Auditor cites strong reserves and no debt as record sales tax collections fuel debate over dedicated funds and upcoming tax renewals
MANDEVILLE — An independent auditor told the Mandeville City Council Thursday that the city maintains exceptionally strong financial reserves and carries no outstanding debt, even as council members debated the continued accumulation of millions of dollars in dedicated sales tax funds.
Michelle Treschwig, CPA, a partner with accounting firm Kushner LaGraize, presented the city’s annual audit for fiscal year 2025, which ended Aug. 31, 2025. The audit received an unmodified, or clean, opinion on the city’s financial statements, although it identified accounting weaknesses and compliance violations.
The audit was submitted approximately six months late and reflects the city’s financial position more than a year ago, rather than its current financial condition.
However, a subsequent report from Finance Director Jessica Farno offered a more recent picture, including record sales tax collections for September 2026, the first month of the city’s current fiscal year.
Together, the presentations highlighted Mandeville’s substantial financial reserves, growing sales tax revenue and questions about how millions of dollars in dedicated funds should be used as several sales taxes approach renewal.
Auditor says Mandeville compares favorably with other governments
Treschwig reported that Mandeville ended FY2025 with approximately $14.6 million in its General Fund, including $14.4 million in unassigned reserves.
That represented approximately 6.6 months of General Fund expenditures, substantially exceeding the Government Finance Officers Association’s recommendation that local governments maintain reserves equivalent to at least two months of regular expenditures.
The council adopted a new reserve policy earlier this year establishing a minimum unassigned General Fund balance of 20% of budgeted operating expenditures, with a target range of 30% to 40%.
Treschwig’s presentation showed that Mandeville’s FY2025 General Fund balance represented approximately 55% of annual expenditures.
In dollar terms, the city’s 40% target was approximately $10.5 million, compared with an actual General Fund balance of approximately $14.6 million.
Councilman-at-Large Jason Zuckerman asked Treschwig how Mandeville compared with other municipalities she had audited.
“So far, you’re doing pretty well,” she replied, noting that Mandeville compared favorably even with some parish governments.
Treschwig cited Jefferson Parish, which she said maintains a 15% minimum reserve requirement, and other governments that typically maintain reserves equivalent to two to four months of expenditures.
She also recalled working with a parish government whose General Fund balance had fallen to just $92 before corrective measures were implemented.
Zuckerman pointed out that Mandeville has no outstanding debt, a distinction Treschwig described as significant.
“Yes. That is huge,” she replied.
Asked directly whether she considered the city’s financial position strong, Treschwig answered yes.
However, she emphasized that her assessment applied to FY2025, not the fiscal year that ended Aug. 31, 2026, or the current FY2027 budget year.
The General Fund balance declined approximately $1.2 million during FY2025, from about $15.8 million to $14.6 million. Nevertheless, the remaining reserves substantially exceeded both the city’s new minimum and the professional association’s recommended level.
Council members disagree over growing dedicated funds
Treschwig reported that Mandeville’s governmental funds held approximately $64.7 million in combined balances at the end of FY2025.
That included approximately $26.6 million in the street construction fund, $11.3 million in the District 3 fund and $11.4 million in the special sales tax fund.
Those balances prompted questions about whether dedicated sales taxes are producing more revenue than the city can reasonably spend.
District III Councilwoman Jill Lane expressed reservations about suggestions that the street construction fund contained excessive reserves.
Lane noted that individual street projects can cost $3.5 million to $4 million and questioned whether the fund’s balance would be sufficient to address future infrastructure needs.
Zuckerman countered that the street construction fund had continued growing despite years of spending on resurfacing, striping, maintenance and other improvements.
He said its balance had increased from approximately $18 million in 2019 to about $27 million, a gain of roughly 50%.
“We continue to repave our streets, we do striping maintenance, we do street improvements, and we seem to be spending more, and it seems that it has grown more than 50, 60%,” Zuckerman said.
He questioned whether the continued accumulation of restricted funds should concern officials when the city faces increasing operating expenses.
“We continue to wrestle with increased cost of annual operating expenses, insurance, goods and services, expenses here and there, where we continue to collect and not spend money out of some of these restricted funds,” he said.
The exchange reflected a recurring disagreement over whether the city’s dedicated sales tax revenue is accumulating faster than the city can use it.
Treschwig did not take a position on whether the balances were excessive.
Instead, she suggested examining the city’s planned projects and whether sufficient spending needs exist to justify the accumulated reserves.
“You all do have some healthy balances in here,” she said. “But my question would be do you have the projects to spend the funds on?”
Sales tax collections continue to climb
The city’s sales tax collections have continued increasing since the end of the audited fiscal year.
Treschwig’s presentation showed that Mandeville collected $21.93 million in sales taxes during FY2025, an increase of approximately $360,000, or 1.7%, over FY2024.
Preliminary figures Farno presented at the council’s Sept. 24 meeting showed that collections increased to approximately $23.05 million during FY2026, which ended Aug. 31.
That represented an increase of approximately $1.12 million, or 5.1%, over FY2025.
The figures for FY2026 have not yet been audited.
Farno’s latest report showed that the upward trend continued into the current fiscal year.
Mandeville collected approximately $1.95 million in sales and use taxes during September 2026, an increase of approximately $138,000, or 7.6%, over September 2025.
The September total also exceeded the city’s budget projection by approximately $65,000.
Farno said the amount was the highest September sales tax collection in Mandeville’s history.
The September collections are not included in the approximately $23.05 million reported for FY2026 because the city’s new fiscal year began Sept. 1.
The record month followed the Aug. 5 opening of Trader Joe’s in Mandeville, although the city did not provide figures establishing how much of the increase was attributable to the new store.
Farno cautioned that one month of collections was insufficient to establish a trend for the fiscal year.
Nevertheless, she connected the city’s increasing sales tax revenue with the continued accumulation of dedicated fund balances discussed earlier in the meeting.
“Every month, you know, we’re very excited to see that these sales tax revenues are increasing,” Farno said. “That’s driving the increases in the dedicated funds though.”
She suggested that the city should reconsider whether the existing purposes of dedicated sales taxes continue to reflect municipal needs when those taxes come before voters for renewal.
Mandeville voters approved a rededication of sales tax revenue in 2014, shifting one-half cent of an existing 1% sales tax from infrastructure funds to the General Fund. The change initially generated approximately $2.3 million annually for general municipal operations, with collections increasing as taxable sales grew. The rededication helped drive the substantial growth in the city’s General Fund reserves over the following decade, as previously detailed by Mandeville Daily.
“Are you servicing the needs of your city with the way the call of the sales tax is written?” Farno asked.
Sales tax renewals could bring difficult decisions
District II Councilman Kevin Vogeltanz raised the approaching expiration of certain dedicated sales taxes during Treschwig’s presentation.
Farno confirmed that renewals are scheduled for 2028 and 2029.
The discussion focused on the city’s dependence on sales tax revenue and the consequences if voters declined to renew taxes that support major municipal programs and capital improvements.
Zuckerman noted that Mandeville collects approximately $22 million annually in sales taxes, compared with about $2.4 million in property taxes.
Farno clarified that the city’s permanent 1% sales tax supporting the General Fund is not subject to renewal.
Other dedicated sales taxes, including those supporting street construction and District 3 projects, require voter approval to continue.
If voters rejected those taxes, Farno said the city would have to scale back capital projects and make cuts affecting the General Fund.
“You would have to radically cut services,” she said.
District I Councilwoman Strong-Thompson cautioned that the discussion involved hypothetical scenarios, but Farno emphasized that residents should understand the potential consequences.
“If you don’t vote for these things, how you see Mandeville today will radically change,” Farno said. “It will have to.”
The discussion also highlighted the distinction between renewing a dedicated tax and reconsidering how its revenue should be allocated.
Both Treschwig and Farno suggested that officials should evaluate the city’s financial needs before deciding whether existing tax dedications should remain unchanged.
Clean audit opinion accompanied by accounting weaknesses
Although Treschwig characterized Mandeville’s financial position favorably, the FY2025 audit identified two material weaknesses in internal financial controls.
One involved procedures for closing the city’s financial records at the end of the fiscal year. The other concerned accounting for capital assets, including infrastructure, land and other city property.
The audit also identified violations involving the Local Government Budget Act, Louisiana’s audit filing requirements and federal reporting deadlines.
Bank reconciliations were not consistently completed within two months after month-end.
The audit was submitted Aug. 28, approximately six months after its Feb. 28 deadline.
Lane noted that the city had submitted audits late in four of the previous five years and questioned whether the capital asset review explained the recurring delays.
Treschwig said she could explain the FY2025 delay but could not account for the circumstances surrounding earlier audits.
For FY2025, she attributed the delay to the capital asset reconciliation project and problems completing the year-end financial closing process.
The capital asset review resulted in a net downward correction of approximately $4.6 million to previously reported financial figures.
Treschwig explained that the city had longstanding problems identifying, classifying and accounting for certain assets, including infrastructure recorded decades earlier.
The adjustment represented a correction of accounting records, not a finding that $4.6 million in city money was missing.
Farno said the city had completed the capital asset review and hired outside accounting assistance to improve financial closing procedures, reconciliations and staff training.
She expressed confidence that the improvements would help resolve the findings in the next audit.
Treschwig emphasized that the FY2025 financial statements nevertheless received an unmodified opinion, meaning they were fairly presented under applicable accounting standards.
Water and sewer operations remain a challenge
The audit also showed that the city’s water and sewer enterprise fund continued operating at a loss, although its results had improved substantially.
The enterprise fund reported an operating loss of approximately $860,000 in FY2025, compared with losses of about $2.9 million in FY2024 and $5.6 million in FY2023.
Farno’s September report showed that the enterprise fund continued facing operating shortfalls in the current fiscal year.
The fund recorded approximately $357,000 in operating revenue and $487,000 in operating expenses during September, producing a shortfall of about $130,000.
The city’s adopted FY2027 budget anticipates an enterprise operating shortfall of approximately $2.26 million.
Farno noted that the first month’s results did not resolve the fund’s ongoing financial challenges.
The September operating expenses included approximately $177,000 in depreciation, a noncash accounting expense.
The city recently increased water and sewer rates, but the FY2025 audit predates the full effect of those changes.
Mayor rejects claims of financial crisis
Madden welcomed Treschwig’s assessment and used the presentation to respond to critics who have questioned the city’s financial condition.
He said Kushner LaGraize was the third auditing firm in three years to describe Mandeville’s finances favorably.
Madden criticized what he called social media “trolls” who have claimed the city is experiencing a financial crisis.
He argued that residents should place greater weight on the findings of independent auditors and other financial professionals.
Vogeltanz agreed that characterizing Mandeville as being in a financial crisis was unwarranted.
However, he said the city’s favorable financial position did not eliminate the need for careful scrutiny of spending, reserves and future obligations.
Next audit already underway
The council unanimously approved a contract with Kushner LaGraize to conduct the FY2026 audit, covering the fiscal year that ended Aug. 31, 2026.
Treschwig said preliminary testing would begin the following week, with additional work planned in November.
The administration hopes to complete the audit before the next statutory deadline in February 2027.
Farno said the city expects its recently completed accounting improvements to address the weaknesses identified in the FY2025 audit.
The next audit will provide an independent assessment of those improvements and a more current picture of the city’s financial position.
Meanwhile, the combination of record sales tax collections, substantial dedicated reserves and approaching tax renewals leaves officials facing a question that emerged repeatedly during Thursday’s meeting: whether Mandeville’s existing revenue structure continues to reflect the city’s most pressing financial needs.
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