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Rathdrum auditors issue clean FY25 opinion; general fund grows to $14.3M amid questions about future water projects
Summary
Hayden Ross delivered a clean audit of Rathdrum's FY25 finances, reporting a $2.7M increase in the general fund and healthy utility fund balances, while council and residents pressed for clarity on donated infrastructure, water storage and long-term reliance on growth-driven revenue.
The city of Rathdrum received a clean opinion on its fiscal year 2025 financial statements at the May 27 council meeting, with auditor Tony Matson of Hayden Ross telling the council the city's books were "fairly stated as presented." Matson reported an ending general fund balance of about $14.28 million, roughly 24 months of operating expenditures, and increases in revenues driven by permit activity and investment earnings.
The audit presentation highlighted that general fund revenues for the year were $9.65 million while expenditures were about $6.90 million, producing an increase in fund balance of roughly $2.7 million. License and permit revenues rose by about $700,000 year-over-year, aided by higher building permits and inspection fees, Matson said. In the water and sewer funds, much of the reported equity represents capital assets and restricted hookup fees; the water fund's available operating cash rose to an estimated $2.5 million after accounting for restricted and capital balances.
The auditor called the results "a good year," and said the city had key financial controls in place. "We did not identify material weaknesses," Matson told the council. He said revenue growth and rising costs were consistent with trends the firm has seen in other local governments and school districts the auditor serves.
Council members used the presentation for detailed questioning. Councilor Laura Fuller and others pressed Matson and staff on contributed capital entries, and Matson explained that a prior-year audit effort had identified donated infrastructure that had not been recorded; that catching up caused large year-to-year swings in the "contributed capital" line. "There was a lot of donated infrastructure that wasn't recorded properly," he said, adding staff had audited transactions back to about 2006 to correct the records.
Several council members and residents raised concerns about the city's reliance on growth-driven revenue sources such as impact fees, hookup fees and building permits. Matson cautioned that while the fees provide funding for infrastructure tied to growth, they are sensitive to building activity: "If new construction slows, those fees stop," he said, recommending continued governance oversight of the capital program and the city's plan to build a new city hall.
City staff and council also discussed donated assets tied to proposed development, and whether the city should accept property or easements in exchange for clarified zoning or other approvals. Matson and staff stressed the difference between operating cash and net investment in capital assets: large balances in the water and sewer funds include restricted hookup fees and the carrying value of infrastructure.
What's next: Council requested that more detailed follow-up materials and pages be provided to members before a formal vote to accept the audit package at a future meeting. City staff said the final audit report will be placed on the next agenda with an action item to approve once members have had time to review the full document.
(Reporting from the May 27 Rathdrum City Council meeting.)
