The City of Taylor accepted a clean 2022 audit last month, as presented by Plante Moran, an audit, tax, consulting and wealth management firm. The auditors issued an unmodified opinion, the highest form of assurance that can be received from an independent auditing firm.
As has been the case with recent audits of the City of Taylor, this one pointed out a lot of high points. For instance, while the City’s General Fund balance decreased by $855,194 in 2022, that was actually less than the planned budgeted use ($2,480,832). The positive $1,625,638 budget variance was due to better-than-projected performances from the general government, community development, public works and capital projects areas.
Plante Moran’s Bill Brickey noted that there was a prior period adjustment related to the City’s OPEB (Other Postemployment Employee Benefits) liability when he discussed it with City Council. The adjustment actually benefited the City as it decreased the beginning OPEB liability after being discovered. The adjustment was the result of the City’s actuary misstating the number of plan participants and correcting the estimated life insurance benefits. As a result, the OPEB beginning balance was $26M or 19% overstated.
“Something didn’t seem right, but when we all got in the room, (Chief of Staff) Dan (Bzura) and (Budget and Finance Director) Jason (Couture) worked hard with Plante Moran,” Mayor Tim Woolley said. “At the end of the day, we found the issue, got it resolved, and it worked out for the better.”
As a result, overall Legacy Cost Liabilities continued to decline and now sit at just over $219M. Once the biggest areas of concern among those liabilities, Taylor’s OPEB outlook has continued to decrease. The City has paid its debt down by making contributions annually, while also making adjustments to various contracts over the past decade.
At one time, Taylor had the highest unfunded OPEB liability in Michigan, but it has fallen over $200M to $110,108,712.
The General Fund’s unassigned fund balance, usually labeled a “rainy day” fund, sat at $11.1M on June 30. The unassigned fund balance represents 25 percent of current year’s expenditures – or approximately 92 days of reserves. Plante Moran auditors considered that a very solid performance. A decade ago, the City had a $5M structural deficit before working its way back into the black.
“The City has done a good job managing its fund balance through the pandemic,” said Nicolette Acho, a member of the team that audited the City. “A 25 percent fund balance is right in the middle of the preferred range.”
Other portions of the audit reported that during the fiscal year, the City invested over $14M in City infrastructure and equipment through its governmental and enterprise funds. Approximately $5M of long-term debt was paid down. The City had new equipment leases of $509,000 and $1.5M in additional debt with the Downriver Utility Waste Authority (DUWA).
A large part of the current budget picture involves the federal American Rescue Plan Act (ARPA) funds. The City received $11.6M, and expended $964,000 in 2022. The remaining balance, over $10M, must be obligated by December 31, 2024. Also called the COVID-19 Stimulus Package or American Rescue Plan, the entire federal package was a $19 trillion economic stimulus bill passed by the 117th United States Congress and signed into law by President Joe Biden on March 11, 2021, to speed up the country's recovery from the economic and health effects of the COVID-19 pandemic and the ongoing recession.
The auditors noted the following key areas of revenue for the City, which totaled over $42M (slightly up from the previous fiscal year): Property taxes ($11,266,013); charges for services ($4,252,755); federal grants ($1,162,831); fines and forfeitures ($4,892,317); licenses and permits ($1,247,706); state shared revenue and grants ($9,646,236); and interest and rent ($1,184,053). Approximately $8.6M was listed as “other” revenue.
It should be noted that taxable value in Taylor is still rebounding from the great recession of over a decade ago. It has been on the increase since 2017, but is not predicted to reach 2010 levels until approximately 2029. In addition, for every dollar taken in taxes, the City only receives 37.6 percent. Over 44 percent of each dollars goes to public schools and just over 18 percent to Wayne County.
Expenditures in 2022 increased year-over-year, $41,026,383 to $43,644,795, with the largest increases coming in general government and public safety.
To view Plante Moran's audit overview, click here
Original source can be found here.
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