Red Oak council accepts annual audit, preserving tax-rate flexibility

The Red Oak City Council voted unanimously March 30 to accept the city's Annual Comprehensive Financial Report (ACFR) for the fiscal year ended Sept. 30, 2025, adopting Resolution 26-015R to record the auditor's opinion and preserve the council's tax-rate flexibility under recent state law.

John Manning, audit partner with Patilio Brown and Hill LLP, told the council the firm issued an unmodified opinion on the ACFR, meaning the auditors concluded the financial statements were materially correct under generally accepted accounting principles. "We are able to offer what's called an unmodified opinion," Manning said, calling the result "a feather in the cap" for the city.

The vote followed a presentation from city staff and the auditors explaining why the council met in a special session. Mr. McRoberts told the council that Senate Bill 1851, effective Sept. 1, 2025, imposes penalties if an audit is not filed within 180 days of the fiscal year end; the city filed the auditor's opinion with the city secretary on March 27, 2026. Adopting the resolution on March 30 preserves the city's ability to set a tax rate above the no-new-revenue rate if the council chooses.

Manning reviewed key financial highlights: the city ended the year with roughly $25 million in fund balance; long-term liabilities increased from about $109 million to roughly $123 million, largely reflecting bonds issued during the year; land held for resale reported within the IDC and EDC totaled about $48 million (approximately $34.66 million in the IDC and $13.7 million in the EDC); and the pension plan was about 95% funded, with an actuarial net liability near $1.2 million. He said charges for services rose notably because several larger permits were related to incoming data-center development.

Council members asked follow-up questions about a graph that showed sales tax lower in FY25 than FY24 and about declines in fines and forfeitures. Manning and staff explained the apparent dip reflected one-time spikes in the prior year related to construction activity and timing of receipts; they said the longer-term trend remains upward when construction-driven anomalies are excluded. On court-related revenue, staff noted collection rules and income limits reduced some fine receipts.

During the presentation Manning emphasized there were no audit findings and only routine adjusting entries tied to year-end accruals. He recommended the ACFR for the council's acceptance, noting the report also included additional disclosures and statistical sections the city produces beyond the minimum required statements.

A motion to adopt Resolution 26-015R was made and seconded; Council members Franklin, Miner, Miller, Lightoot and Smith voted in favor. After the vote the council adjourned at 6:34 p.m.

The resolution accepts the ACFR as filed and creates the record needed to comply with state filing requirements; no additional policy action or budgetary changes were taken at the meeting.