Auditors find town's financials to be in order

(12/21) At the November Council meeting, Erin Clark, Representative of Smith Elliott Kearns Company, presented the results of the Town’s approved financial audit for Fiscal Year 23/24 to the mayor and town council. They were tasked with verifying the Town’s financial records and determining if the Town is following correct accounting principles, as well as the accuracy of their financial statements.

The time period reviewed was July 1, 2023 through June 30, 2024. Overall, Clark found the Town's financials to be in order. The auditors looked at the General Fund and the Enterprise Fund. The Town’s assets exceeded its liabilities by $24,624,914, also known as a net position. Of this amount, $9,972,917 may be used to meet the Town’s ongoing obligations to its citizens and creditors. At the close of the fiscal year, the Town owes $7,438,561 in the form of various loan payments.

The General Fund is the primary operating fund of the Town; it receives funds through various mechanisms, including taxes, licenses and permit fees. The General Fund is where the Town accesses funds for such items as the majority of staff payroll, insurance and pensions payments, new police cars, etc.

The Enterprise Fund receives money primarily through bi-yearly homeowner water payments and hookup fees for new homes and businesses. Sewer is billed through the County. Money in the Enterprise Fund is used to pay for the upkeep of the Town’s water and sewer systems, and salaries of staff who operate them, and is considered self-sustaining.

Both the General Fund and Enterprise Fund are considered separate accounts and the expenses and revenues are audited separately.

When combined, their assets or income total $37.9 million ($19.2 million in the General Fund and $18.7 million in the Enterprise Fund) and their liabilities or expenses balance with the assets. Total revenues for the Town were $6,863,393, which was 20.4% less than last fiscal year ($4,854,373 for General Fund and $2,009,020 for the Enterprise Fund). These revenues were primarily from charges for water services and the non-operating wireless tower rental. Total expenses for the General Fund were $5,049,664 and $1,750,175 for the Enterprise Fund.

Real estate property tax is revenue listed under the General Fund, which was approved at 14 cents per $100 of assessed property value, which is consistent with prior years. The generated revenue from this rate was $1,134,029, an increase of $89,635 over the last fiscal year. Even with the increased revenue, Walkersville has one of the lowest real estate tax rates in Maryland.

Discussion is ongoing regarding the possibility of offering 24/7 police protection to town residents. The cost for five full time resident troopers was $1,704,148, which is a 14% increase over last fiscal year.

Operating revenues for the Enterprise Fund decreased by $19,905 due to a decrease in connection fees, as there was less construction in town than the previous year. Charges for water services increased from $1,510,049 last fiscal year to $1,545,776 in this fiscal year, a $35,727 increase.

Operating expenses for the Enterprise Fund decreased this year by $4,679 due to decreases in electricity usage and distribution maintenance. These were offset by increases in chemical costs, treatment fees and insurance costs.

Compared to FY 22/23, grants and shared taxes for the Town decreased from $3,380,229 to $2,767,813, mostly due to the lack of ARPA funds being spent on projects. Highway user revenue accounted for $356,472 of this total. The rest was accounted for by admissions tax, Frederick County shared income tax and tax equity.

The largest portion of the Town’s net position is its investment in capital assets, minus any outstanding debts, which acquired $14,651,997. These assets include the acquisition of land, buildings, machinery, equipment and infrastructure and are for the benefit of the residents.

Overall, the Town’s assets exceeded its liabilities by $24,624,914. It is the desired goal of the Town to continue to operate conservatively and manage resources responsibly, while also beginning to spend some of the surplus funds. With many infrastructure upgrades needed, the Town should be able to easily obtain this goal.