Audit shows $1.3M shortfall for city in 2012
Wednesday, January 9, 2013 12:00 AM
The city of Philadelphia saw a fifth consecutive year of expenditures outpacing revenues in fiscal 2012, this time by $1.3 million, an audited financial report revealed last week.
CPA A. T. (Tommy) Williams told the Philadelphia Mayor and Board of Aldermen last week that the money was "going out faster than it's coming in."
Williams wrote in the financial report that even though the city amended its budget during the fiscal year, there were "several instances of expenditures exceeding their budgeted amounts."
He recommended that "greater care" be taken in reviewing operations and amending the budget.
Aldermen were anticipating about a $500,000 shortfall.
"We need to plug the hole," Ward 2 Alderman Roy White said after the financial report was presented.
The general fund saw $6,735,081 in revenue for FY 2012, compared to $8,089,181 in expenditures, the report said.
The general fund shortfall totaled $1,354,100.
The fund provides monies for such city departments as general government, public safety, streets, sanitation and cemetery, among others.
The city saw its beginning general fund balance - or rainy day fund - drop from $5,161,596 to $4,200,316 after TIF funds were transferred in as well as $323,348 from a CAP loan the city obtained to purchase a fire engine.
The city's $2 million share of a major renovation project at Northside Park was funded through a Tax Incremental Financing or TIF plan where sales tax revenues are diverted.
Budgeted revenue for the general fund in fiscal 2012 was $6,360,244 and actual revenue was $6,735,081.
Expenses were budgeted at $6,670,004 for fiscal 2012 and aldermen spent $8,089,181.
The city saw its total assets increase in fiscal 2012 by $281,214 or .6 percent from the previous year. Total liabilities decreased by $234,867 or 29 percent.
Total net assets increased by about $561,081 or 12 percent.
Major capital asset events during the fiscal year included $939,786 to renovate the former U. S. Motors facility, $323,348 for a new rescue truck and $113,121 for new energy efficient streetlights.
The general fund budget for fiscal 2013 reflects anticipated revenues of $7,495,473 and anticipated expenditures of $7,592,875.
Williams said if the budgeted estimates were realized, the city's budgeted general fund balance would decrease by $97,401 by the end of fiscal 2013, marking a shortfall for the sixth consecutive year.
Mayor James A. Young attributed much of the shortfall to capital outlay and a budgeted shortfall at the beginning of fiscal 2012.
"We are having to dive into our savings to pay for the equipment we have purchased which adds to the shortfall," Young said. "We need to increase our revenue. The budgets are there. There is no fluff in there. There is no excess."
Maintaining a rainy day fund is important, Young said, because monies are needed for future matching grants.
"We need to keep and secure our savings and the only way to do that is run our budgets as lean as we can and, at this point, no more capital expenditures. That's where we are. We have got to have the mindset to retool our revenue stream and get capital outlay down to zero. When that happens, we will get this ship back up to where it needs to be."
Young commended the city's individual departments for managing on "bare bone budgets" but noted that increased costs for such things as fuel and employee insurance also contributed to the shortfall.
"There have been yearly increases in everything we pay for and we have not compensated for it in our general budget," Young said.