It’s a large deficit, but it’s a paper-only one, was the message Thursday from Leitchfield’s utilities commission.

As part of some year-end bookkeeping before the July 1 start of the new fiscal year, commissioners amended the 2011-12 budget to reflect a $665,000 loss for the year.

That deficit is actually being caused by the way the commission takes in grant funding and spends it, said chairman Bob Crawford.

City Clerk/Treasurer Erin Embry, who acts as the secretary for the commission, explained the “deficit” is showing up because the commission’s budget is based on cash accounting methods, while its audit is based on accrual accounting methods.

Cash-based accounting records revenue when funds are received, and records expense when they are paid in cash. In accrual accounting, income and expenses are recorded as they occur, regardless of whether cash has actually changed hands.

In other action, the commission:

* Approved its 2012-13 budget, which projects revenues and carryover of $13.23 million and spending of $8.6 million.

* Announced closing on the loans for the new raw water intake and pipeline is now scheduled for June 19. Closing in June will allow the city to qualify for a lower interest rate, which in turn is expected to save it $500,000 over the life of the loan.