by Jack Mayne The state auditor in its 2013 audit found no major financial problems in Burien city government, but one â€œsignificant deficiencyâ€ turned out to be an error the city staff found itself. Washington State Auditor Troy Kelly issued on Sept. 29 its report of the 2013 audit of Burienâ€™s financial statements of the cityâ€™s governmental activities (download PDF of the audit here). A problem during the audit process prompted the auditor to suggest better internal controls. The single â€œsignificantâ€ deficiency could have led to â€œmaterial weaknesses.â€ Even so, the audit showed no â€œinstances of noncompliance â€¦â€ Missed $288,477 expense The report said the city has responsibility to have internal controls to be certain that statements are reliable, but the audit found a â€œsignificant deficiency in internal controlsâ€¦â€ because the city â€œdid not identify $288,477 of expenditures incurred but not yet sought for reimbursement.â€ The audit report said that was because the city did not have a procedure in place to be certain that correct information coming from various departments involved in federally financed projects. â€œThe city did not dedicate sufficient time and resources to the preparation and review process.â€ The result was the total program expenditures increased and created a new major program that was required to be audited,â€ the state report said, adding that Burienâ€™s Finance Department staff found and subsequently corrected the error. Even so, the auditor recommended that the city in the future provide time and money to ensure accuracy. City objects The city said it â€œrespectfullyâ€ disagreed. â€œWe do acknowledge an error in the originally submitted materials,â€ the cityâ€™s response said. â€œHowever, that error resulted from an isolated incident of oversight related to one federal grant out of 16 includedâ€ and the â€œsingle reimbursement request that was not included was discovered by finance staff and promptly and accurately reportedâ€ while the auditors were still at Burien City Hall. The auditorâ€™s report acknowledged that. â€œThe city has a small accounting staff and experienced an extended vacancy in the position responsible for performing this work,â€ said the report. â€œThe error was an isolated incident of oversight as the other 15 grants â€¦ were correctly reported. In addition, the error was detected prior to finalizing the financial statements so those were accurately reported. â€œThe city agrees that accuracy is important and has implemented additional policies and procedures related to grant reimbursement requests to ensure timely and accurate submittal of requests.â€ Income exceeds liabilities This included a â€œManagement Discussion and Analysisâ€ which the report said â€œis intended to be an easily readable analysisâ€ of the cityâ€™s financial activities, and said over the past 10 years, the tax income has increased by an average of $5.36 million per year, a trend that continued in 2014 with an increase of $4.1 million. â€œAssets exceeded its liabilities at the close of the most recent fiscal year by $120.7 million,â€ the auditor wrote. â€œOf this amount, $98.8 million is net invested in capital assets and the remaining $21.9 million is available for capital projects, debt service and funding the governmentâ€™s ongoing activities and obligations.â€ The auditor said the cityâ€™s total long-term debt increased $651,000, â€œwhich reflects a net increase in governmental activities long-term debt of $734,000 and a decrease of $83,000 in business-type activities.â€ Burienâ€™s total line of credit is $3.6 million, the state audit report said, â€œbut the city only drew down $2.4 million in 2013.â€ Economic factors As most citizens know, property taxes are a big part of Burienâ€™s income, representing 19.5 percent of total governmental resources. The sales tax grew to 21.1 percent and Business and Occupations and Utility taxes total about 11.9 percent of income. Then money from state shared revenues and grants make up 28.8 percent of total resources. The state auditor said that while sales tax revenues â€œhave rebounded to pre-recession levels, it will take several years to fully recover the loss of property tax revenues due to legislative limits on the amount that property tax can increase in any given year.â€ In 2012, Burien logged a decline in assessed valuation because the city hit its property tax cap of $1.60 per $1,000 in assessed value. â€œAssessed value declined further in 2013,â€ the audit report said, â€œassuring that it will take several years for the city to recover the lost property tax revenues.â€ Even though Burien’s assessed valuation grew by 2.7 percent in 2014, property tax revenue is approximately $500,000 less than the highest amount collected in 2011. â€œThe loss in property tax revenues is cumulative and has caused a structural deficit,â€ said the state auditor. â€œSales tax has returned to pre-recession levels and continues to grow; however, that revenue source alone does not overcome the property tax loss.â€]]>
Search The B-Town (Burien) Blog
SUPPORT OUR SPONSORS
Search The B-Town Blog
Subscribe to our Daily Email Newsletter
Berkshire Hathaway HomeServices NW Real Estate
Story Idea or News Tip?
You can also text us or leave a voicemail 24/7 at (206) 659-1282, or call our office at (206) 248-2565.