PORT RICHEY — Audits don't usually bring applause.
But City Council members found themselves cheering Tuesday evening after the city's accountant and an external auditor gave a report on Port Richey's dramatic financial turnaround. They said the city is in the black and poised to turn around a long-struggling water and sewer fund that caused state officials a few years ago to warn of a financial emergency.
In the four years he has been auditing the city, auditor Judson Baggett told council members the city has "been to hell and back" in terms of their finances.
"You are looking a tremendous amount better than you ever have," he said. "You don't see that in too many places."
He noted that last year the city's net assets increased 3.1 percent to $588,764. The city collected $3 million in general revenue while spending about $2.4 million, according to a report by the firm Baggett, Reutimann & Associates.
The trend continued for the first six months of this fiscal year: The city pulled in $2.5 million, which is $229,000 more than projected. It spent $2.2 million, $61,000 less than projected. In addition, the city's water and sewer fund has a positive balance of $382,000, city accountant Pete Schatzel said.
Council members praised tough, and at times unpopular, decisions to raise utility rates and property taxes as a factor. City finance director Pam Zeigler also credited a stricter citywide purchasing policy. Acting Mayor Bill Colombo said "it's not often" a city council is excited over a financial report.
"We're moving in the right direction and I'm proud of everybody," he said.
The biggest drag on the city's finances in recent years has been in its water and sewer department, which hemorrhaged money due to aging infrastructure and only two water and wastewater rate increases in 21 years.
State officials had warned for years that the city faced a financial emergency, in large part because of problems with the utility funds. As recently as this year, the city made the governor's auditor general's warning list.
That process, however, is somewhat muddled, as the state is a year behind in reviewing cities' financial statements. So its emergency warning this year was based on 2009-10 fiscal year numbers that showed an asset deficit of $997,000.
The Baggett audit for 2010-11 shows the city will likely get another warning from the state on its next review due to a continued water and sewer deficit, according to Zeigler.
But since the 2009-10 fiscal year, the city has slashed its water and sewer deficit of $561,000 by $504,000, according to Zeigler's response to the state's inquiry.
Zeigler told the Times that a state warning based on the 2010-11 fiscal year should be the city's last, as this year the city will likely end up with a surplus in the water and sewer fund.