Don’t worry —
$58 million city debt not so bad

By Kevin Killough
Staff writer

GALLUP — There seems to be a lot of talk of tight budgets around city hall, and the fiscal year 2007 audit that was presented at the last City Council meeting didn’t show that Gallup is made of money. But the picture isn’t at all grim either. According to Executive Director of Administrative Services Judi Starkovich, Gallup met its financial expectations. The city’s assets exceeded its liabilities by $116 million.

“We tend to see that,” Starkovich said.

The total net assets increased by $6 million, of which about half was attributed to an increase in utility and recreation rates. The audit found that the city had $20 million in ending fund balance, which was $1.6 million more than the previous year. Of that, nearly $8 million is available for the mayor and council to spend at their discretion.

Starkovich pointed out that expenditures were kept well under control, matching the city’s projected budget. The total city revenues for the year were at $64 million, while the expenses came to $58 million.

“It was a pretty good year,” Starkovich commented.

She added that the audit uses a modified accrual accounting method, which projects certain expenditures and revenues that aren’t acquired until up to 60 days after the end of the year. And most of that accounts for discrepancies between projected figures and the audit.

The city also has nearly $58 million in debt, which is a $2 million decrease from the previous year. This leaves some $6 million in bonding capacity. Starkovich said that while $58 million may seem like a lot of money, it wasn’t so high as to cause alarm.

“It may sound like a lot of debt outstanding, but we’re still pretty good,” she said.

She pointed to the remaining bonding capacity and the 15 to 20 year terms for the bonds. Starkovich also said that the city can easily handle the payments.

”We don’t have any problem paying our debt service payments,” she said.

The city would also find it impossible to perform many of its capital improvements without the bonds. The large infrastructure projects require too much money for the city to pay for up front, Starkovich said.

According to the audit, sales tax account for 60 percent of the city’s revenue. Property and other taxes account for another 15 percent of Gallup’s income. The city also makes 10 percent of its money from charges for services. These include utilities: electric, wastewater, sanitation, and drinking water. Each type of service made money in 2007.

The independent audit was performed by Griego Professional Services, LLC.