With an undesignated General Fund balance over $8 million, Soldotna would be the envy of many other cities in the words of the Mikunda, Cottrell and Company auditor reporting Wednesday on the city's finances.
Also impressive is the fact the city has no long-term debt.
"What an enviable position," said auditor John Bost.
He did, however, point out two "material weaknesses" in the city's past accounting methods.
In auditor parlance, a material weakness is the most serious shortcoming, followed in decreasing seriousness by significant deficiencies and control deficiencies.
A material weakness is defined as a significant deficiency, or combination of deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity's internal control.
Bost criticized the city for its internal controls over bank reconciliations and over journal entries.
Mayor Peter Micciche asked whether the city's financial report for the fiscal year that ended June 30, 2008, had "any show-stopper deficiencies."
The auditor replied that the two material weaknesses were "weaknesses in internal control that could affect federal programs."
Responding to a follow-up question from City Manager Larry Semmens, the auditor confirmed that the city had no ineligible charges to (federal) grants and nothing to indicate that any granting agency was going to be asking Soldotna for money to be returned.
During fiscal year 2008, Soldotna spent $2,195,258 in federal financial assistance, according to Bost. Of the total, $1.8 million went to building a ski runway and other improvements at Soldotna Municipal Airport.
Total state financial assistance to Soldotna was $2,579,555, according to Bost. Included in that total is a refund to the city of more than $1 million pre-paid toward the Public Employee Retirement Systems unfunded liability.
On Thursday, Semmens said, after spending hundreds of hours reconciling the city's bank books, the shortcomings noted by the auditors have been addressed and rectified by new Finance Director Melanie Lewis.
Semmens said, in fact, the two material weaknesses were reported by auditors a year earlier, but were not rectified by the previous administration.
"Going forward, we're on the right road to correcting the material weaknesses and won't see them again next year," Semmens said.
Bost said he has worked with Semmens and Lewis in the past, and is confident Soldotna will not have an extensive list of negative findings in the future.
Overall, Bost said Soldotna "had a really, really good year financially."
Among the highlights is the fact that the city's assets exceeded its liabilities as of June 30, 2008, by $87,124,022. Of the total, $22,718,781 may be used to meet the city's ongoing obligations to citizens and creditors, according to the Comprehensive Annual Financial Report.
With sales tax revenue at nearly $7.5 million in fiscal year 2008, the city's tax revenue was $8.1 million, or more than 80 percent of its $10.2 million General Fund.
The financial report actually shows a steady increase in Soldotna's sales tax revenues from $4.4 million in 1999 to $7.44 million in 2008, without an increase in the sales tax rate.
In his mayor's report, Micciche said the Unified Community Memorial Park Committee unanimously supported the Knight Drive properties as the site of a city cemetery.
The committee "will be approaching Planning and Zoning on April 15 asking for their blessing and recommendation back to the (city) council the following week," Micciche said.
He also said the city has $29,000 available for scholarships, including three adult scholarships for adult academic or vocational education or retraining opportunities. Applications, which are due April 22, are available at city hall.
Micciche announced a pilot project to beautify the city's main business corridor, beginning with a plan to improve the looks of a gravel parking area in front of the Aspen Hotel.
Approving its consent agenda unanimously, the council awarded a $52,707 contract to Alaska Treeline Inc. for repairs to a section of the fish walk at Swiftwater Park.
City Clerk Teresa Fahning said a Committee of the Whole meeting at 5 p.m. will precede the council's April 22 meeting.
Phil Hermanek can be reached at firstname.lastname@example.org.
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