By David Rogers. November 29, 2011. BLOWING ROCK -- Blowing Rock’s total net assets increased by $1,546,571, with the increase primarily in business-type activities during the fiscal year ending June 30, 2011, town commissioners learned Monday (November 21) at a special Town Council meeting. Blowing Rock News offers this summary report after study of the audit document and interviews with Town officials.

The meeting included an audit report by Combs, Tennant & Carpenter, Inc., CPA. The accounting firm’s report was presented by Mr. Jason Carpenter and Mr. Billy Combs, principals of the firm.

All of the currently sitting Town Commissioners were present, as well as incoming Commissioner Dan Phillips, Mayor J.B. Lawrence, Town Manager Scott Hildebran, and other key administrative personnel.

Key highlights of the "Management Discussion and Analysis" portion of the audit document:

• The assets of the Town of Blowing Rock exceeded its liabilities at the close of FY2011 by $26.06 million (referred to as "Net Assets").
• The town government's total net assets increased by $1.55 million, with the increase primarily coming from what are classified as "Business Type Activities", such as providing water and sewer services to town residents and businesses. The main contributor to the increase in net assets from business-type activities was due to the completion of capital projects such as the Blowing Rock-to-Boone water interconnect and various sewer improvements.
• As of June 30, 2011, the Town's governmental funds reported combined ending fund balances of $3.61 million, a decrease of $430,333 compared to the period ending June 30, 2010.  The decrease is attributed to the expenditure of loan proceeds on hand to construct the Parking Facility at the Blowing Rock Art & History Museum, as well as debt service payments for the Parking Facility at the American Legion building and the Emergency Services building.
• Approximately 69.65% of the Town's total governmental funds, or $2.51 million, is available for spending at the government's discretion, as "unassigned funds".   This amount represents approximately 51% of the Town's total general fund expenditures for the fiscal year.
• Unassigned funds increased $317,465 in the fiscal year ending June 30, 2011, with the increase primarily attributed to the receipt of final FEMA funds received for the 2009 Ice Storm debris cleanup and, according to the auditor's, "...accomplished through vigilant monitoring of expenditures during a time of continued economic uncertainty."
• The Town's total debt decreased by $751,769 (-9.28%) during the fiscal year.
• The Town maintained a North Carolina Municipal Bond rating of 80 for the ninth consecutive year and also maintained its improved Moody's Investor Service bond rating of A2 "...for the second consecutive year, having previously maintained an A3 rating for seven consecutive year, as a result of financial planning and capital debt management."

Business-type revenues, which accounted for 91.32% of the Town's total growth and include services that the Town charges customers to provide, surged 41.26% in FY2011 compared to FY2010, primarily owing to a 186.91% increase in Capital Grants and Contributions related to the Blowing Rock/Boone Water Interconnection projects completion.

Other key highlights from Blowing Rock News' review and analysis of the audit document and its "Management Discussion and Analysis":

• The ratio of the Town's net assets to total liabilities improved to 3.19%, compared to 2.68% for FY2010.
• The Town collected 97.32% of property taxes, a slight decrease of 0.67% from the prior year’s rate of collection (97.99%).
• REVENUES:
  • Total governmental activities revenues declined from $5.49 million in FY2010 to $4.89 million, or -10.91%.
  • A major factor in the reduced governmental activities revenues was a decline in operating grants and contributions from $902,453 in FY2010, to $131,683 in FY2011.
  • Property tax collections increased slightly, from $3.04 million in FY2010, to $3.06 million in FY2011.
  • The financial position statements reflected an allowance for Doubtful Accounts in the General Fund's taxes receivables of $74,414.
• EXPENSES:
  • Total governmental activities-related expenses increased from $4.31 million in FY2010, to $4.60 million in FY2011, due in large part to the payoff of debt service associated with the former Visitor Center building that was purchased by the NCDOT for the Hwy. 321 widening project.
  • General government expenditures declined from $753,621 in FY2010, to $707,885 in FY2011, a reduction of 6.07%.
  • Interest on long-term debt declined slightly from $260,545 in FY2010, to $255,783 in FY2011.
• DEBT
  • As of June 30, 2011, the Town had total bonded debt outstanding of $210,000, backed by the full faith and credit of the Town. This is a 49.40% reduction in general obligation bonds of $415,000 at June 30, 2010.
  • There was no major new debt issued in FY2011 and debt retirements via payments were made on the Fire/Rescue building, American Legion Parking Facility, and Sewer Bonds, as well as the payoff of the former Visitor Center building after the purchase of the property by the North Carolina Department of Transportation for the widening of U.S. 321.
• FY2011 vs. BUDGET
  • In the General Fund, there was $107,078 less collected in revenues than were budgeted, with budgeted revenues for the General Fund totaling $4,873,050 and actual collections coming in at $4,765,972. This is mainly attributable to a $211,323 shortfall in a revenue line item identified as "Miscellaneous." In a more detailed statement, "Miscellaneous" revenues in the General Fund were further identified as Cemetery Revenue (actual: $6,375), Solid Waste Fees (actual: $99,268), Zoning fees (actual: $3,501) and Miscellaneous (actual: $70,623).  This document does not show the detailed budgeted amounts for each line item vs. the actual expenditures.
  • In the General Fund, total expenditures finished the year under budget expectations by $187,848. The largest contributor to the savings was in public safety ($63,466 under budget).
  • Actual revenues came in $80,770 above actual expenditures at the close of Fiscal Year ending 2011.

2012 BUDGET HIGHLIGHTS (selected notes):

• • Property tax collections and revenues from franchise fees and sales tax are projected to remain relatively flat.
  • Budgeted expenditures in the General Fund may increase somewhat, as a result of rising costs of employee retirement and health insurance, as well as increases in operation and maintenance costs.
  • At June 30, 2011, the Town had a legal debt margin of $81.68 million.

The Town accomplished its goal as set forth in its Comprehensive Financial Policy of a General Fund Balance equal to just over 50% of total General Fund expenditures. Several aspects of the Town’s financial operations with a positive influence on their financial position as mentioned in the audit include:

1. Financial Operating Policy, which maximizes cash management
2. Continued diligence in the collections of property taxes
3. Utilization of a capital improvement plan for managing capital expenditures
4. Preventative measures, such as diligent monitoring of expenditures and continued prioritization of Capital Projects

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