Audit reflects improvement in city finances

Sunday Times Newspapers

LINCOLN PARK – The news could have been worse, Mayor Thomas Karnes said of the audit report that was presented to City Council last month.

When the budget year ends in June, representatives of accounting firm Plante & Moran projected that the city can expect a $1 million deficit, less than half of the peak shortfall that put Lincoln Park under the watch of state finance officials.

Still, Karnes said, the report given during a special meeting of the council on Jan. 27 didn’t fully reflect recent developments.

“The audit didn’t take into account certain changes we’ve made,” Karnes said.

In December the panel reached an agreement with Sun Trust Bank on behalf of Honeywell Corp., to which the city had defaulted in payments. The settlement added about $80,000 per quarter to the plus side of the ledger.

According to city records about $2.14 million of the fund balance for the fiscal year has been used.

The presentation by Plante & Moran did not include some anticipated costs, but also was prepared prior to new contracts reached with the firefighters union last year and concession that avoided staff layoffs and reduced overall expenses.

City finances have been monitored by state officials since officials requested a review in August 2013, at the time under the burden of an estimated $3 million deficit. Efforts to cut spending have been taken for more than a year, including salary reductions department heads. Personnel costs reportedly represent more than 75 percent of the municipal budget.

Negotiations with public safety unions remain pending.

Few avenues exist for any further cost reductions, which balanced against declining tax revenues left the city vulnerable to state oversight or potential emergency management.

Last week the city expected a team of state financial officers to review financial records. That assessment, coupled with the audit from Plante & Moran, will frame state recommendations on whether the city should ener a consent agreement. That decision is expected prior to the June end of the fiscal year.

(James Mitchell can be reached at