The City of Tomball’s initial audit report revealed that while the city overspent its General Fund by more than $2.3 million last fiscal year (FY), there was enough left in reserve to keep the city well into the black.

With a fund balance of more than $12 million, Nathan Krupke of Belt Harris Pechacek, the accounting firm in charge of overseeing the annual audit, told city council Jan. 17 that the city is sound financially.

“It’s a good position for the city to be in should something catastrophic happen,” he said.

Krupke called the fund balance “very healthy,” with Tomball having enough left in reserves to keep normal operations running for up to 10 months should the city lose its revenue stream.

He added that most cities have fund balances that could hold them over for about six months.

The audit shows that in FY 2010, the city earned $12.6 million in revenues, $7.8 of which came from sales and franchise taxes. The city’s revenues amounted to $14.9 million, resulting in an initial deficit of $2.3 million.

One of the reasons for the deficit was a more than $385,000 drop in sales tax. According to the audit, the city brought in more than $7 million in sales tax in 2009. That number dropped to $6.6 million in 2010 amid a sluggish economy.

However, the city transferred $2.2 million from the Enterprise Fund and held a $12.2 million fund balance from the previous fiscal year, which produced a final General Fund balance of $12.1 million.

The city’s General Fund is used to pay for emergency services, public works, community services, parks, streets and other basic city functions.

The report presented to city council at the council’s last meeting was only a draft. The City Charter requires that a draft of the audit be presented to the city within 120 days of the last fiscal year. FY 2010 ended on Sept. 30, 2010.

Krupke said a final report likely would not reveal any significant changes and that “there is nothing additional they have to do, just finalize documents.”

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