Three Audits, More Than $1 Million, and One Unanswered Question

For three consecutive years, Livingston’s independent auditors raised concerns about the City’s Impact Fees Fund.

Each time, the City gave essentially the same explanation: the unusually large balance was being accumulated for a future railroad crossing project.

Then the budget projected that the Transportation Impact Fee balance would be spent down to zero.

A few months later, the City Manager told the Commission that more than $1 million was still appropriated in that same fund and could be used for railroad crossing alternatives analysis.

Now the proposed FY2027 budget shows more than $700,000 remaining in a combined Impact Fees Fund.

Those records may have a reasonable explanation.

But right now, they do not tell one clear story.

What are impact fees?

Impact fees are paid by new development to help cover the added demand that growth places on public infrastructure.

Livingston has collected separate impact fees for specific purposes, including:

• Transportation

• Fire and EMS

• Police

• Parks and Recreation

These are not general-purpose funds. Transportation impact fees are supposed to remain connected to eligible transportation improvements needed because of growth.

That distinction matters because money collected for one purpose should remain traceable to that purpose.

What did the audits find?

In the FY2024 audit, the Transportation Impact Fee balance was approximately $1.44 million. Auditors determined that the fund held roughly $502,000 more than the maximum balance allowed under the statutory interpretation used in the audit.

The audit stated that the City was out of compliance.

The City responded that it did not intend to reduce the charges because the money was being accumulated for a specific future railroad crossing project and would be spent in upcoming fiscal years.

The finding appeared again in the following audit. By FY2025, the Transportation Impact Fee balance was approximately $1.37 million, still about $156,000 above the limit calculated by the auditors. The prior issue remained unresolved, and the City continued to rely on the future railroad crossing explanation.

This was not a one-year accounting issue.

It became a repeated audit finding.

Then the budget projected a zero balance

Livingston’s adopted FY2026 budget showed:

Beginning Transportation Impact Fee balance: $940,323

Projected revenue: $188,923

Budgeted expenditures: $1,129,246

Projected ending balance: $0

In other words, the adopted budget anticipated that the Transportation Impact Fee balance would be fully spent during the fiscal year.

That raises a straightforward question:

What was the City planning to spend more than $1.1 million on?

The published budget included several smaller projects proposed for Transportation Impact Fee funding, including trail improvements, ADA sidewalk work, and the Front and Fifth Street intersection. But those listed projects do not appear to explain the entire projected drawdown.

What was said in February?

At the February 3, 2026 Commission meeting, commissioners asked whether money was available to determine a railroad crossing location and pay for engineering work.

The City Manager explained that more than $1 million was appropriated in the Transportation Impact Fee Fund and could be used for a study or alternatives analysis.

That statement is important.

The issue is not that the money had disappeared. The issue is that the adopted budget already projected that the fund would be spent down to zero.

So how was more than $1 million still available several months into the same fiscal year?

Possible explanations include:

• Planned expenditures had not occurred.

• Projects had been delayed.

• Transfers had not been completed.

• Budget assumptions had changed.

• Some expenditures were never intended to occur during that year.

• The published summary did not show the full accounting picture.

Any of those may be true.

The public record does not yet tell us which one.

Then the reporting changed

The proposed FY2027 budget no longer presented the individual impact fee categories in the same way.

Instead, it showed one combined Impact Fees Fund with:

Beginning balance: $706,832

Projected revenue: $84,635

Budgeted expenditures: $555,250

Projected ending balance: $236,217

The same budget materials showed that FY2026 expenditures were now projected at approximately $1.016 million rather than the roughly $1.746 million previously budgeted across the broader Impact Fees Fund. That difference explains why a substantial balance remained, but it does not identify which projects were completed, which expenditures did not occur, or how much remained in each impact fee category.

That is the missing reconciliation.

Why separate categories matter

Fire and EMS impact fees are not the same as transportation impact fees.

Police impact fees are not parks impact fees.

Each category exists for a specific purpose. Combining them in a summary may simplify the budget presentation, but the underlying money should still be separately traceable.

Residents should be able to see:

• How much was collected in each category

• Every expenditure charged to that category

• Every transfer involving the fund

• Which public project received the money

• How much remains

• Whether the expenditure met the legal purpose of the fee

Without that breakdown, a combined balance of $706,832 tells the public very little.

The July discussion made the restrictions clear

During the July 7 Commission meeting, Finance Director Paige Fetterhoff cautioned that transportation impact fee money must retain the purpose for which it was collected, even if it is transferred into another fund.

She explained that these funds must support capacity-expanding improvements associated with growth. She also questioned whether fixing stormwater at the existing underpass would qualify if it did not increase transportation capacity.

She contrasted that with an additional grade-separated crossing, which could expand north-south traffic capacity.

That discussion confirms why the details matter.

The question is not simply whether the City has a worthy transportation or stormwater project.

The question is whether the specific use qualifies for the specific impact fee being charged.

What still needs to be explained?

The City should publish a complete reconciliation showing:

1. The current balance of each impact fee category.

2. Every Transportation Impact Fee expenditure from FY2023 through the present.

3. Every transfer into or out of the Impact Fees Fund.

4. Which FY2026 expenditures were completed and which did not occur.

5. What specific railroad crossing project supported the City’s responses to the auditors.

6. Whether that project had an approved scope, engineering plan, cost estimate, funding strategy, or timeline at the time.

7. Why the FY2026 budget projected a zero balance while more than $1 million was later described as available.

8. Why the proposed FY2027 budget combined the separate impact fee categories in its summary presentation.

9. Whether the repeated audit finding has now been fully corrected.

10. Whether all expenditures complied with the legal restrictions governing each fee category.

The bottom line

This is not an allegation that money is missing.

It is a request for the City to reconcile its own records.

The audits say the fund remained too large and out of compliance.

The City said the money was being saved for a future railroad crossing project.

The adopted budget projected that the Transportation Impact Fee balance would fall to zero.

The City Manager later said more than $1 million was available for alternatives analysis.

The next budget showed more than $700,000 remaining in a combined Impact Fees Fund.

The public should not need an accounting degree, a public records request, and hours of budget review to understand how those statements fit together.

The City may have a reasonable explanation.

It is time to provide it.