The City of Havre de Grace's financial operations posted a $1.89 million net loss between total revenues and total expenditures for the 2014 fiscal year that ended June 30, 2014, according to a report presented to city officials this week.
The city took in $20.94 million in revenue from all sources during FY2014, and spent $22.83 million, according to a summary report prepared by the Baltimore-based Cohn-Reznick accounting firm.
According to the year-end audit prepared by the firm, the decrease in total net position was the result of a net deficit of $236,000 for general government activities and a net deficit of $1.65 million in business-type activities such as water and sewer and dockage funds.
The water and sewer fund posted a net loss of $1,448,544, according to the audit, while the dockage fund's net loss was $202,864.
Cohn-Reznick partner Lucas Matesa presented the audit findings to the mayor and city council Monday evening.
Despite the deficits, Matesa said the city received a "clean opinion, or an unqualified opinion."
"In our opinion, the financial statements presented are presented in accordance with generally accepted accounting principles," he said.
Matesa also said there were "no instances of noncompliance" with the audit process, and he praised Finance Director George DeHority and his staff for their assistance.
The city ended the 2013 fiscal year with a $1.82 million net deficit, according to historical data included in the summary report Matesa presented. It ended fiscal 2012 with a $380,000 net surplus.
The city received $20.86 million in revenue during FY2013 and had $22.68 million in total expenses, the summary report states. The city received $21.92 million in total revenue during FY2012 and spent $21.54 million.
Property taxes are Havre de Grace's largest source of revenue, and the city received $9.93 million through that source during FY2014. That figure, however, decreased from prior years. About $10.51 million came in through property taxes in FY2013, and $10.32 million in FY2012, according to the summary report.
Revenue from charges for city services increased during the period, however, from $6.64 million in FY2012 to $6.74 million in FY2013 to $7.27 million in FY2014.
Capital grants and contributions went from $3.12 million in FY2012 to $1.51 million in FY2013 and then increased to $1.72 million in FY14.
Expenses by function increased over the two-year period, except in general government, where spending decreased from $3.93 million in FY2012 to $3.42 million in FY2014, according to the summary report.
The largest expense by function is in the water and sewer fund, which is an enterprise fund separate from the city's general fund and whose primary revenue sources are water and sewer usage fees and connection fees or developer contributions. None of those revenue sources have kept pace with the system's expenses, city officials have acknowledged.
Water and sewer expenses were $8.79 million during FY2012. They increased to $9.08 million in FY2013 and then dipped slightly to $9.03 million in FY2014, according to the summary report.
The next-largest expense by function, public safety, increased from $4.92 million in FY2012 to $531 million in FY2013 and then to $5.57 million in FY2014
Public works expenses for streets and other non-water and sewer related activities also grew, from $2.58 million in FY2012 to $3.45 million in FY2013 to $3.51 million in FY2014, according to the summary report.