The City of Somerset received an overall clean bill of health from its annual audit. The report was presented Monday night to the Somerset City Council.
Mayor Eddie Girdler said that the audit report indicated that the city was in a strong financial position, and that the city is financially sound with growing assets.
Girdler said the strongest areas were in the city’s natural gas and water departments. Overall, the city’s net position increased, indicating a growth in the number of assets.
While the Emergency Medical Service experienced a small loss, councilors at the meeting were more concerned with the part of the report that stated that Somersplash Waterpark operated at a major loss for 2014.
The water park lost more than $500,000 last year.
Councilor Jim Mitchell said wished there was “some way we could turn that thing around and make money.” He said he wanted to see it come up out of the red, since it has not turned a profit in many years.
Jerry Hensley, CPA with Ray, Foley, Hensley and Company, the accountant firm tasked with conducting the audit, explained that that the city was “never going to make money on that because its a public service.”
He said that managing parks was a balancing act between keeping the cost of staffing streamlined while charging the right amount to keep visitors returning.
In February, the price for some daily pass tickets to the water park was increased by $2, a move that city budget director Jimmy Hogg said would increase revenue around $73,000.
Also, Girdler pointed out that leaks in the lazy river in 2013 caused that attraction to be shut down, which led the city to give a $20 discount to season passes for 2014 to compensate visitors for not having access to the entire park.
“That really affected the revenue on the water park this year,” he said. That discount will not be offered this season.
Besides the issue with the water park, the audit turned up two issues that needed to be noted. One was a reporting issue on one bank account without adequate collateralization or a security pledge to offset the risk of having a large amount of money in that account.
Hensley said it was a minor issue concerning the creation of a new account in a new bank where federal rules only allow $250,000 to be insured without that pledge.
The other was a compliance issue connected to work on the excavation for an amphitheater at the Rocky Hollow Park.
The report says that the costs for the labor exceeded $20,000, which is the amount that a project needs to be advertised for bids, required by Kentucky Statute 424.260.
The city’s response, included in the report, is that the costs for labor on the project were originally predicted to be much less than the $20.000 mark.
Unforeseen circumstances with labor, including large amounts of bedrock found during digging, caused the costs to increase. Therefore, the city had underestimated the costs, and did not realize until well into the project that the city would not be in compliance.
Hogg explained after the meeting that the labor was initially going to be done internally, and concrete and other material were bid out, so at the beginning the project was thought to be well in compliance with the law.
“It was one of those things that kind of snuck up on you,” Hensley said in the meeting.
Overall, though, Hensley said the numbers were “pretty good.”
What the overall numbers mean in terms of Somerset’s status is that, if the city were a business, the business would be growing, Hogg said.
Still, the city needs to needs to begin now looking for ways of growing further, he said.
“It’s a cause to be careful,” he said.
The city’s costs are continuing to go up.
“We need to start looking at ways so we don’t start going the other way,” he said.