City’s net income grew by $13 million last year
The city of Durango announced it has received the “best possible marks” on its annual comprehensive financial report produced by independent auditor Eide Bailly’s review of the city’s books and records.
The audit identified just two errors in the city’s financial statements:
- A 2022 insurance premium payment incorrectly filed as accrued by Dec. 31, 2021.
- The absence of Business Improvement District taxes to be received by the city in 2022.
Corrections were made during the audit to reflect accuracy, Paul Kane of Eide Bailly said at Tuesday’s Durango City Council meeting.
Kane said the nine-month effort to conduct the 2021 audit and final financial statement is a noticeable improvement in pace compared with the 15-month process involved with the 2019 comprehensive financial report.
“The past couple years have seen longer turnaround times on the Annual Comprehensive Financial Report because of the rebuilding of the finance department in 2020 that took place after the finance department’s previous director was convicted of embezzlement,” the news release says.
Julie Brown, former city finance director, was sentenced to five years in prison in 2021 for embezzling more than $700,000 from the city over more than 11 years. She was later resentenced to 90 days in jail and 20 years of probation.
Kane said financial audits have noticeably improved and that the Eide Bailly team aims to have the 2022 audit completed by the end of June next year, more in line with the work schedule the city had in place before the Brown embezzlement scandal shook things up.
He said since 2020, Eide Bailly performed forensic audits and internal control exams with the help of third-party consultants; they were barely used in the 2020 financial audit and this year the audit was performed all in-house with Eide Bailly.
“I think you are all on a trajectory to get this done even faster next year, back to probably where you’re used to getting it done,” he said.
The city of Durango announced the release of its audited 2021 annual financial report on Sept. 15, days after Durango resident John Simpson filed a lawsuit against the city after being denied access to an unaudited version of the same report.
Tom Sluis, spokesman for the city, said the timing of the audited report’s release is not related to the lawsuit filed Sept. 9 by Simpson, which alleges the city violated the Colorado Open Records Act by denying him access to its unaudited 2021 financial report.
“We would look forward to a ruling from a judge in settling this matter,” Sluis said, referring to the lawsuit.
He said the city is confident in how it provides financial data on a daily basis to the public in an accurate and transparent way.
Alex Arndt of Eide Bailly said the city’s assets exceed its liabilities by nearly $365 million, meaning the city has “more than enough money” to cover any debts or surprise financial needs.
He said assigned and unassigned fund balances in the city’s general fund grew by about 39% in 2021, which is indicative of a healthy standing with reserve funds.
The city’s net income grew by over $13 million in 2021 compared with 2020, from $18,234,341 in the latter year to $31,603,961 last year.
He added that debts and liabilities are going down in value as a result of debt payments without additional debts added in 2021.
Net revenues rose last year from nearly $88 million to $89 million, but net expenses also rose by about $6 million from $69.5 million to nearly $76 million.
“Some of those (expense) increases were due to a lot of the business-type (funds); the water and sewer had additional expenses more so than previous years, as well as the transportation fund,” Arndt said.
Kane of Eide Bailly said the Durango-La Plata County Airport is also in a strong financial position. Its combined restricted and unrestricted fund balance for 2021 was $13,101,851, or 189% of its annual expenses.
DRO’s total revenues in 2021, almost $8 million, fell from 2020 by about $4 million as a result of COVID-19 funding and airport improvement programs.
“The airport’s back to normal: You all know you had a great travel year,” he said. “I feel like the whole country did. But from all accounts it sounds like Durango was just hopping and the airport got to see a boom there in their operating revenues as well as an increase in their operating expenses.”