Windfall to pad city reserve fund

Rebecca Neipp

News Review Staff Writer

After a recent statement by City Manager Dennis Speer that the fiscal health of the city is improving, Finance Director Rachelle Mc-Quiston followed up with a more in-depth report to the Ridgecrest City Council that one-time monies, revenues coming in above projections and penny pinching at City Hall have created a $2-million windfall for the cash-strapped city.

The welcome news comes on the heels of years of fiscal uncertainty and hardship that yielded loss of staff, cuts to service and reduced maintenance of city infrastructure.

McQuiston said that the city would have to set aside some $600,000 of that money for known costs that had not yet been invoiced. She added that $365,000 that came in above projections for the Measure L sales tax would go into street repairs. The rest she recommended putting into the city’s vastly diminished reserve fund.

She also noted that although the laws governing public accounting prohibit the city from having a hard reserve so long as the city still has outstanding liabilities (such as the $4.2 million currently being paid back to the wastewater account), the city should have set more money aside to cover cash-flow needs and unanticipated costs.

Because of this accounting practice, the city still exhibits a negative fund balance of more than $2 million. But McQuiston noted that this is not reflective of the city’s actual cash on hand, but rather the way the wastewater loan is logged on the books.

Mayor Dan Clark expressed confusion over some parts of the presentation, including why the entire windfall would not go into reserves and how long the city would reflect the negative fund balance.

During a lengthy exchange between the two, McQuiston acknowledged that part of the surplus was obligated to other payments, and that the negative fund balance would be reflected throughout the 30-year life of the wastewater loan.

“I can tell you are being very careful what you say,” Councilman Jim Sanders told McQuiston. “I’m not an accountant, I don’t want to be an accountant. Don’t worry about the lingo here.”

Sanders then said he wanted to make sure the bottom line was that the city did not have a cash-flow problem. McQuiston responded that that was correct.

“Other than one paper probably putting a bad headline [on this], we need a better presentation,” said Councilmember Steven Morgan. “Things will be exaggerated over the next couple of weeks, so things need to be taken care of.”

“We have money in the bank. We are solvent. We have cash,” McQuiston assured the council.

Public comment indicated that the presentation was hard to follow from a citizen’s perspective. Jerry Taylor asked that the next presentation include a slide that showed the numbers.

“Please bring this to us in English rather than in accounting. You are trying to paint a good picture — we are solvent — but it’s not obvious to the common man.”

Story First Published: 2013-10-09