The City of Havre de Grace finished its fiscal year June 30 "in sound financial shape," with a $3.1 million fund balance in its operating budget, according to Mayor Wayne Dougherty, despite a troublesome and worsening deficit in the city government's Water and Sewer Fund.
The year-end fund balance of $3.1 million was "$850,000 ahead of expectations," the mayor told the city council Monday night after he had stepped down from the dais to deliver his quarterly report for the fourth quarter from the podium, facing the council members.
"The financial results for fiscal 2012 indicate that the city continues to be in sound financial shape and was able to achieve most of its budget targets by year end," Dougherty said in his opening statement.
The one budget target the city didn't meet was eliminating, or at least decreasing, the deficit in the Water and Sewer Fund. Despite increasing usage rates, the deficit grew from $490,000 at the end of the previous fiscal year to $1.2 million 12 months later.
Havre de Grace received $13.5 million in revenues, an increase of $590,000 over the previous year and $715,000 more than budgeted.
There were three key areas, according to Dougherty's report, that accounted for most of the revenue increases:
The city's share of local income taxes was $1.5 million, an increase of $275,000 over the previous year and $840,000 more than budgeted.
Property tax revenue was $8.6 million, an increase of $105,000 over the previous year and $225,000 more than budgeted.
And, the Harford County allocation for police was $175,000 more than the year before and $410,000 than budgeted.
The biggest financial concern is the Water and Sewer Fund, which wasn't helped by a 4.1 percent decline in usage in the most recently completed fiscal year compared to the previous year. It was also 5 percent less than the city budgeted.
"There are several new development opportunities under way within the city," the mayor said. "These new developments will increase water demand which the city can meet with its existing facilities."
The water and sewer operating budget ended the fiscal year at a deficit of $80,000 compared to a $65,000 operating deficit the previous fiscal year. The operating deficit increased slightly despite an additional $175,000 generated by the rate increase.
The city spent $5.7 million to operate its water and sewer facilities, which was $100,000 less than budgeted, but $250,000 more than the previous year, Dougherty reported.
"The increase in spending, despite the reduced volumes, can be attributed to price volatility in chemicals," he said.
The mayor also reported the city spent $635,000 more in capital projects than it received in grants or other reimbursements.
"As I reported in prior reports, continued usage declines can be attributed to water conservation efforts by our residents and to increased housing vacancies," the mayor read from his report. "The city will continue to explore opportunities to reduce operating costs, to obtain capital grant funding, and to provide short-term debt relief as we overcome the current financial challenges."
In other funds:
• The Marina Fund finished the fiscal year with a $205,000 balance that decreased from the $255,000 balance at the start of the year. The mayor attributed the decrease to the unexpected need to dredge the marina that was silted in by Hurricane Irene and Tropical Storm Lee.
• The city was reimbursed for 75 percent of the dredging costs, but the unreimbursed portion cost the city $50,000 and that was the amount the fund decreased.
"The city did not have to use any Emergency Reserve funds through the quarter," the mayor reported, "and the fund is still at its $1.2 million target."
• The RAD loan program made one new loan in the fiscal year and has nearly $160,000 available to lend to small businesses.
• The Promenade Fund has a balance of $120,000 for maintenance and/or repairs, an additional $10,000 over the start of the fiscal year.
• Critical Area Tax receipts were $43,000 for the fiscal year, according to the mayor, making $285,000 available for "future qualified Bay restoration projects."
• "Slip User Fees were $65,000 for the year and $215,000 is available for qualifying for projects," the mayor reported.
• The Community Center Fund has a $17,500 deficit, which is $3,000 less than it was at the start of the year.
• The Abandoned Property Restricted Fund spent $30,000 during the fiscal year, leaving a balance of more than $40,000.
• The Forest Conservation Fund didn't have any activity and has a $700 balance.
Those funds, though important to the areas they serve, are secondary to the three primary funds – general, water and sewer and the marina.
"The strong financial condition of both the general and marina funds will be important as the city grows its water and sewer service customer base to pre-recession levels that are needed for sustainable operations without the need for additional debt," the mayor reported.