EAGLE MOUNTAIN — Eagle Mountain officials are understandably jubilant — but not really surprised — with a recent audit that shows the city should have a $730,000 surplus at the end of the current fiscal year that started July 1 and runs through June 30, 2005.

That is especially good news since the prior fiscal year ended with a $480,000 deficit.

City Administrator Chris Hillman said the surplus is due to a number of things: the city getting its financial records straightened out, a pickup in building in the city and a self-imposed moratorium on spending.

"We reasonably underestimated our revenues and overestimated our expenses while holding off on service expansions," said Mayor Kelvin Bailey. "We wanted to make sure our revenues caught up with our expenses."

Most of the surplus will be spent on parks, roads, public safety and other related improvements because more than 70 percent was generated through impact fees paid by new homeowners or are leftover Class C and B state road funds.

But $170,000 is free and clear and may be put into the general fund for whatever needs the City Council deems worthy.

Hillman said he will recommend putting the money into a reserve account to re-establish that fund, which was wiped out by the previous deficit.

Former City Councilman Greg Kehl recommends the city hold off on celebrating or spending the surplus.

"It's just disturbing," Kehl said. "That's what happened the last time. We thought we'd have this big, old surplus and did not."

Hillman said he is confident in the numbers and in the future but acknowledges that some concerns remain.

"We still have a long way to go to secure the city's long-term financial stability, especially for our utilities," he said.

Hillman said home building is holding steady with between 300-400 new homes going in each year. That brings in revenue from building permits, planning fees and impact fees.

In the 2002-03 fiscal year, the council had counted on 600 homes and budgeted for that revenue, but construction fell well short of that estimate.

"The good news in 2002 was that we could have had a $600,000 deficit (instead of the $480,000 loss) if we had spent what we anticipated," Hillman said.

The city reinstated construction impact fees during that fiscal period.

The City Council is expected to approve plans for a new $2 million City Hall at its meeting Tuesday, Hillman said, but none of the anticipated budget surplus will be earmarked for that building.

The funding for the proposed one-story 15,000-square-foot building will come from money remaining from the city's sale of utility bonds.

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