A recently released audit of Magnolia’s finances shows the city is $493,587 negative in its general fund balance, more than double the amount revealed in last year’s audit.

This comes seven months after a July 2009 audit of the 2007-08 fiscal year showed the city had a $126,899 negative general fund balance.

Since the last audit, the city’s net change in fund balance for the general fund was $366,688.

The 2008-09 fiscal year report also showed large differences between projected property and sales tax revenues and the actual revenue taken in.

The city budgeted collecting $249,236 in property tax revenues, but only took in $220,139. The city also expected to take in $1,165,578 in sales tax revenues, but only earned $968,115, a total difference of $226,560.

In the “Financial Analysis of the City’s Funds” section of the report, under governmental funds, it lists the “increase in cost for public safety” as a reason for the decrease in the general fund balance.

It also attributes the property and sales taxes reporting “less than expected revenues” during the year as a reason for the general fund’s deficit.

According to the report, expenditures in four different areas “exceeded appropriations at the legal level of control.”

Those four areas are the municipal court, the public works department, capital outlay and principal in the debt service fund.

The Texas Comptroller’s Office defines “legal level of control” as “the level at which the governing body must approve any over expenditure of appropriations or transfers of appropriated amounts.”

Despite the negative numbers, senior auditor Nathan Krupke of auditing firm Belt Harris & Associate, told the council there were some encouraging factors in the report.

“It would appear you are working in the positive in the water and sewer,” said Krupke.

The water and sewer funds currently have a combined total asset of $2,496,138.

Council member Patsy Williams said that when Unity Park is finally complete it could be a major, multi-million dollar asset to the city.

“That’s a very positive thing that I’d like to point out,” she said.

Council member Todd Kana acknowledged that the city must make changes to get to a better financial state.

“We definitely have some serious things to take care of,” Kana said. “We’re going to have to go on a diet.”

Williams compared the city’s financial woes to the country’s current economic climate.

“I’d like to point out, we are like every other family, home in the U.S. We projected more than we made. Oops, we made a mistake,” Williams said.

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