Audit concerns raised despite clean report

PNT senior writer

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Despite a clean audit report, Portales city councilors raised concerns about it after an accountant who presented on the audit cautioned the city about its spending and suggested staff look at cutting expenditures.

Dahlia Garcia, a certified public accountant with White + Samaniego + Campbell, LLP, told councilors at their Tuesday night meeting that though the city is financially sound, there was a 3 percent decrease in revenues and a 3 percent increase in expenditures from last year’s audit.

Garcia told the councilors that the majority of the increase in expenditures can be attributed to the cost of salaries and benefits. She said it was best for the city to look at ways to cut spending to avoid any future problems but said the audit had no findings.

“All in all, financially the city is doing really well,” Garcia said. “The audit went very well.”

But her comments about increased spending were all councilors and Mayor Sharon King focused on and caused further agenda items involving money to be scrutinized for the rest of the meeting.

King pointed out how there was a $2 million increase in spending from the previous year and asked both the city manager and the finance director what their plans were to address the issue so that it would not happen again.

“If we keep overspending by $2 million every year, we’re going to have a big problem,” King said. “What can we do to never let this happen again?”

Finance Director Marilyn Rapp said majority of that $2 million, about $1.7 million, was taken from the city’s reserve funds and used to improve the water infrastructure. Rapp added that the money was budgeted for, which the council did approve.

City Manager Doug Redmond said he and Rapp are looking at ways to cut expenses. Redmond said about 80 percent of the general fund goes to paying salaries.

“That leaves us with little wiggle room for cutting expenditures,” Redmond said.

As a result, Redmond has frozen hiring for the city with the exception of public safety.

“Staffing is the biggest issue,” Redmond said.

He added that the infrastructure improvements were necessary projects that needed to be completed in order to ensure citizens would have water.

Another large factor as to why spending has been an issue is because the gross receipts taxes the city collects are lower than what was expected.

Redmond said the erosion of local gross receipts is an issue affecting municipalities across the nation.

“Those are issues we can’t address but they impact our budget,” Redmond said. “Don’t think for a minute we’re not watching this every day.”

Redmond said the city’s staff is working on a budget for the next fiscal year, which will be due June 1. He said they plan to come to the council for approval of the budget in May.

Both King and Redmond agreed that it would be helpful if councilors had several meetings about the budget before May so that they can stay on top of the financial issues.

“I’d like to see suggestions on how to increase revenues,” King said.