MAYVILLE — The 2008 audit report was presented to the Mayville City Council on May 27, and the results weren't as good as city officials had hoped.
"We all know we're in rough shape, so no one needs to be afraid to speak openly about our city's financial condition," Mayor Tracy Heron said. "Indeed, that's why we're here today and that's why we were elected: to shine the light on the numbers, discuss the causes and continue toward real solutions in the very near future."
According to John Rader of Virchow and Krause, the general fund is at negative $909,700. The number has deteriorated from the previous year.
"If you turned off the faucet at Dec. 31, how long could you continue to pay bills, plus or minus the liabilities and receivables," Rader said. "It gives you a sense of your financial position. Financial advisors like to see 15 to 25 percent, but you have a negative number."
A loss in the general fund of more than $400,000 was attributed to two factors: $325,000 in transfers due to the golf course closing out as a fund to the city in April 2008, and the snow and ice removal budget being over by $95,000.
Rader said that the general fund, if it was in good shape, should be at about $1.4 million in the positive.
"A short 10 years ago Mayville had almost $1 million in its rainy day fund," Heron said. "Apparently it has rained quite a bit since then because that fund remains in a negative position, even with the advance we made in the right direction with this year's budget."
According to Rader the enterprise funds operation costs varied: water had a surplus of $216,000, wastewater had a small loss of $48,000 compared to the $1.2 million it brings in and the TAG Center had a loss of $390,000, which includes $264,000 in depreciation.
"You are $3 million away from where you should be," Don Rahn of Virchow and Krause said. "That's the TAG Center deficit, the capital project fund deficit and putting the general fund into a 15 percent positive fund balance. How much of that can you do in one year? Clearly there are many variables. You didn't get into this situation in one year, you got into it over 10 years. Even getting to a situation in one year where all funds receive a positive result is a major undertaking. I think you are working hard to do that."
He said that before the city council can start undoing the deficits of the past, they have to stop adding to them.
Heron said that there were several reasons the city is in its current financial situation:
n Past mayors and councils were reluctant to raise taxes and find other revenue to outpace increasing costs;
n Reluctance to cut costs;
n Reluctance to cut city personnel;
n Complacency when it came to attracting new business and industry;
n Instead of finding new revenue or cutting costs, the city ate away at reserve funds;
n The city did not budget properly, creating deficits;
According to Heron, there also have been several financial surprises uncovered:
n Cash accounts at local banks had not been reconciled for more than a year;
n Quarterly state sales taxes were late on a number of occasions from 2002 to 2008 resulting in interest and penalties paid by the city in excess of $17,000;
n Interest and penalties paid for late payment on Mayville Golf Course sales tax in excess of $5,000;
n Total interest and penalties paid from 2002 to 2008 were in excess of $27,000;
"Let me be clear that our current comptroller/treasurer was not responsible for any of these fines and we have safeguards in place to ensure that this practice does not continue," Heron said. "I am eager to continue shining the light on the truth of whatever it is we are dealing with at any time, and eager to get to the work of returning Mayville to the vaulted status that it deserves to have in the State of Wisconsin."
dharris@capitalnewspapers.com