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City council receives 'clean' audit report

RINCON — The City of Rincon’s financial ship is docked in tranquil waters.

During an Aug. 2 Rincon City Council workshop, City Manager John Klimm said, “I think — more than anything else over the last two or three years — we really have been successful in solidifying the financial position of the city. I give credit to the mayor and the members of the council for your support in doing that.”

Finance Director Monica Woods reported to the council about an annual outside audit that was in the final draft stage.

“We are excited and glad that we are going to get a clean opinion,” Woods said.

Almost all the numbers in Woods’ report were positive.

“The good news is that the governmental funds — sanitation, water and sewer — all ended with an increase in their fund balance,” she said. 

operating loss (of $202,353) but it is consistent with 2019 and that speaks volumes because of the (COVID-19) pandemic last year.”

     Klimm said the City of Rincon has weathered the pandemic well. It cut the budget last year out of concern that sales tax revenue might plummet.

     “We didn’t know if it was going to go south on us,” he said. “Fortunately, in the end, it didn’t, but when you are relying on the sales tax you have to plan for things like that.”

Woods credited Lost Plantation management’s strict budget oversight for preventing the course from becoming a major financial drain during a period of social distancing requirements.

The general fund balance was nearly $4 million. The Fire Fund and SPLOST Fund contained $922,805 and $5,078,505, respectively.

 The Sanitation Fund ended with $522,468 and the Water and Sewer Fund finished with $28,001,301. 

The Water and Sewer budget started with $25,241,870.

“Eighteen million of that is your capital asset value,” Woods said. “Really, the reserve there is just under $10 million.”

Klimm expressed his satisfaction with the report.

“It is relatively rare for a city to have an audit done with no deficiencies — findings or deficiencies,” he said. “There are usually a handful of recommendations that we may have had from the last year or whatever so this is significant.”

In previous years, auditors flagged a few fund transfers for “misclassification.” The timeliness of bank statement reconciliations were also a concern.

“... all these have been corrected,” Woods said.

In 2018, the Rincon City Council passed a reform package that called for saving excess revenue in case of an emergency. 

“In every year since then — 2018, 2019 and 2020 —  we’ve had an increase to a point where we are where we need to be, which is something to be said for the city and this council,” Klimm said. “We don’t have a fund balance issue, and more than a few communities do.”

The general fund balance has reached $3,906,575.

The City of Rincon has also spent less since 2018. Annaul expenditures have dipped from $18 million to about $14 million.

“That’s a reason why have been able to increase our reserves and our fund balance,” Klimm said.

All departments are on track to hit their budget targets for this year, Woods said.

Klimm noted that the budget will change substantially in two years.

“In 2023, our fire department will become a City of Rincon Fire Department,” he said. “With that advent will be a loss of revenue of $625,000 that we have historically received from (Effingham County) because we provided fire services to a part of Effingham County.”

An fire audit was conducted to prepare for the change.

The City of Rincon will soon have a new revenue stream in the form of a small monthly stormwater fee. Details are still in the works but it is expected to be implemented in the next 90 days.

In February, Klimm recommended that the fee be $1.50 for single-family homes. The money will be used to pay the costs of maintaining and upgrading Rincon’s sewer-related equipment.

Rincon’s wastewater treatment plant has reached about 80 percent of its capacity. Plans are in the works for a $9 million expansion that will be paid in part by SPLOST revenue, the general fund and the 2021 Recovery Act.