Auditor says Fernley posts healthy financial profile in year-end financial report

The City of Fernley is in a healthy financial position in all its funds, according to an annual comprehensive financial report presented to the City Council at its Dec. 17 meeting.

R. McKay Hall, an audit partner with Hinton Burdick, CPAs and Advisors, summed up the fiscal year 2025 audit report as a “healthy profile for a municipality.”

The city’s total assets exceeded its liabilities by $268.9 million, Hall reported. If compared to a for-profit business, “that would be comparable to the equity,” he said, indicating that the city’s net position increased by $35.8 million in FY 25.

Total revenue from all sources was $64.0 million and the cost of all city programs was $28.2 million. In addition, the city has incurred no new long-term debt since FY 2022, while the city utility fund’s long-term debt decreased by $6.1 million due to debt service payments and a debt refinancing, Hall said.

Governmental expenses of $29.9 million for FY 25 increased 87 percent over the $15.9 million in expenses in FY 24, primarily due to capital expenditures. Excluding capital expenditures, governmental expenditures in FY 25 only increased 3.7 percent, Hall said.

The large expense for capital improvements in FY 25 is not unusual, Hall said, indicating it is common for municipalities to build up resources in anticipation of large capital projects.

Looking at five-year trends, not including capital outlays, city revenues increased by 112 percent while expenditures increased by only 39 percent. Between FY 21 and FY 25, the city’s total assets increased from $12.6 million to $22.1 million, its equity increased from $10.1 million to $17.6 million, and its liabilities increased from $2.5 million to $4.5 million, Hall said.

Property taxes, the city’s “largest single source of governmental revenue,” increased from $3.9 million in FY 21 to $5.3 million in FY 25, which represents a 15 percent increase in FY 25 and a 63 percent increase over five years, Hall said.

In the city’s water fund, operating revenues increased from $10.0 million to $12.0 million in the last five years, while expenses climbed from $7.6 million to $9.2 million.

In the water fund’s balance sheet over the last five years, assets went from $156.2 million to $188.6 million, equity went from $95.7 million to $139.3 million, and liabilities decreased from $60.5 million to $49.2 million, Hall said.

The city’s sewer fund shows much the same, Hall reported, with revenues rising from $4.6 million to $5.6 million in the last five years and expenses increasing from $3.1 million to $4.6 million.

Examining the sewer fund’s balance sheet for five years, assets climbed from $45.4 million to $65.4 million, equity went from $36.2 million to $56.3 million, and liabilities fell from $9.1 million to $8.1 million, Hall said.