The audit covered all city spending —- from the water and sewer department to the daily functioning of city government. It will be presented to the City Council on Wednesday.

To make up for the difference in last year’s spending and revenue, the city tapped into its unrestricted assets, which are a type of reserve fund, said city Finance Director Teri Ferro said.

The practice of using reserves to cover ongoing expenses has been one of the central issues dividing the City Council, with Mayor Jim Wood and Councilwoman Esther Sanchez supporting it and Councilmen Jack Feller and Jerry Kern against it.

Feller said Tuesday that the city will be broke if it keeps it up.

“You can’t spend what isn’t coming in,” Feller said. “You can’t live beyond your means.”

Wood and Sanchez didn’t return phone messages left Tuesday afternoon. They argued during budget workshops last fall that in addition to cutting spending on planning and landscaping projects, the city should use some of its reserves to soften spending cuts that resulted in 26 city workers being laid off.

Among all city operations, the city by the end of June had $52.7 million in unrestricted assets, which included the general fund reserves, the auditor reported.