City auditors give Liberty Hill an unmodified opinion; report shows strong fund balance and healthy pension

John Watson, the city's independent auditor with Brooks and Watson, presented the City of Liberty Hill's annual financial report for the year ended Sept. 30, 2025, and said the city received an unmodified audit opinion.

Watson told the council that total assets exceeded total liabilities by about $176,000,000 and that the city's unassigned general fund balance was a little over $16,000,000, which he said represents roughly 131% of annual general fund expenditures. "You've got about a little over a year there worth of unassigned fund balance within the general fund," Watson said.

He summarized revenue and expense patterns for the fiscal year: governmental revenues were $18,461,000 with sales taxes and property taxes the largest sources (sales taxes roughly 30% and property taxes about 34% of governmental revenues). Total governmental expenses were $16,176,000, with the police department and general government among the largest spending categories. On the enterprise side, Watson said water operations showed an operating loss while sewer and wastewater treatment had positive operating results.

Watson also reviewed the city's pension position: the pension held an asset of $114,397 and a funded ratio of about 102%, up from 99% the prior year. He noted that the city's pension funding compares favorably to a nationwide 2024 average funded ratio of 83%.

The auditor explained the audit process, communications with governance about internal controls, and that noncorrected misstatements had been identified, proposed and adjusted in the report. He also mentioned adoption of the accounting pronouncement GASB 101 related to compensated absences, which affected some year-over-year estimates.

The council offered no questions after the presentation. The audit materials, including the bound report and related letters, were made available to council and will be part of the record.