Lexington receives clean audit but council delays formal approval to review 286-page report

Council received a presentation of the City of Lexington’s Annual Comprehensive Financial Report for the fiscal year ending June 30, 2024. Cassie Wilson of Martin Starnes & Associates told council the firm issued an unmodified opinion on the financial statements — commonly described as a clean audit — and summarized key figures and items the Local Government Commission (LGC) flagged for follow-up.

Wilson reported the city’s unassigned general fund balance ended at $8,309,504 and said the LGC will review certain performance indicators, including remaining useful lives for water and sewer assets. She summarized enterprise fund performance and noted the water and wastewater operating income exceeded $3,000,000. "We did issue an unmodified opinion on the financial statements," Wilson told council.

Council members pressed for clarification about what drove increases in utility operating income and the electric fund’s changes, citing rate adjustments, restructuring for commercial customers and a large one-time rebate. Councilman Burke said he preferred to review the full audit packet before approving the report: "I hate to make the Council attend another meeting in December, but I would prefer to see it." Staff said the ACFR had been submitted to the LGC that morning and reminded council the report must be approved within 45 days of submission. In response, council indicated it will schedule a special meeting in December to review the full ACFR and the audit report before taking a formal vote.

The presentation also noted prior-year inflows that affected fund balances, including a $5,000,000 county contribution and $6,000,000 from ARPA, and referenced a roughly $7.9 million rebate affecting electric fund results. Staff committed to follow up with additional information for council and the LGC.