Vernal's fiscal 2025 audit: budget overspending repeats, capital fund ends in deficit

Vernal City's audit for the fiscal year that ended June 30, 2025 reports three findings. One repeats a budget-overspending finding the auditor has now reported three years running, and one describes a deficit in the city's capital projects fund. ^[1][2]

The auditor, Smuin, Rich & Marsing, gave unmodified opinions on the financial statements, on the city's compliance with state requirements and on its major federal programs, and classified all three findings as significant deficiencies rather than material weaknesses. Its summary also lists the city as a "high-risk auditee," as did the prior year's audit. ^[1][2]

Spending above the budget

Finding 2025-3 says the city's actual spending exceeded the amounts appropriated in its final budget for "one or more funds/departments" and that the city did not amend the budget before year-end. The auditor cited limited oversight, staffing transitions and unfamiliarity with state budget requirements. ^[1]

The audit's general fund budget schedule shows police spending of $4,862,446 against a final budget of $4,818,825, and transfers out of $2,854,937 against $2,371,550 budgeted. General fund expenditures other than transfers were $772,820 under the final budget overall. ^[1]

The prior-year schedule says fiscal 2024 finding 2024-2 "has not been corrected." That finding listed overspending in several general fund departments, the airport fund and other funds. The fiscal 2024 audit in turn said fiscal 2023 finding 2023-2, on overspending in the city attorney budget and the airport fund, had not been corrected. ^[1][2]

In its fiscal 2024 corrective action plan, the city named the airport as the repeat offending department and said it would analyze departmental budgets more closely and hold more frequent budget reopeners. ^[3]

The capital projects fund

Finding 2025-2 says the capital projects fund ended fiscal 2025 with a deficit fund balance, which the state compliance guide does not allow. The auditor said the cause was spending beyond available revenue and beginning balance, and cited insufficient budget monitoring and delays in budget amendments. ^[1]

The fund started the year with $3,866,799. It took in $891,462 in intergovernmental revenue and a $1,800,000 transfer, spent $9,493,072 on capital outlay and ended the year at negative $2,934,811. Its balance sheet also shows a $2,500,370 cash deficit. ^[1]

The city responded that it would take corrective action to restore the fund to a positive balance. ^[1]

The fiscal 2027 budget's capital projects fund page lists a $2,200,000 transfer from the general fund and $2,035,800 in use of beginning fund balance. The general fund page of the same budget lists a $2,000,000 transfer to the capital projects fund. The records reviewed do not explain the difference. ^[4]

A separate deficit finding from fiscal 2023, 2023-3, was reported as corrected in the fiscal 2024 audit. ^[2]

A corrected finding

The fiscal 2024 audit found the general fund's unrestricted balance of $6,640,790 exceeded the state limit of $5,419,453 by $1,221,337 at June 30, 2024. The city's corrective plan said it would transfer money from the general fund to the capital fund and other funds, with an anticipated completion date of March 1, 2025. ^[2][3]

The fiscal 2025 audit says that item "has been corrected." The general fund transferred $2,854,937 to other funds during fiscal 2025, including $1,800,000 to the capital projects fund. ^[1]

Late reconciliations

Finding 2025-1 says several account reconciliations were performed months after the period closed and some were not completed until year-end. The auditor said key positions were not replaced in a timely manner and new staff were still learning the accounting system. ^[1]

The city responded that it is putting in place procedures to reconcile accounts monthly and will train staff. ^[1]

On June 17, 2026, staff told the council the proposed fiscal 2027 budget maintained fund balances in compliance with state requirements and that none of about 30 funds was projected to end the year with a negative balance. ^[5]