The City of Nome’s financial position improved significantly in fiscal year 2024, although that's largely due to major state and federal investments in the Port of Nome. That’s according to an independent audit formally adopted by the Nome Common Council at a special meeting Thursday.
The audit was conducted by Anchorage-based firm, Altman, Rogers & Co. It showed the city’s net position increased by more than $80 million, an 84% gain over the previous year. Nearly all of that growth came from the business-type activities category, which includes the city-owned Port of Nome.
Auditors issued unmodified, or clean, opinions on the city’s major funds, including the General Fund and Port Fund. A disclaimer, however, was issued for the Nome Joint Utility System, whose audit process is lagging two years behind the city’s.
“I guess the question is, and I don't mean to sideline, change the conversation,” Council Member, Scot Henderson, said. “But how long are we going to be doing this?”
City of Nome Mayor and General Manager of NJUS, John Handeland, said the sole utility provider in Nome has closed its books for 2023. He said personnel and turnover was to blame for the delay and confirmed that an outside accountant had been hired to catch the utility company up.
Also murking up the audit schedule is having separate auditors for each of the city’s three main components: the city, NJUS, and Nome Public Schools. Henderson questioned whether a change was needed.
“I think I ask this question just about every time we do this, would it make a difference, or would it be less likely we would have this, these gaps in our opinions for the aggregate units, if there was one auditor that audited all three entities?”
Henderson then questioned whether that would bring any additional risks or weaknesses to the city. Altman, Rogers & Co.’s CFO, Donald Hanni, said it was a difficult question to answer.
“Are there any inherent risks to it? No. I mean, they are totally separate audits. The auditor has to maintain independence for each individual client that they're doing, so there's no inherent risk associated with having one auditor do all three audits,” Hanni explained.
The city’s total net position stood at $175.7 million at the close of the 2024 fiscal year last June. Of that, $167.9 million was invested in capital assets, primarily related to the port expansion project.
While business-type activities saw a dramatic increase — up $83.4 million — governmental activities decreased by $3.2 million. The audit attributed the decline to rising operating expenses and lower-than-expected tax revenues.
Sales tax revenues fell short of projections by more than $400,000, and property tax revenues also declined following a mill rate reduction from 12 mills to 10.5 mills. The council voted last spring to increase the property tax rate to 11.5 mills to help balance the budget.
General Fund expenditures outpaced revenues by nearly $1 million before transfers, and the city drew from savings to balance the budget. The General Fund’s unassigned balance was $6.28 million, down from $7.45 million the year before.
The audit noted that overall city expenditures were under budget, due in part to staff vacancies and the transfer of ambulance services to Norton Sound Health Corporation in April 2024.
A copy of the 2024 audit is available here. The latest amended version of the 2025 budget is available here.
