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City finance director says midyear position stable; audit work on GASB items continues
Summary
Finance reported a stable midyear position: revenues in line, expenses at ~44% of budget, lower-than-expected interest revenue due to federal rate movements, and several audit items (GASB 87 leases, GASB 96 subscriptions, and arbitrage) under review with audit committee briefings planned in June.
Carol McDermott, acting in finance leadership, delivered the city’s second-quarter financial overview on May 18. She told council that general operations are stable: operating expenses are at about 44% of budget during the midyear point, and tax revenue is strong due to higher property valuations and an increased millage rate. However, interest revenue trailed prior assumptions because the 2026 budget was set before certain federal rate adjustments.
McDermott identified several items the city is addressing with auditors: compliance with GASB 87 (lease accounting), GASB 96 (subscription accounting for IT and software subscriptions), and outstanding arbitrage calculations related to debt (work being coordinated with Hilltop Securities). She said the audit team expects to meet June deadlines and that CLA (external auditors) will report findings to the audit committee in late June.
Councilors asked for additional line-item detail and proposed metrics (for example, labor as a share of expenses and more transparency on consulting costs). McDermott said reporting will continue to evolve, and the city will seek more granularity in future variance reporting. The city also noted ongoing grants work and an initiative to standardize contract review for correct accounting treatment.
