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December 12, 2012

City keeps good books in bad economy Eastpointe receives annual audit report

By Sara Kandel
C & G Staff Writer

EASTPOINTE — The 2011-12 fiscal year audit report showcased Eastpointe’s good bookkeeping and positive efforts in offsetting another bad economic year.

The city received its annual audit report from Plant & Moran, an independent accounting firm, Nov. 19. Required annually by state statute, an audit report assesses accounting practices and evaluates the city’s overall financial report.

According to the audit report, the city’s financial statements were clean of any material misstatements and fairly represent the city’s financial position.

While the city did have to dip into the general-fund balance in the 2011-12 fiscal year, they did so less than planned.

“It was really good because, originally, we were supposed to go into our fund balance like $3 million, and we only went in $750,000,” said Mayor Suzanne Pixley.

“It was all right,” she said.

“We went into the general and public-safety fund by about $731,725, less then the projected use of $2.7 million,” City Manager Steve Duchane said. “We were able to cut costs from the general fund by restructuring departments, implementing cost controls, downsizing the executive team, changes in health care, adopting new fiscal policies and the creation of the recreation authority.”

The city’s overall assets took a hit, falling by approximately $1.4 million from $76 million in the previous fiscal year to $74.6 million in the 2011-12 fiscal year. The downfall in property taxes played a big roll in the loss of value to the city’s overall assets.

“After four years, the value of a mill is about half of what it used to be — a mill used to generate $750,000, and now, thanks to the overall taxable value drop, a mill raises $464,000,” Duchane said.

Property taxes make up the largest portion of the city’s annual revenue. In 2011-12, revenue from property taxes fell by approximately 8.4 percent, or $1.3 million, to $14 million. State-shared revenue also comprises a large amount of city revenue, and it decreased in 2011-12 by 5.1 percent, to $3 million.

The city’s water and sewer fund did see an increase in revenue, though. The water and sewer fund brought in $11.2 million in revenue, but expenses were only $9.5 million, creating a net increase of $1.7 million.

“In some years, you break ahead a little bit, and in some years you fall behind; this is just one snapshot year,” Duchane said. “The 2011-2012 fiscal year revenue increase led us to be able to reduce rates in the 2012-2013 fiscal year by 9.5 percent for water and 8.5 percent for sewer.”

In addition to a review, the audit report presented to council will include a letter of transmittal, detailing, among many other things, the city’s accomplishments in the 2011-12 fiscal year, which includes adopting a water shut-off policy, a partnership with the county to use Community Development Block Grant funds to develop a senior living facility, a $304,000 reduction in administrative costs, the replacement of almost three miles of water mains and more.

While overall in the 2011-12 fiscal year, the city lost revenue, it was able to offset much of what could have been lost and accomplish a lot of positives in the process.

]“The financial department is very competent, and (Randy) Blum is a very competent director, and I am appreciative and proud of their work, as I am with the work of all the city officials who helped come up with and implement cost-cutting plans, and the City Council and mayor who passed them,” Duchane said.

The City Council will officially receive the audit report at the regular council meeting Dec. 18. For more information on it, visit the city website at www.cityofeastpointe.net or call the City Manager’s Office at (586) 445-5016.

You can reach C & G Staff Writer Sara Kandel at skandel@candgnews.com or at (586)498-1030.