The Newport City Council heard its annual financial audit at the Thursday, August 7.
Giving the audit presentation was Jim Eichten from LB Carlson.
“My name is Jim Eichten with LB Carlson,” he said. “You’ve probably seen me here before under a different name. I previously worked for MNPR CPAs. As of Jan. 1 we merged with LB Carlson, which is a larger CPA firm, a one officer firm in Plymouth…the work that we do and service level is very similar, just under a different name.”
Presenting the audit report, Eichten delivered an unmodified opinion on the city’s basic financial statements, meaning that the Newport financial stations were fairly presented in accordance with accounting principles in the State of Minnesota. Emphasis of matter was placed on implementation of new standards on group purchases of capital assets (a new requirement), while internal control check cited limited control of segregation of duties and internal control over financial reporting, specifically in regards to the preparation of financial statements.
“Pretty standard for a city of your size,” Eichten said of limited segregation of duties between employees. “During our audit we look for controls, other systems to overcome that limitation. We didn’t have any concerns with that limitation.” Nonetheless, the firm was required to report it.
The audit itself was delayed in completion due to some information not coming from the state’s pension plan program until mid-May.
As to city legal compliance, meanwhile, the only audit finding related to unclaimed property reporting.
“There is a state law that requires the city to report any unclaimed property to the state of Minnesota and to turn over those funds to the state of Minnesota if and when they become unclaimed for a certain amount of time,” Eichten said. “ That particular report was not filed on a timely basis.”
No issues were found with the data aside from late filing.
“The corrective action plan basically states that you’ll file on time next year,” Eichten said. “I don’t anticipate any issue with that.”
Shifting to financial highlights, Eichten shared an increase of taxable market values in the city from 2015 to 2024, rising from under $300,000 to near $700,000.
“This graph shows a 10-year presentation of the taxable market values in the city,” he said. That is a tremendous positive growth you’re seeing in the city.”
The taxable market value for properties in the city increased 20 percent in 2023 and 14 percent in 2024. “The city is seeing a positive increase in property values as well as the levies you’re issuing,” Eichten said.
An expanding tax base has the overall effect of lowering the per capita contribution per citizen (assuming an unchanged tax rate) as the overall base from which to draw needed funds is larger. In line with this, Newport had seen the average tax rate on city, county, school, and special taxes go down, from an overall figure of 121.3 percent of net tax capacity in 2022 to 104.2 percent net tax capacity in 2024. The average tax revenues collected, meanwhile, were going up.
Eichten then covered the changes in fund balance, with most changes due to online infrastructure projects.
Fund balances for governmental funds saw a difference in the 2024 fund balances of $1,268 less for Non-spendable, $118,853 more for Restricted, $126,495 less for Assigned spending, and $215,782 more for Unassigned spending, as compared with 2023.
City fund balance changes for 2024 as compared with 2023 including $324,196 more for General Fund, $51,698 more for the Economic Development Authority, $10,227 more for Special Revenue, $173,421 more for Debt Service, and $3512,620 less for capital projects.
The city’s total net position change versus last year was up by $3.764 million as of Dec. 31. Much of this increase with net investment in capital assets, such as roads and streets.
Also covered at the Aug. 7 audit were water and stormwater funds, with income before depreciation rebounding after suffering a fall in 2021 and 2022.
The full Newport audit report is available online with the Aug. 7 Newport City Council meeting.