Berlin Not Concerned With General Fund Dip

BERLIN — A slight dip in the General Fund balance has still left Berlin in a “healthy” financial position, according to the town’s annual audit that was discussed at this week’s Mayor and Council meeting Monday.
As of the end of the fiscal year, Berlin’s general fund balance is sitting at $7,088,135, with a little more than $500,000 of that restricted and already committed to various projects.
“Which leaves $6.5 million as unassigned or available to carry forward to the next year,” said Leslie Michalik, one of the town’s auditors from finance group PKS and Company.
The general fund saw a $350,718, or 5 percent, drop this year.
“And this is after a transfer of $300,000 which was budgeted to go to the stormwater fund,” said Michalik. “Without this transfer, General Fund activity actually had a decrease of $50,000.”
That put the general fund a little under, but still in line with, the average of the last five years.
“There’s not a whole lot of change in the overall fund balance,” Mike Kleger, another town auditor, told Mayor Gee Williams. “You mentioned the $300,000 and that’s not a big drop.”
Recent years have seen the town with a $7 million general fund balance average. The current $6.5 million unreserved is “a healthy fund balance based on your annual budget and revenues,” Kleger told the council.
Michalik also touched on some of the largest expenditures for the town this year.
“The largest area of expenditures is public safety, 25 percent, and general government, which makes up 26 percent of expenditures,” she said. “Public works department makes up 16 percent.”
Among all governing costs, salaries and benefits accounted for the lion’s share, at 55 percent of the total. On the revenue side, property taxes were once again the biggest source of income for the town, accounting for 59 percent of the total dollars received.
Even with the General Fund taking that slight hit, the council was enthusiastic about the audit results.
“If I understand it, the basics of the basics are that revenues in all of the enterprise funds and basically utilities have a net gain during the fiscal year,” said Williams.
That was correct, according to Kleger, who added that even with the fund balance dipping this year it is still unusually high for a town of Berlin’s size. The mayor told Kleger that maintaining a strong general fund was a strategy that Berlin had been using for years to generate financial leverage.
“I think that goes back several administrations where the idea was that, by having a higher than usual fund balance that put us in a much better position to seek grants and loans from our partners at the county, state and federal level and I think that’s proven out,” Williams said.
Williams also told Kleger that he was not overly disappointed with the $350,000 hit to the general fund balance given recent major undertakings, such as a new stormwater utility that Berlin has launched. Initial projections saw that decrease to the fund as more significant.
“Quite frankly, that [$350,000] is a lot, lot less then what we were told three years ago,” said Williams. “I think at one time we were estimating $750,000-$800,000.”
Though the fund is in good shape, especially compared to similar municipalities, Kleger did point out that Berlin is carrying more baggage than most as well.
“However, you do have a significant amount of debt, too, which a lot of towns don’t have, so it’s not an unreasonable level fund balance but it’s still very comfortable,” he said.
When asked by councilmember Paula Lynch if the town needed to be worried about reaching a debt cap, Kleger replied that they did not and had plenty of wiggle room.
“You’re nowhere near the maximum,” he said.