NEW ALBANY — An audit issued by the State Board of Accounts on Feb. 26 authorized Clark County to spend $5 million during 2010, and in its first two months of the year, the county already has spent more than $2.8 million.
The limit was imposed as a reaction to analyzing the county’s 2008 budget and determining it had overspent by nearly $14 million over the past two years.
Several problems already have been addressed by the countyAuditor’s office and some factors leading to the deficit may have been outside the county’s control, but several questions still facing the Clark County Commissioners and the Clark County Council must be answered before the county can dig itself out of the hole.
Supplemental reports and revenues that were not included in the original State Board of Accounts report may help relieve some of the financial headaches for three of the major players that determine the county’s finances. Relief already arrived March 5 when the state revised the county’s budget, giving it room to spend $10.7 million out of the general fund, a boost of more than $5.6 million.
Despite the work that has already been done, the auditor’s office, the county council — the county’s fiscal body which appropriates money — and the county commissioners, the county’s executive body responsible for office oversight, likely will still face a major budget shortfall in 2010.
The question remains, is anyone to blame?
County Commissioners
A problem with oversight was listed as a possible factor in the county’s budgetary problems, and that oversight falls to the commissioners.
“The county board of commissioners has not performed either an ongoing or separate evaluation of their system of internal controls,” the audit says. “The failure to exercise their oversight responsibility places the county at risk that controls may not be designed or operating effectively to provide reasonable assurance that controls will prevent or detect material misstatements in a timely manner.”
One excessive payment that was included in a State Board of Accounts report was a payment out of a landfill improvements fund totaling $2.3 million.
“The one that I was questioned on that I disagree with is landfill improvements of $2.3 million,” said Commissioner Ed Meyer. “That’s set up through home rule, and an ordinance on home rule [says] that if the money does not come in, it doesn’t get paid out.”
Another payment that caught the commissioners’ attention was money paid out of the cumulative capital fund.
In 2008, about $414,000 was paid out of the fund, but the issue was not what was paid out, but rather procedure. “Indiana code ... authorizes money held in the Cumulative Capital Development Fund to be used for purposes other than capital outlay if the purpose is to protect the public health, welfare or safety in an emergency situation that demands immediate action,” the report says.
The report claimed while the commissioners declared an emergency to dedicate $185,549, the remainder was designated without declaring an emergency.
“Whenever we spend out of [that fund] we declare an emergency,” Meyer said. “We’ve always watched that.”
Meyer disagreed with parts of the report, as did Commissioner Mike Moore, but Moore was quick to say he would not shirk responsibility for the county’s fiscal state.
“If you want to lay blame, I’m not going to run from it,” he said.
Moore also said he didn’t believe the report handed down from the state is where the county will end up. “I think ... when this is all said and done it’s not going to be near as bad as what the state came in and said [it will be],” he said. “The county council from 2008 was probably the most conservative board that I have seen. “To hear that they wildly overspent, the first thing that comes into my mind is somebody’s made a mistake, because that doesn’t add up.”
County Council
Moore was not alone in his thoughts that mistakes were made.
While the council is aware of the issues facing the county, how it got there remains a mystery to several of its members.
Because of budget orders coming in late from the state, the majority of the money that the council was obligating was paid out of the county’s rainy-day and riverboat funds.
“We were spending out of our rainy-day and riverboat [funds] thinking we were leaving our general [fund] alone,” said Council President Jack Coffman. “Because we didn’t have budget orders ... we weren’t allowed to appropriate out of the general fund.”
Through possible poor estimations on the total budget and limitations on how much money the county was able to raise, the likely result was overspending.
How that occurred was a concern for council members.
“Before we appropriate money, we always look to see what we have and we have to advertise it. There is no way that we can overspend,” said Councilman Kevin Vissing, “Now, you can maybe misbudget, [but] there’s checks and balances there to keep that from happening.”
Regardless, the county is in a hole and it will not likely dig itself out in one year. To make it through 2010 may be a struggle and the council will again look to its reserve funds to keep services afloat.
“We’re going to have to just crunch the numbers against our rainy-day and riverboat [funds],” Coffman said. “We knew we were going to have to use that up, but now its even going to be more crucial how we use it.”
Solutions
Entering 2010, the county started out about $3 million in the red, according to Auditor Keith Groth.
“It’s not unusual for a fund to be in the red, but once you make the distributions, then normally that pulls you back out,” he said.
One solution that presented itself is the prospect that the county will be receiving a substantial amount of money back for property tax assessments.
Nearly $4.3 million is expected to come back to the county through money it fronted to pay changes to municipalities’ assessed values.
A definitive amount is still unknown, but it will surely help the cash-strapped county.
In addition, supplemental reports from the State Board ofAccounts may shed more light on why the budget numbers are so far off.
The county also filed an excess-levy appeal in hopes of regaining more money.
Some good news for the county is a revised budget — dated March 5 — has come back from the state, bumping the county’s general fund up more than $5.6 million.
The total amount the county now has in its general fund for 2010 is $10.7 million.
The total fund amount listed in the State Board of Accounts original report and its revised report has also risen from $8.1 million to $13.7 million.
Unfortunately, the total estimated expenditures have also increased, from $14.4 million to $20 million.Despite the increase in the general fund approved by the state, it is still more than $3 million short of the amount originally submitted by the county — $13.8 million.
A decision on whether the gap will be closed with more cuts is unknown. About 20 jobs already have been pared from the county’s payroll.
“I don’t know how we could cut anymore,” Coffman said. But for upcoming years, the county may be able to position itself so it can climb out of its deficit.
In addition to the property-tax assessment money that is expected to come back to the county, Groth is trying to acquire dormant funds in excess of $500,000. Groth would not elaborate on which fund he was talking about before it is secured.
About $800,000 in unallocated Economic Development Income Taxes — EDIT — money also may help to cover the gap. Other options on the table include adding a wheel tax, the $1.4 million possible from Local Option Income Tax — which was implemented last year — and the bridge tax that has been reestablished, but will not be realized until 2011. Another factor will weigh heavily in outlining a budget to keep the county from overspending again.
“We will have the spring and fall [tax money] disbursements this year for the first time in five years,” Groth said.
Without the budget orders coming in on time, the county may be in the same situation it has been under recently.
“We’d be sitting in the dark again,” Coffman said. “When we go to do our 2011 budget if everything falls into place like it is now, we’ll be a lot better prepared for that budget.
“If anything, at least we know where we’re at, and we didn’t before.”
