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Budget review shows $2.5 million surplus

NATCHEZ — In a single week, the City of Natchez’s financial outlook became $4 million rosier, all due to correcting accounting mishaps.

The city originally believed it was $1.5 million in the hole last week. Tuesday, city leaders said they now believe they have a $2.5 million surplus.

Deanne Tanksley, the city’s independent auditor who works for The Gillon Group, wrote in an email to Mayor Butch Brown Tuesday that a rerun of the May budget numbers revealed the city actually had a $2.5 million surplus, not a $1.5 million deficit, which was originally reported in a monthly budget report presented to the Board of Aldermen at last week’s meeting. The erroneous report was created by the Natchez City Clerk’s Office.

Brown said the city has found itself with cash flow problems as money continues to be taken out of the general fund, but not other city funds.

“We’re not in a deficit problem, but we do have a cash flow problem because we don’t collect enough that’s being used to go into the general fund,” Brown said. “As long as you have enough money coming into the general fund you’re fine, because that’s the one you want to use to run the city.”

Ward 6 Aldermen Dan Dillard brought up the apparent deficit during last week’s meeting while reviewing a monthly budget report presented to the board.

City Clerk Donnie Holloway attributed the deficit at the time to lower than expected ad valorem tax revenue and increased payroll expenses.

Following the meeting, Tanksley said she found issues with the city’s fund 111, a Natchez Water Works operations funds.

Tanksley said at the time, she discovered the budget report included this fund, but was only reporting expenses and not revenues.

After further reviewing the May budget, Tanksley said Tuesday “monies are in funds that the Aldermen don’t want touched and that is contributing to the cash crunch.”

Brown said the city has a need to grow the general fund, but can’t when certain funds are restricted from being used.

“We need to grow the general fund like anything else, and we do that right now by making an inter-fund loan so we can make payroll and that sort of thing,” Brown said. “We need to do that until the ad valorem tax and sales tax comes back and then we repay that loan.”

Dillard said he didn’t believe an inter-fund loan would be the best course of action, as the money borrowed might never make it back to the account from which it was taken.

“I don’t have a problem with inter-fund loans with one exception — it’s a loan so you need to pay it back,” Dillard said. “If you don’t pay it back, it defaults into a transfer, and we don’t want transfers.”

Ward 3 Alderwoman Sarah Smith said she also didn’t think an inter-fund loan was the best option, either, referring back to inaccurate and inconsistent budget numbers as a root of the problem.

“We need to figure out how to get better and more accurate reporting and utilize a system to get more simplified reports, so it doesn’t take five hours to go through it all,” Smith said. “We should have the more in-depth reports there if we need to go back on something specifically, but I think the reports we get now are too cumbersome.”

Brown said he felt having a board that helped replenish the general fund could solve the city’s cash flow issue.

“It’s easy when you have a cooperative board that doesn’t want to stash everything or that wants to make a holding pattern for selfish particular use,” Brown said. “Some people want more streets, some people want recreation, some people want better police cars, and we’re having to take care of all of those issues out of the general fund, and that needs to be replenished.”

Dillard said the funds are restricted for use for a reason.

“It’s not because we don’t want (the mayor) to touch that money, but it’s in restricted funds for a specific purpose such as for street overlays,” Dillard said. “But from a problem-solving decision, quite honestly, it goes back to the information just not being that accurate.”

Ward 1 alderwoman and mayor pro-tempore Joyce Arceneaux-Mathis declined to comment Tuesday saying she hadn’t been able to review the email sent by Brown, which stated accurate data would result in cooperation, not criticism from the public.