City officials explain balances

Published 12:00 am Tuesday, December 3, 2002

City officials want residents to know and understand Austin's financial condition -- specifically, how it relates to the city's fund balance.

According to documents from the state auditor's office, Austin's 2001 fund balance was pegged at $78 million.

However, both city finance director Tom Dankert and city administrator Pat McGarvey said nearly all of that amount is spoken for through various projects, or in other needs.

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Concerns have previously been raised by citizens, questioning both Austin and Mower County's fund balances.

In candidate debates before the November general election, the issue of fund balances was a popular topic, particularly those that involved elections for county commissioner seats.

The latest attempt by county officials to deflect public criticism of its fund balance came after an Austin Daily Herald story reported the 2001 state auditor's report indicated Mower County's fund balance jumped from $34.2 million in 2000 to $36.3 million in 2001. The jump came despite county commissioners' reported plans to deficit spend in 2001.

Mower County has the second-highest fund reserve balances in the state at 134 percent. The state auditor's office recommends the county have a reserve balance of 45 percent of next year's operating budget.

When asked by citizens at the American Association of University Women-Austin chapter candidates' forum, commissioners David Hillier and Len Miller defended the county's position partly by pointing at the city's large balances.

McGarvey and Dankert believe it is time the city and county quit the finger-pointing over the fund balance question and give local citizens the facts.

"If the majority of citizens don't like the way we are operating and spending their money, we would request that they tell us to do something different," Dankert said.

Dankert explained Austin's accumulated fund balance is made up of several components, including Austin Utilities, the Austin Housing and Redevelopment Authority (HRA) and Austin Port Authority -- organizations that have their own policy-setting boards outside of the control of the city of Austin.

Of the city's $78 million fund balance, $40.3 million is related to the Austin Utilities, the Port Authority and the HRA.

The Austin Utilities fund balance is controlled by its own elected board and the city has no control over how the money is spent or raised.

That $40.3 million amount is if every entity and component within each agency was liquidated. For example, Austin Utilities would have to sell off all its buildings and equipment, among other items. For the Port Authority, the Town Center building would have to sold and the HRA would have to sell all of its buildings and properties.

Removing the balances of the Austin Utilities, the HRA and the Port Authority leaves the city of Austin's actual fund balance at $37.7 million.

According to Dankert, the composition of the city's $37.7 million includes both cash balances and the value of certain fixed assets. The list is as follows:

n Debt service ($5.4 million) This goes toward paying off outstanding bonds that put many of the city's roadways in place. "We have to have money in the bank to pay next year's assessments," Dankert said.

n Airport improvements and city building fund ($6.6 million) These monies go toward the continual improvements at the Austin Municipal Airport, the Packer and Riverside arena projects and street projects that can't be financed by bonds.

n Sewer user fund ($8.2 million) These funds go toward upgrading and maintaining the sewage plant that serves everyone in the city, except Hormel Foods. Monies in this fund are also designated for upgrades and upkeep of the city's waste transfer station, located east of the airport.

n Internal service funds ($6.3 million) Dankert said roughly $4.2 million of this money will go toward the new central garage and for new equipment including, but not limited to, snow plows, dump trucks, etc … The remaining funds are for the city's risk management fund, which is designated for paying out unused sick leave for those who retire, and for the city's various insurance plans including health, property, liability and workman's compensation.

n Donations ($1.1 million) These funds are given through estate planning or through other gifts to the city. The majority of this fund is made through the contribution from the recently established Walter Wienke estate. The donation is currently valued at $884,000. However, Dankert said the principal on that donation can't be touched for at least 30 years, meaning the city can only spend the interest. There are other contributions the city has received, called non-expendable trusts, that stipulate the city cannot spend the principal, but only the interest.

n Refund of funds from Austin's now-defunct fire and police retirement association ($2.5 million) McGarvey said that in 1998, the state of Minnesota took over the retirement association. Thanks to a timely withdrawl from the stock market, the city has seen extra money that can only be used for fire or police-related purposes.

n Flood buyout ($1 million) This is the amount the city had to kick in to receive large contributions from the state and federal government for the flood buyout program, largely to purchase homes that were in a floodplain.

"We had to show a good faith effort," before getting those outside funds, McGarvey said.

n General fund ($6.3 million) About $3.2 million of this fund is the city's "cash flow" to meet payroll and pay bills before Austin's largest funding source (local government aid) comes from the state in July. The remaining dollars are part of the city's "rainy day fund" and reserve funds for contracts.

n Library fund and library improvement fund ($300,000) Monies for this project are set aside for upkeep and upgrades at the Austin Public Library.

Dankert said Austin's annual audit report is also posted on the city's Web site at

"We have discussed our fund balances and operations with citizens many times over the last several years, and we will continue

to have an open-door policy to discuss citizens' questions and issues," he said.

The city's annual truth-in-taxation meeting takes place tonight at 5:30 p.m. in city council chambers.

Neal Ronquist and Dan Fields can be reached at 434-2231 or by e-mail at