HARLINGEN — Officials’ financial management earned the city high marks in its annual audit finding cash reserves jumped to a record stockpile of $31.4 million while sales tax revenue climbed 25 percent to an all-time high during the last five years.
The certified public accounting firm of Carr, Riggs and Ingram issued the city a “clean opinion” after conducting its comprehensive financial report covering the 2021-2022 fiscal year.
“We got a clean audit — that’s great,” City Manager Gabriel Gonzalez said. “That’s always what you want to have. Finance is going a good job.”
For the 36th year, the audit earned the city a Certificate of Achievement for Excellence in Financial Reporting, auditor Mathew Montemayor told city commissioners during a May 17 meeting.
“Your city does go above and beyond the minimum requirements and presents a comprehensive financial report,” he told commissioners.
‘Clean opinion’
The auditors issued the city a “modified opinion” after their audit of the city’s departments, Valley International Airport, the WaterWorks System, the city’s Economic Development Corporation and the Harlingen Community Improvement Board.
“You could consider that to be a clean opinion,” Montemayor said. “It’s one of the best opinions that you could receive as a result of the audit — something that you as a commission would be anticipating and wanting to receive and something that your management would be wanting to receive. We didn’t have any kind of deficiencies in internal control identified to be considered material weaknesses nor did we identify any type of material non-compliance.”
Record cash reserves
During his presentation, Montemayor said the audit found the city’s general fund budget’s cash reserves climbed to $31.4 million during the fiscal year, capable of financing operations for 216 days, far more than the 120 days officials have set as the city’s benchmark.
The audit found the fund balance soared during the last 10 years, climbing from $20.7 million in 2019 before standing at $15.7 million in 2013, he said.
Overview
During his presentation, Montemayor said the audit found the city’s total assets stood at $238 million, exceeding liabilities totalling $105 million, setting the city’s net position at $132 million.
Meanwhile, the audit found the city’s governmental activities totaled revenues of $74.2 million.
It’s one of the best opinions that you could receive as a result of the audit — something that you as a commission would be anticipating and wanting to receive and something that your management would be wanting to receive. We didn’t have any kind of deficiencies in internal control identified to be considered material weaknesses nor did we identify any type of material non-compliance.
Sales tax all-time high
During the fiscal year, the city’s sales tax revenues exceeded its property tax collections, a trend going back about five years.
The audit found the city’s sales tax collection climbed to $23.7 million during the fiscal year, up from $21.8 million, or 8.4 percent, the previous year, Montemayor said.
“It shows residents are able to use their funds and shop here in your city and it’s good economic condition as well,” he told commissioners.
Since 2018, the city’s sales tax revenues have jumped by 25 percent, from $18.9 million.
Amid discussion, Commissioner Frank Morales requested the extent the national inflation rate has impacted the city’s sales tax collection.
“If you just look at the increase in the inflation rate, you could probably factor that into the increase in sales taxes and get a projection of what that impact would be,” Montemayor said.
Auditorium recovering
During his presentation, Montemayor said the city’s business-type activities totalled $11.5 million.
“Overall, you did have increases in each operation of business-type activities in total revenue,” he told commissioners.
The audit showed the sanitation fund, made up of garbage pick-up and landfill operations, generated revenues of $10.4 million.
Meanwhile, the Harlingen Municipal Auditorium continues to recover from its deep hole, the result of the coronavirus pandemic’s safety restrictions.
During the fiscal year, revenues climbed to $105,831, while expenses came in at $317,806.
During the previous year, the auditorium’s revenues sagged to $4,942.
In 2019, the operation’s revenues stood at $222,427.
Golf course deficit
During about the last 10 years, the Tony Butler Golf Course’s falling revenues have led the operation to post annual deficits.
During the fiscal year, revenues stood at $870,878 while expenses came in at about $1 million.
Now, commissioners are launching a $5.5 million project aimed at drawing more players to the course as part of a plan to turn it back into a money-maker.
Valley International Airport
In an audit of Valley International Airport, the auditors found the airport’s net position stood at $91.5 million at the end of the fiscal year, up from $84.8 million the previous year.
While the airport’s revenues climbed to $6.7 million, up from $4 million the previous year, the operation covered $8 million in total operating expenses before depreciation, the audit showed.
WaterWorks System
At the WaterWorks System, the auditors found the operation’s net position stood at $89.1 million, up from $83.7 million the previous year.
During the fiscal year, WaterWorks generated $21.6 million in operating revenue, slipping from $21.7 million the previous year.
Meanwhile, the operation covered operating expenses of $21.7 million, up from $19.9 million the previous year.
EDC, Community Improvement Board
In an audit of the Economic Development Corporation, the auditors found the agency’s fund balance stood at $14.3 million, up from $12.1 million the previous year.
Meanwhile, the auditors found the Harlingen Community Improvement Board’s fund balance, made up of revenue committed to projects, stood at $7.6 million, leaving an unassigned fund balance of $232,257.
The audit showed the agency’s unassigned fund balance stood at $6.5 million during the previous year.
