the city is doing a good job in budgeting their anticipated revenues while maintaining consistent operations,” he said.