But whether that will be translated into tax relief for residents and businesses is another matter.

Net assets -- the value of the city's land, buildings and equipment --exceeded liabilities by $125.8 million for the fiscal year ending Sept.30, 2006.

That represents an increase in net assets of $11.9 million, or 10.5 percent, from 2005, according to the annual independent audit of the city's finances by Brent Millikan & Co. of New Smyrna Beach.

"It'sa very good audit," City Manager Jim Chisholm said of the audit that will be presented at the City Commission meeting at 6 p.m., Wednesday at City Hall. "It's clean. It says we're financially secure.

"All city funds, including redevelopment funds, were reviewed and appear in standing," he said. "They didn't find any problems with the way the city is managing its money."

But the city manager said the audit is not something one can use to judge next year's budget and tax rate, which he said will depend on the results of a strategic planning workshop at 1 p.m. Wednesday before the night meeting.

"We've got to go through the process to determine our objectives for next year and what funding is available for planning or those objectives," Chisholm said.

City officials have been raising taxes in recent years because an audit in 2001 warned of potential crisis if a trend of city spending rising faster than city income continued. That trend turned around in 2004. Last year's increase in the property tax rate was 14.9 percent.

Mayor Glenn Ritchey said he wants to take a look at the city budget during Wednesday's strategic planning session.

"I've asked the city manager for an evaluation of all city departments," the mayor said. "I hope to have a good roundtable discussion on opportunities."

The annualaudit reported that 12 percent of the city's general operating budget-- $7.4 million -- was being held in reserve for emergencies as of Sept. 30, 2006, a decrease of $701,916, but still more than the city's minimum goal for reserves. Reserves for all the city's funds totaled $59 million.

During the 2006 fiscal year, the city's total debt decreased by $5.5 million.

Citygovernment expenses increased 12.5 percent last year, with the general operating portion of those expenses rising 30 percent, mostly due tohigher fuel, construction, insurance and employee fringe benefit costs.

Income from the city's business-type operations rose $4.4 million, mainly from increases in water, sewer, garbage and marina fees.

The Florida Tennis Center lost $382,335 last year, compared to $371,071 in 2005.

In a management letter, the auditors noted that the city had responded to a review of its community redevelopment area trust funds by the Florida Auditor General's Office.

According to the auditors, the city has adopted plans for the redevelopment areas. Last year, the city estimated charges for employee time spent in redevelopment areas, rather than documenting actual time worked, auditors reported. But after Sept. 30, 2006, the city charged time to redevelopment areas based on actual time spent in those areas in compliance with state law, according to the report.

Information about the redevelopment areas was included in the city audit, complying with a state requirement to audit those redevelopment areas, Brent Millikan's auditors stated in the Daytona Beach audit.

The city's five redevelopment areas received $11 million income last year, spent $5.18 million and put $5.84 million into reserves. As of Sept.30, 2006, the redevelopment areas had a total of $9.45 million in reserves.

Recommendations bythe auditors directed the city to make an assessment of all post-employment benefit programs to determine the cost to the city, contact the Florida Department of Environmental Protection to determine if a loan repayment reserve the city didn't pay is still required, and modify accounting practices for police and fire pension funds.

john.bozzo@news-jrnl.com