Financially speaking, 2016 was not an average type of year for the City of Redwood Falls. Much of that had to do with the construction of the addition to the Redwood Area Community Center, as it continued to demonstrate the city’s commitment to culture and recreation.

The audit, which was presented at the June 20 city council meeting by Mary Reedy of CliftonLarsenAllen LLP, demonstrated what has been a constant for several years in the city - a strong fiscal position.

According to the audit, in 2016 30.99 percent of its revenues came from local taxes, with 23.39 percent coming in charges for services. That is similar to the 2015 finances when 31.2 percent of the revenues were from local taxes and 26.02 percent were from charges for services. While not an apples to apples comparison, as it is based on the 2015 state report of cities with a population of more that 2,500, the average Minnesota city receives 50.4 percent of its revenue from taxes. 

When it comes to expenditures, said Reedy, Redwood Falls continues to be unique, as 26.14 percent of its budget is spent on culture and recreation, which includes expenditures for amenities such as the parks system, the library and the community center.

However, its largest expenditure – 28.19 percent – is in the area of public safety.

The streets and highways portion makes up 16.14 percent of the expenditures, with 21.59 percent spent in general government. Comparably, the 2015 state report for 2015 of cities with a population of more than 2,500 show 24.4 percent of the expenditures are in public safety, with 8.8 percent of the expenses in the culture and recreation programs.

The city’s general fund unassigned fund balance dropped from $2,950,969 in 2015 to $2,320,802 in 2016, but Reedy said that was due to the funds paid for the community center expansion.

One of the measures of a strong fund balance is the amount of unassigned dollars in comparison to the budgeted general fund expenditures. Reedy said the ideal is for that number to be around 50 percent. With the drop in 2016, that number was at 36 percent locally.

However, Reedy added that was a bit of an anomaly, as the city’s fund balance has consistently been much closer to the 50 percent mark historically – 49 percent in 2015, 44 percent in 2014, 48 percent in 2013 and 47 percent in 2012.

The council was told while those dollars came out of the fund balance to cover the costs of the community center project, much of that will be recovered based on commitments from the community. A number of donors pledged funds for the project with payments over a period of three to five years. The city covered the cost in 2016 but can expect those funds to come in over the next few years to help boost the fund balance back to its historical position.

The city’s proprietary funds continue, for the most part, to be strong, as its water, storm sewer, public utilities and liquor store all show strong operating income. However the city continues to struggle in its sewer fund, as it has been consistently in the negative since 2012, with the exception in 2013.

Missi Meyer, city finance and administrative services director, said the staff continues to work on that issue to find resolution.

Overall, the city continues to be in a good financial position, said Reedy, adding the clean audit demonstrates that. Members of the council thanked the city staff for its work on the audit. Meyer said the city has put in place strong internal controls to ensure fiscal responsibility, adding with a $50 million budget it is very important to have good people.

That, she added, is certainly the case for Redwood Falls.