Auditor Galloway raises concerns about utility fund transfers of $859,000 in audit of Gallatin

Auditor calls for evaluation of utility customers subsidizing the city's general fund

Missouri State Auditor Nicole Galloway today released an audit of the government of the City of Gallatin, in response to a citizen-initiated petition. The audit identified approximately $859,000 in transfers from utility revenues to the city's general fund. The transfers represent a significant revenue source for the city's general fund. 


"Gallatin's citizens came to my office concerned about how their city manages its accounts," Auditor Galloway said. "When we looked into the city's records, we identified major transfers of money from the city's utility revenues to its general fund. Most troubling, these transfers of water and sewer revenues are in violation of bond covenants, and city officials lacked sufficient documentation to explain the transfers or how they calculated utility rate increases. City residents deserve more transparency from their local officials."


Auditors found that from 2011 to 2014, Gallatin transferred approximately $252,000 in water and sewer revenues and $607,000 in electricity revenues to its general fund. City officials increased sewer and electric rates during the same period but failed to prepare a statement of costs, as required by law, to support the increases.


In addition to the transfers, the city allocates 75 percent of the wages of the city administrator, clerk, and deputy clerk, along with other personnel costs and general expenses to the utility departments. Gallatin officials were unable to provide documentation to support the basis for these allocations. 


The city received an overall performance rating of "fair." The complete audit report can be found online.