ARLINGTON — Money management problems persist at the Arlington Municipal Airport.

City officials have fixed a number of issues over the past six months but there still is work to do, according to a state audit released Wednesday and a management letter sent last Monday.

The city needs to patch holes in leases and billing processes and tighten control on how money is spent so airport resources are not used for other city services.

Some of the problems rolled over from the state’s last audit of the city, which came out in March.

In that audit, the state found outdated leases at the airport and spaces that were being rented without formal agreements. They also concluded that the city had fallen behind in billing tenants and was maintaining contracts at the airport that conflicted with other city codes.

Since then, staff have started updating leases, closing gaps in billing and receipting processes, fixing airport policies that conflict with other regulations and adding more oversight of the airport’s budget, according to the most recent audit report.

Still, the city does not have enough controls in place to keep dedicated airport dollars from being used elsewhere. The auditor concluded that the city’s use of airport office space to house the Arlington Community and Economic Development Department, without billing the department, was an inappropriate use of airport resources to the tune of about $11,520. Also, the city has not consistently applied late fees to lease agreements, and airport leases that require liability insurance don’t include proof of that insurance with the final agreements.

The auditor’s concerns about the airport come as Arlington Mayor Barbara Tolbert is running for re-election against Craig Christianson. Tolbert serves as executive director of the city’s largest annual event hosted at the airport, the Arlington Fly-In. The auditor concluded last year that there was no conflict of interest with Tolbert’s work as mayor and Fly-In director. However, the nonprofit Fly-In was one of the groups that had an expired lease, though they were up to date on payments. The contract has since been updated and the Fly-In was not identified as an issue in the most recent audit report.

In a response to the auditor, the city noted that combining office space for departments was done to save money and work more efficiently. To address the state findings, the city now pays $11,520 per year to the airport for the 1,200-square-foot community and economic development space. Local officials also have promised to work closely with the airport and finance departments to update policies, upgrade software and increase monitoring for airport leases and spending.

Along with problems at the airport, the audit found issues with how the city accounted for cash, investments and bond refunding in 2014. City officials failed to record changes and misidentified categories for some totals in financial statements. Though the city did not lose any revenue by incorrectly recording information, it did cause confusion for budgeting and annual financial reporting, according to the audit.

Gaps in properly recording information are the result of change in the finance department, according to the city. For roughly eight months, the city was without a permanent finance director while they went through the hiring process for a new one. Former finance director Jim Chase retired in September 2014. Kristin Garcia was hired in June and has since corrected reporting errors, according to the city.

In the management letter, the auditor also cautioned local officials about their use of lodging tax money and control of cash flow for the city cemetery.

Lodging tax revenues must go toward efforts to increase tourism, as recommended by an advisory board that reviews applications for lodging tax grants. When the city council discovered it had more money than expected, they gave out more than the totals approved by the advisory committee, according to the auditor’s letter.

The city also lacks safeguards for money at the cemetery because receiving, spending and reporting are handled by the same employee with minimal oversight. The city has taken some steps to increase oversight but more monitoring still is needed, the auditor found.

Kari Bray: 425-339-3439; kbray@heraldnet.com