Vice Mayor Larry Munsey gave a presentation to the Board of Mayor and Aldermen last week on the results of the audit - a comprehensive review of the city's finances for the year ending June 30, 2006. The Kingsport accounting firm of Blackburn, Childers & Steagall performed the audit in the fall of last year.
"The city is in excellent financial condition," Munsey said. "And as in the past few years, we have received an unqualified, clean audit."
According to the audit, Kingsport had no material weaknesses or reportable conditions. Material weaknesses are conditions that could lead to misstatements in the city's finances, while reportable conditions involve matters related to deficiencies in the design or operation of the city's internal controls over finances.
At the end of the 2006 fiscal year, the city's general fund balance stood at $15.4 million, which is an increase of $3.3 million over last year.
"I see some encouraging signs, and there's no reason at this time for a tax increase," City Manager John Campbell said. "I don't know if I've seen a city in this region in the past 25 years that has this good a picture for the long term."
According to the audit, the city's total gross debt decreased by nearly $5 million during the 2006 fiscal year, going from $114 million to $109 million. During the 2006 fiscal year, Kingsport made $10.2 million in debt payments - approximately $431,000 more than during the 2005 fiscal year.
However, the BMA voted in December to issue $24.5 million in general obligation bonds to pay for a new elementary school in the Rock Springs community. This debt was issued in the 2007 fiscal year.
As of June 30, 2006, Kingsport owes approximately $46.3 million in general obligation bonds, $18.4 million in water bonds, $47.7 million in sewer bonds, and $8.3 million in bonds for MeadowView convention center and Cattails golf course.
Munsey said debt payments go from $20.5 million in 2007 to $8.9 million in 2012, which means the city would have $41.3 million more in cash over the next five years.
"Over the next five years we are going to have significant amounts of additional money with which to work without raising property taxes," Munsey said.
Alderman Ken Marsh, who keeps a close eye on the city's finances, said Kingsport is in incredible financial shape - at this moment.
"But this is June 30, 2006. This situation on June 30, 2007, will look far less appealing because we approved to float the largest annual bond issue every issued," Marsh said. "Politicians have an incredible ability to spend whatever is there. ... Plus. I'm not opposed to borrowing money in rational ways. There's an opportunity here for the new board to throw a lot of money in a lot of directions. We need to be careful where we put our resources because they're not unlimited."
The 2006 budget was crafted by former City Manager A. Ray Griffin Jr. and Budget Director Judy Smith. City Attorney Mike Billingsley, who served as interim city manager last year, oversaw the budget for the second half of the fiscal year and helped craft the 2007 budget.
Kingsport paid BCS $139,881 to audit the city and schools' finances for the 2006 fiscal year and is under contract with the accounting firm for $146,580 to perform an audit on the 2007 fiscal year finances.