Finance committee hears clean FY2025 audit; staff warns of stormwater rate increase

The City of Stevens Point Finance Committee was presented with the city’s FY2025 audit on July 13, when Justin Hoglund of Baker Tully told the committee the auditors issued an unmodified (clean) opinion on the city’s financial statements.

Hoglund said the general fund finished 2025 with about $15.2 million in unassigned fund balance and a net income roughly $1.25 million better than budget. Revenue outperformed budget by about $1.33 million, driven largely by approximately $930,000 of higher-than-expected investment income, while expenses ran about $610,000 under budget. “You did almost $2,000,000 better than budget, so the general fund did have a strong year,” Hoglund said.

The auditor’s presentation also covered debt and enterprise funds. Hoglund said the city used about 35% of its statutory general-obligation debt capacity and that tax-increment financing districts are generally in a healthy position; he noted TIF 7 will close first in 2028 with a positive balance. On utilities, Hoglund reported the water and sewer funds exceeded minimum coverage and had healthy capital equity (water equity about 81%, sewer about 64%). He said the airport fund’s cash on hand had declined to about 2.4 months at year-end and transit remains substantially subsidized by state and federal sources.

Of particular note, the stormwater utility’s 2025 debt-service-coverage ratio was 1.20, below the 1.25 bond covenant requirement. Comptroller Lattic told the committee borrowing late in 2025 whose payments begin in 2026, combined with that shortfall, will put further pressure on the ratio and likely require a “fairly substantial rate increase” in the coming months so the utility can meet bond covenants and retain borrowing capacity.

Why it matters: The clean audit affirms the accuracy of Stevens Point’s financial reporting and signals a generally healthy fiscal position for day-to-day operations. At the same time, the stormwater shortfall identifies a near-term policy decision for elected officials: raise rates to comply with bond covenants and preserve the utility’s capacity to borrow for capital needs.

Committee members asked staff questions about internal controls and debt limits. Comptroller Lattic reminded the committee of an internal ordinance that caps city borrowing at 3% of equalized value (a stricter internal limit than the statutory 5%), which raises the city’s internal used capacity to about 58% when measured under that local policy. Staff said audit adjustments were minor and controls are generally sound.

The committee took no immediate action on rates; staff said a rate proposal for stormwater will be brought forward in the coming months for committee review and formal action.

The Finance Committee continued with other agenda items after the presentation.