An independent audit presented this week shows Moorhead is in good financial shape overall, but some council members are concerned the city may be short on reserves.
A self-created ordinance that sets guidelines for maintaining a cushion of reserve funds is currently not being met, according to council member John Rowell.
The ordinance, created to ensure the city keeps enough money set aside for future disasters and unexpected events, states its general fund and park fund must maintain a cash balance of 40 percent of a current year's budget as of June 30 of each fiscal year.
It also says the city's enterprise fund should maintain a reserve of 25 percent.
The city on Friday was not in compliance with the ordinance.
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Moorhead is under the current reserve requirement of $6.7 million by $765,956, City Finance Director Harlyn Ault told council members at a meeting earlier this week.
Rowell said the city has been forced in recent years to delve into its reserves to pay for basic projects because of reductions in government aid. That, coupled with a city growth spurt, is what has some worried.
Ault said the city is working toward getting back into compliance with the ordinance.
"We're trying to recover to meet the obligation of that ordinance. We're trying to get to that point," Ault said.
This year isn't the first that Moorhead hasn't been in compliance with the ordinance.
In 2005, the city was under the reserve requirement by approximately $1 million, Ault said.
Striving not to overspend in all city funds is helping the city creep back toward its reserve benchmarks, Ault said.
"If we can keep expenditures to budget, we hope there will be some build-up eventually in the cash balances," he said.
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The June 30 benchmark was set because local government aid flows to the city in July and December.
The end of June typically represents a low point in city bank accounts.
The issue came up at a council work session this week, at which time Ault and Eide Bailly accountant Brian Stavenger presented audit findings and outlined the financial health of the city. State law requires cities conduct an audit and report outcomes publicly.
Moorhead in 2005 spent taxpayer dollars within 0.7 percent of $15 million budgeted for general fund expenditures - money that pays for public safety measures among other services, the audit showed.
Overall, the city is handling funds responsibly, Stavenger said.
Ault agreed.
"When you look at the $15 million expenditure budget, the city only exceeded that by only $98,000," he said. "We were within less than 2 percent of what the budget was."
The review of city finance information for 2005 comes on the brink of discussions over Moorhead's 2007 budget.
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Overall, the city's 2006 budget totals $51.5 million, a $7.4 million increase over the adopted 2005 budget.
The council will soon begin talks for the 2007 budget.
A sticking point for council members is the status of the city's general fund reserves.
They are divided over the best way to finance $8 million in parks improvements. Although the council earlier this month passed a trio of resolutions that allows it move forward with planning for parks, final decisions on funding the entire project aren't finished.
The subject is on deck for coming weeks.
Councilman Mark Hintermeyer said he wants park improvements paid for from reserves.
Other council members including Rowell, Lauri Winterfeldt-Shanks and Diane Wray Williams say a small property tax increase is necessary to pay for the upgrades.
Rowell said since the city is currently not in compliance with the general fund ordinance, it's unfathomable to pay for parks improvements from the account.
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News on the city's current reserves will likely play into that discussion, Mayor Mark Voxland said.
"The council's mind is already working toward '07," he said.
Readers can reach Forum reporter Melinda Rogers at (701) 241-5524
