WATERVILLE $ The city continues to meet its responsibilities for sound financial management, according to a 2008 audit presented Tuesday to the City Council.

"The city is in good financial shape and the finance department is operating effectively and doing a good job," Christian Smith of MacDonald Page & Co., of South Portland, said.

Smith and Erik Nadeau of the accounting firm presented the report, which shows the city's net assets for the year ending June 30, 2008, at about $24 million. The fund balance is $10 million, an increase of $1.2 million over last year.

The increase is due to state revenue sharing money and excise tax activity being larger than expected; a growth in investment earnings and expenditures overall being less than the city budgeted; and unused funds added to the balance.

The undesignated and school fund balance of $10 million equals 27.4 percent of total revenues for the year, or 29.6 percent of total expenditures, the report says.

"Moody and Standard & Poor's bond rating agencies like to see a fund balance rate in the 14 percent to 16 percent range or an amount equal to two months of budgeted expenditures. The city of Waterville's current fund balance exceeds both requirements."

The city carefully monitors expenditures, finding non-tax sources of revenues and setting debt repayments ceilings which have all helped establish a favorable fund balance, the report says. Rating agencies prefer a fund balance that will cover two months of actual appropriations and the city can cover about three-and-a-half months.

"The residents of the city of Waterville can be proud of its municipal and school personnel who have worked together to continue to meet these financial goals," the report says.

Smith told councilors he had no issues with the audit and had no difficulties performing the audit.

"We've issued a clean opinion," he said.

He said the city has $25 million in capital assets and the debt associated with those assets is about $17 million.

"You have more in value than you have debt and that's obviously important to have," he said.

The city has consistently reduced its tax rate, with the 2008-09 fiscal year representing the sixth consecutive year the tax rate has remained flat or decreased, according to the audit. The current rate is $24.40 per $1,000 worth of assessed valuation.

City officials praised those who contributed to the good audit report, including the city's finance director, Rob Boschen.

"Thank you, Rob $ great job," Mayor Paul R. LePage said.

In other matters Tuesday, LePage, councilors, police Chief Joseph Massey and Deputy Chief Charles Rumsey honored resident Peter Tompkins with a good citizenship award for helping to save a man's life. Tompkins received a standing ovation.

The council voted to amend an existing transportation enhancement agreement that provides additional money for final engineering, property acquisition and construction of a trail from the North Street pool to the Head of Falls area. The city plans to commit labor and equipment to provide matching funds.

The amendment increases the total project funding amount to $350,000, with $50,000 having been accepted in the original agreement. Eighty percent of funding for the project comes from the federal government and 20 percent from local sources, including $26,000 from Kennebec Messalonskee Trails. The public works and recreation departments will furnish labor and equipment and the value of work and equipment will be reimbursed through revenues generated from the project.

Councilors also voted to renew a contract with Somerset County Communications Center, which answers 911 calls generated from Waterville and reroutes those calls back to the Waterville Regional Communications Center at the Police Department. The city will be charged $1 per capita annually for the service, to be renewed Jan. 1.

Amy Calder $ 861-9247
acalder@centralmaine.com