PELL CITY – Audits recently released for the past three years reveal the city is in good financial shape.

According to the audits, the city’s ending fund balance has grown $2.2 million in the past three years.

Mayor William “Bill” Hereford said he wasn’t surprised the city’s financial condition is in good shape.

“We’ve got a lot of dedicated people working here,” Hereford said. “We just hadn’t done the audits. I’m not shocked.”

City clerk Jennifer Brown said the city’s administrative department was playing catch-up since she was hired last year.

“We have been playing catch-up, but we are moving forward now,” she said. “I think we’re in good shape.”

About the only surprise with the recent audits was the cost.

Originally the city was billed $329,136 for the 2006-2008 audits, but Carr, Riggs & Ingram LLC of Birmingham wrote off 30 percent for its accounting assistance, according to city documents. The final bill was about $258,000 for the three audits.

“When I saw it, I almost choked, too,” Brown said.

Hereford and Brown said the inflated audit cost was due to the research and accounting assistance required to construct city financial records for the past three fiscal years.

The city has since hired a full-time certified public accountant to perform all accounting work for the city.

Brown said future audits by the Birmingham firm will cost the city less than $50,000, as long as they are kept up to date.

Hereford said completion of the audits was vital for the city, seeking to borrow $17.5 million to fix its sewer overflow problems. The city can now move forward with securing a bond issue for the major sewer projects.

The mayor said he is also optimistic about the future financial picture for the city.

“We’re cautiously optimistic about our finances,” Hereford said.

Following are some highlights in the final 2008 audit:

• Actual revenues for the general fund exceeded budget by $283,078 or nearly 2 percent.

• Actual expenditures were over budget by $1.5 million. Due mainly to the storm damage at Parks and Recreation; $735,000 of the overage was offset by insurance proceeds. Administration legal fees exceeded budget primarily due to pending litigations. The Fire Department exceeded budget in salary related lines due to an increase in the volume of emergency calls. Remaining departments were below budget primarily due to lower salaries, taxes and fringes from unfilled positions and less than budgeted contract costs.

• At the end of 2008, the city had $37 million invested in a broad range of capital assets, including police and fire equipment, buildings, park facilities, roads, bridges and water and sewer lines. This amount represents a net increase of $3.1 million or 9 percent more than the previous year, 2007.

• While $52.8 million of General Obligation Bonds are a legal obligation of the city, it is important to note that due to a funding agreement between the city and the Board of Education, the city is obligated for future debt service for only $30.2 million of the total debt.

• The city had a favorable bond rating of Aa3 as of November 2008.

• At the end of the 2008 fiscal year, the city’s governmental funds reported a combined fund balance of $9.5 million, which includes $791,498 in reserved fund balance and $7 million of unreserved general fund balance, which is available for future operations.

• The general fund revenues received during the 2008 fiscal year exceeded expenditures by $109,840.

• At the end of the 2008 fiscal year, the general fund unreserved fund balance was $7.5 million or 74 percent of the total general fund operating expenses before debt service.

• The city’s total net assets increased $1.9 million as a result of fiscal year 2008 operations.

• The city’s total revenues increased by 2.6 percent or $538,000 in fiscal year 2008.