GATESVILLE – Fund balance vs. paying down the debt…those two financial components were the topic of discussion here earlier this month at a meeting of the Gates County Board of Commissioners.

The issue surfaced after Commission Vice-Chairman Henry Jordan asked County Finance Officer Sandy Pittman, at the board’s Sept. 17 night meeting, to provide an overview of the county’s fund balance and what the projected outlays were for the current year and future years.

Pittman’s overview showed that the county possessed an estimated fund balance of $2.77 million as of July 1 (the start of the new fiscal year). Subtracting the money already obligated from fund balance during the current budget year, Pittman projected a balance of a shade over $2.06 million in that account by June 30, 2013.

Her overview included some “dark days” for the county’s fund balance, which had dwindled to $457,112 during 2007. However, from that point until the present, the fund balance rebounded nicely…$1.91 million in 2008; $2.33 million in 2009; $2.39 million in 2010; and $2.67 million last year.

Looking into the future, Pittman projected back-to-back years of fund balance decline in 2013 ($2.07 million) and 2014 ($2.03 million) before that account rebounded again with an estimated $2.28 million by 2015 and $2.39 million in 2016.

“I’ve looked it over and as I’ve said in the past, I’m not against paying certain amounts of money against our loan debt,” Jordan said. “Obviously, that (paying down the debt) is a good business practice. But I was concerned that we need not extend ourselves (financially) too much. We need to have some level of excess funding to do some things, some projects.”

However, after seeing Pittman’s projections on the fund balance, Jordan said he would support of paying down some of the debt by $50,000 to as much as $100,000.

“I appreciate Sandy getting these projections together. This shows how fund balance evolves,” said Commissioner John Hora who has led an effort to use fund balance to help pay down some of the county’s outstanding debt in exchange for savings on long-term interest rates.

Gaining the revenue numbers from Gates County Tax Collector Renee McGinnis, Hora said he charted the tax receipts over the past three years and plotted the “cash flow” received by the county over a quarterly basis.

“What this amounts to is not looking at the negative impact on fund balance, but the positive impact on that fund,” he noted. “Due to our collection rate, we have to put in a 95 percent rate to build our annual budget. But look at the third column…it shows the 100 percent amount we expect to receive. If you subtract the September outstanding levy and divide that by your budgeted amount you start getting these numbers – 99 percent in 2008; another 99 percent, then 98.79 percent and 96 percent. This is ongoing. We get the money; it just takes longer than one year to appropriate it.”

Over a four year period, Hora said there is an additional $718,000 above what was budgeted. He said that money has gone directly into fund balance.

“That’s how we’ve been able to pay the $640,000 to Cavanaugh (the county’s engineering firm for the ongoing wastewater project), and $100,000 to LS3P (the county’s architect for the new library currently under construction). This (excess fund balance) is where that money comes from.”

Hora admitted that there will never be a time when the county collects 100 percent of its property taxes, but, “We still do real well, we just don’t do it all in one year. The money keeps coming and rolling, rolling, rolling over. That’s how your fund balance grows. We have excess cash flow above our budget. That’s why the refinance thing makes so much sense….a million dollars to Gates County.”

“We’ve done the refinance, we’re in good shape there, so what are you asking,” inquired Commissioner Jack Owens.

“I just want to see us to do more, pay down more debt, and we’re going to work on it again, soon,” Hora answered. “I just want you guys to understand that a budget is just a target tool. But you live in the real world; it’s about what you take in and what you spend…it seems that we have folks up in Washington, DC that haven’t quite figured that out as of yet. As soon as a child is born today; as soon as he or she takes that first breath, they owe the government $50,000. That’s absolutely terrible. Right now our (federal) government is taking in about 2.3 trillion dollars and spending 3.8 trillion. We’re losing about 1.5 trillion dollars a year. That’s why this refinancing thing for us is so important; we make high returns for a little pain.”