BRISTOL, Va. — The city’s fiscal 2021 audit report shows its financial position continues to improve despite the impacts of a global pandemic and substantial debt.
The City Council received the audit earlier this month from the Blacksburg CPA firm Robinson, Farmer, Cox Associates. The audit report covered the previous fiscal year ending June 30, 2021, a year fraught with uncertainty, Chief Financial Officer Tamrya Spradlin said last week.
“We had to really aggressively reduce expenditures to offset anticipated revenue reductions, and we were able to finish the year strong,” Spradlin said. “The city was on a clear, upward progression, but in March 2020 when COVID hit, all of that stopped. … It was very unnerving, so for our revenue estimates to have held and our expenditure estimates to have held was significant.”
Sales and meals tax revenues actually rebounded more quickly than anticipated, which played an important role in the “positive” outcome, she said.
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Grocery stores, home improvement stores and restaurateurs that were able to pivot and provide carryout service were at the core of the city’s rebound, she said.
During his recent presentation to City Council, Gordon Jones of the audit firm said the city received a “clean, clear opinion,” meaning there were no issues with the audit and — for the first time — the comprehensive report earned a certificate of achievement for excellence in financial reporting from the Government Finance Officers Association, a national organization that promotes excellence and best practices in government financial reporting.
Bristol, Virginia is the only local government in Virginia southwest of Montgomery County to earn that distinction this year.
However, BVU Authority has also received that recognition for its last two audit reports for fiscal 2020 and 2021.
Spradlin said this was the first time the city had applied for the certificate, which included an extensive application process.
“To accountants, this means a lot because these are our peers. It’s not an easy review process, but it means we’re doing it right and the association is saying this meets (their) criteria,” Spradlin said.
“It means our financial reporting meets a pretty high level of criteria. So not only have we seen cash improvements, fund balance improvements, we are now meeting national organization criteria on how we report that data. That ought to be important to management of the city of Bristol, council and citizens to know we’re doing it the right way,” Spradlin said.
In the results of the audit, on June 30 the city had $22.2 million in its unassigned general fund, a 27% increase over last year’s $17.4 million total and a 164% improvement over just five years ago — 2017 — when the city was declared the most fiscally challenged entity in Virginia.
“That (balance) is why we’re no longer relying on the tax anticipation notes (short-term borrowing),” Spradlin said. “Our operating cash balance now is healthy, and a lot has led to that. We have sound financial policies in place, conservative budget estimates that are attainable. We switched to the cash basis not long after I got here to shore up that cash balance. That has really worked for us.”
The city received and spent all its first round of federal CARES Act money by the original deadline, Spradlin said, but hasn’t yet spent the second round.
“The second pot of COVID money is the ARPA funds, and the city did receive the first $5 million of that in late spring, early summer of fiscal year 2021. Those funds have not yet been expended, but we have quite a bit of time to spend those funds. They must be committed by 2024 and expended by 2026,” she said.
The city ended the fiscal year with $76 million on interest-bearing, long-term city bond debt, plus $35 million interest-bearing landfill bond debt.
“When we used to look at the debt plan, it seemed insurmountable, especially as The Falls project was not developing as originally planned. With no additional revenues needed, we have a plan that gets us into fiscal 2027,” she said. “That allows The Falls project to continue to develop; it also gives the city time for another significant revenue inflow that we had no idea was coming [Hard Rock casino resort].”
While sales tax revenues from The Falls are assigned to pay off bonds used to create the project, the privately owned and financed casino hotel project is forecast to generate millions of annual tax revenues for the city once operational. Some work is currently occurring at the former Bristol Mall site in anticipation of opening a temporary casino and related businesses in mid-2022, developers recently announced.