by John Stang July 26th, 2012
The City of Sunnyside in Yakima County improperly juggled its internal funds in the past two years, so its general fund landed in the red just five months into 2012, according to a state audit report released this week. That red ink in the general fund totaled $613,516 as of May 31, although the city has slightly more than $1 million in cash reserves to bail it out. But this is the first time – at least in recent years – that Sunnyside’s general fund is in negative territory and the cash reserves will have to be used, and it’s no mere technicality. The report from the office of State Auditor Brian Sonntag says, “The city is at risk of not being able to meet financial obligations or maintain services at current levels. This could result in the city needing to take out bank loans or to find alternate funding sources, which could be an additional cost to its ratepayers and taxpayers.”
The city’s general fund budget was $9.5 million in 2011 and is $9.4 million for 2012, according to the city’s Web site. The bulk of the general fund is used to pay for salaries. The city’s overall budget is roughly $20 million including utilities, and maintenance and capital projects that have their own funds. Sunnyside is a city of 15,340 in the Yakima Valley.
The state auditor’s report said causes of the problems were lack of controls on shifting funds, and extensive turnover in top staff such as city manager, finance director and assistant finance director. Consequently, the city council did not receive timely and accurate budget information. The report said the the city government agreed to corrective measures recommended to fix those problems. Interim City Manager Frank Sweet – who had been in the post for several weeks – could not be reached for comment.
In 2008 and 2009, the city had $2.7 million and $2.5 million left in its general fund at the end of the calendar year, which is the same as its fiscal year. The ending balances of the general fund dropped to $1.27 million in 2010; then $159, 005 in 2011 and a negative balance of $613,516 as of May 31 this year. The bulk of the general fund is used to pay for salaries.
One cause of Sunnyside’s financial woes can be linked to using utility funds for general fund purposes. This is allowed in some circumstances and not in others, said Kent Zirker, spokesman for the Washington Auditors’ Office. In 2010 and 2011, the city transferred $1.82 million from its utility funds to the general fund with questions on the documentation and procedures. Zirker said the lack of documentation does not necessarily mean that a transfer was improper, but that the legality could not be confirmed.
Another problem for Sunnyside is not having adequate financial tracking procedures in place, including routines to keep the city council informed on budget issues, the report said. The city agreed to implement corrective procedures.