ROCKLAND, Maine — City government kept a tight rein on its spending during the past year, resulting in a record-high surplus. But the city’s financial cushion is still less than the goal established by the City Council.

City auditor James Wadman of Ellsworth met Monday night with city councilors to discuss his firm’s findings for the budget year that ended June 30, 2012.

The city’s surplus as of that date reached $1,332,000, an increase of $166,000.

The surplus has grown in each of the past six years since it reached a low of $407,000 in 2006. The council adopted a policy at that time, on the advice of its auditors, to maintain a surplus equal to 8 percent of the taxes billed each year.

The $1.3 million amounts to slightly more than 7 percent of the annual tax billing.

The surplus grew during 2011-2012 because city departments spent $246,000 less in the past year than budgeted by the council. Most departments finished the year with small surpluses that led to the overall $246,000 surplus. The largest over-expenditure came in the $45,000 welfare budget, which swelled to $94,000. City Manager James Smith said this was due to a down economy and more people qualifying for general assistance benefits.

The city took in $80,000 less in revenues than it budgeted, almost exclusively from reduced municipal revenue sharing from the state.

The main topic of discussion by councilors was the failure of the city’s Finance Department to reconcile records of money owed to the city — called accounts receivable — on a timely basis. Wadman said that failure to do this monthly results in a delay in the audit being completed and can cause errors to go uncorrected for too long a period.

Councilor Eric Hebert said auditors have noted this deficiency for the past seven years. The auditor said that this is not an unusual problem when government agencies finances are reviewed.

The city is training its staff to reconcile the books, Smith said. Finance Director Tom Luttrell is reviewing the monthly statements to make sure auditors can get to work by Oct. 1.