'Great year financially' for Eagle Mtn.

EAGLE MOUNTAIN — The results of Eagle Mountain's audit of its finances for fiscal 2005 are in. And city leaders are thrilled — even though the amount they've saved violates state law.

"It was a great year financially for Eagle Mountain," City Administrator Chris Hillman said. "We exceeded our financial goals immeasurably."

The year may have been a little too good, in fact, as the $1.06 million surplus Eagle Mountain shows in its general fund exceeds the amount it is allowed to have.

A state statute sets the amount a city may have in its general fund at 18 percent of total revenues, which translates to about $900,000 for Eagle Mountain.

Hillman said there is no punishment for exceeding the statutory limit, but the state will require the city to transfer the extra $160,000 into a capital facility project and put it to immediate use.

"The city has numerous capital project needs, from parks to a public safety building to a sewer treatment plant; I could go on for hours," Hillman said.

The money hasn't been earmarked for a specific project, but the council is expected to vote on how to spend it in the near future.

Since the city's last deficit year, 2002, a drastic shift in money-management policy has created a surplus each year. In 2002, the city had $36,000 in the general fund. That amount rose to $200,000 in 2003 and $500,000 in 2004.

In 2002 and other deficit years before it, the city relied heavily on one-time income sources, like building permits, which accounted for about half of all budgeted income, Hillman said.

The city also set unreasonably high levels of expected income, then budgeted accordingly. When the revenue didn't come in, the city was left holding the bag and nearly wiped out its savings to make up the difference.

"Now, we reasonably underestimate revenues and reasonably overestimate expenses to give us a cushion . . . it's actually quite simple," Hillman said.

The city has also reduced its reliance on one-time income to about 25 percent of its income and turned to more reliable sources, like property taxes and sales taxes.

But the audit was not all rosy as it revealed Eagle Mountain is grappling with two utilities — electric and sewer — that are losing money.

"The city anticipated natural (population) growth to broaden the base and balance the books, but that's taking a while," Hillman said.