Jim Pell, left, the third-generation owner of The Derby Restaurant, is recognized by Mount Airy Mayor Deborah Cochran during a recent meeting of the city board of commissioners, as part of an ongoing program to honor the city’s older businesses. Pell’s grandfather, J. Weldon Pell, opened the restaurant in the Bannertown community in 1947.

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A newly released annual audit report shows the city of Mount Airy is on solid financial footing, including fund balances increasing despite property taxes being cut and several major expenditures.

“Your report card would say A-plus,” Matt Braswell of the Hickory accounting firm Martin Starnes & Associates, told city officials when recently presenting the findings of a required, independent audit performed by the firm for the 2011-2012 fiscal year.

During that budget period, $759,000 was spent on a ladder truck for the fire department, while $270,000 was allocated for the start-up costs of a curbside-recycling program launched during the winter. Among other major expenditures was a paving project in the annexed Hollyview Forest neighborhood and levee-rehabilitation work along the Ararat River.

The past fiscal year, which ended on June 30, also included a property tax decrease of 2 cents per $100 of assessed valuation.

And though revenues fell while expenses rose, the municipality finished the year in the black, according to audit figures. General fund revenues for the year topped out at slightly more than $12 million, while expenditures totaled $11.7 million — a margin of $274,842.

When everything was accounted for, the municipality was able to add $223,000 in general funds to its overall fund balance, which Braswell defined as what remains after liabilities are subtracted from assets.

“Much of this increase resulted from continued initiatives taken to sharply curtail spending plans in response to the economic downtown, including delays in hiring vacant positions,” according to a summary in the audit report. Personnel costs were $459,070 under budget, mainly due to vacancies and delays in filling positions.

Braswell said the city also has been able to maintain a healthy level in its available fund balance, which includes money that is there for appropriation. That amounts to 88 percent of Mount Airy’s general fund expenditures.

As of June 30, the municipality had a combined fund balance of $13.1 million, reflecting an increase in the $150,000 range.

Tight budgeting procedures on the part of the city’s management staff was credited for the positive results. In response to a question from Commissioner Shirley Brinkley, Braswell said Mount Airy stacks up “very well” compared to other municipalities.

“You have a great management team, and people in the right places,” the auditor said.

Braswell also praised the work of the city finance department led by John Overton, and said its sound procedures contributed to Martin Starnes & Associates being able to issue an unqualified opinion.

Mount Airy has consistently been recognized for its excellence in financial reporting by the Government Finance Officers Association of the United States and Canada.

“I’m very proud of the audit we had,” City Manager Barbara Jones said.

Commissioner Jon Cawley and other council members said they were pleased that key goals such as the implementation of curbside recycling and the acquisition of the ladder truck had been accomplished without draining the budget.

Reach Tom Joyce at 719-1924 or tjoyce@heartlandpublications.com.