LEONARDTOWN — Leonardtown’s books for the fiscal year that ended June 30 earned the best opinion an auditor can give, and the town’s general fund finished the year about $458,000 ahead. The utility side of the ledger tells a different story: the wastewater and sewer fund’s net position dropped by about $1.3 million.
Both sets of numbers were presented to the mayor and Town Council on Nov. 9 by Town Treasurer Sharon Ferris and the engagement partner from the town’s outside audit firm, which is in its second year on the account.
For residents, the split matters because the two sides are paid for differently. The general fund runs on taxes and covers services such as streets, planning and administration. Water, sewer and trash are enterprise funds, supported by the rates on customers’ bills, and the sewer fund is now carrying the full cost of the debt behind the town’s wastewater treatment plant expansion.
A quiet audit
The auditor said the firm issued an unmodified, or clean, opinion on the fiscal 2026 financial statements, meaning they are reasonably free of material misstatement. He reported no instances of fraud, no material weaknesses in the internal controls the firm tested, and no audit adjustments to the records the town supplied.
The audit was filed with the state ahead of its Oct. 31 deadline, along with the Uniform Financial Report that Maryland requires of local governments. The town was not subject to a federal single audit this year because it spent less than $1 million in federal money, the threshold that triggers one.
A clean opinion speaks to the accuracy of the statements, not to whether every fund is growing. The auditor told the council he had no concerns to raise about controls or financial stability, and called it a quiet audit.
General fund: more in reserve
Ferris said the general fund balance rose about $458,000 in fiscal 2026. Roughly $250,000 of that came from money the town had budgeted to pull from prior-year reserves for a sidewalk project and did not need to use.
The town’s unassigned fund balance, its uncommitted reserve, now equals 96% of the fiscal 2027 general fund budget, she said. A year earlier the comparable figure was 78%.
Other general fund details Ferris gave the council:
- Income tax collections came in about $230,000 above budget.
- Snow removal ran about $100,000 over budget after last winter’s storms.
- To offset that, the town held off on a road maintenance project, leaving that line about $102,000 under budget. Both are paid largely from state highway user revenue.
- The snow removal budget was raised slightly for fiscal 2027.
On the government-wide statements, which unlike the fund statements count depreciation, the picture is less rosy. The auditor said governmental activities took in about $3.4 million against $3.7 million in expenses, a $322,000 decline in net position. He attributed the gap between that loss and the general fund’s surplus to roughly $850,000 in depreciation, a non-cash expense. Governmental net position stood at about $25.6 million on June 30.
Utilities: debt and depreciation
The enterprise funds together saw net position fall by just over $1 million, Ferris said. By fund:
- Wastewater treatment and sewer: down about $1.3 million
- Water: up about $238,000
- Trash: up about $107,000
The auditor put business-type revenue at about $4.2 million and expenses at about $5.2 million. He said depreciation in those funds was roughly $2.5 million, by his recollection, which means the decline reflects aging and newly built assets being written down more than cash going out the door. Net position for the utilities was about $39.2 million at year’s end.
Debt is the other pressure. Ferris said the town has now drawn down all of the state loans it took for capital projects, so it is paying full principal and interest on the entire amount borrowed. One offset: money the state held for the town before it was spent earned interest, and just over $100,000 of that was credited against the town’s interest expense.
Neither Ferris nor the auditor proposed a rate change at the meeting, and the council did not discuss one.
Where the reserve may go
The larger reserve already has claims on it. Later in the meeting the town administrator listed a string of pending road, parking and utility projects and told the council she may bring budget amendments forward to pay for them. She also asked the council to consider a steep increase in the fee developers pay in place of providing parking, money that would go toward a future garage.
Ferris also reported that the town has received its first large property tax payment of the new fiscal year. St. Mary’s County now bills and collects the town’s real estate tax and passes the money along; the most recent transfer was about $547,000 of the $900,000 the town budgeted. The next large payment is expected in January.
The council accepted the presentation without a vote.
