City receives clean financial audit

MANAWA – The City of Manawa received an unmodified, or “clean,” audit opinion for its fiscal year 2025 financial statements, though the annual report shows the municipal General Fund relied on a $470,000 short-term line of credit to manage cash flow.

Amber Danielski, a director at CliftonLarsonAllen (CLA), presented the 2025 audit findings to the Common Council last week. The report showed that the city’s General Fund ended 2025 with a total fund balance of $75,340, a decrease from the beginning fund balance of $369,973.

A major problem is that the city’s General Fund has been lending money to its water and sewer utilities to cover their cash shortfalls. Over several years, those loans have grown to $827,459.

Nearly $479,000 of that money is considered a long-term loan, meaning the city does not expect to get it back quickly. That leaves the General Fund with a $420,986 deficit in money available for general operations.

To keep enough cash on hand to pay its bills, the city borrowed $470,000 from a $500,000 line of credit with Premier Community Bank. The line carries a 5.5% interest rate.

“By giving extra funds to the water and sewer over time, you don’t necessarily have a lot of extra liquid cash to cover expenditures for the general fund,” Danielski told the council. “That also is kind of why you end up needing that short-term debt to help that cash flow.”

The Sewer Utility recorded an operating loss of $162,592 in 2025, while the Water Utility recorded an operating income of $25,201.

To deal with the operating deficits, the city implemented a significant sewer rate increase in 2026. This year’s rate hike is the first sewer rate increase approved since 2011.

Under the new rates, the flat quarterly sewer connection charge for a standard residential customer with a 3/4-inch or 5/8-inch meter increased 26%, from $44.36 to $55.89. The sewer volume charge also increased, from $4.12 to $5.19 per 1,000 gallons of wastewater.

Water charges also rose from $26.33 to $27.12 per quarter, with the base volumetric charge increasing from $4.50 to $4.64 per 1,000 gallons.

Danielski said the rate adjustments are a necessary step to stabilize the utility funds and eventually eliminate the city’s short-term borrowing costs.

“If you have a little bit more built up in fund balance, you don’t have to do that short-term borrowing, which means you don’t incur that interest expense,” she said.

Danielski said that the city’s long-term financial position remains stable, pointing to positive fund balances in its Tax Incremental Financing (TIF) districts as future revenue options.