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Last of a series

GATESVILLE – Double trouble – those two words may best describe Gates County local government’s current financial situation.

As reported in Saturday’s edition, the county’s Fund Balance is down by almost $2.5 million over the course of two budget cycles, the majority coming in FY 2017-18 to address cost overruns in a wastewater project.

Now, compounding that issue is the fact there is a financial void in excess of $600,000 in the current year (FY 2019-20) budget. The culprit, as reported in the Oct. 2 meeting of the county commissioners, is the over-budgeting of expected DSS revenue.

That issue leaves county officials scrambling to fill that void as state statutes require each county to operate a balanced budget.

“Our budget is unbalanced; we have to make some adjustments in our 2019-20 budget that we passed in June,” said Commission Chairwoman Linda Hofler at the Oct. 2 meeting.

Sharon Edmundson, a CPA with the Local Government Commission (LGC) who attended the meeting, told the board she would be able to make recommendations on how the county can recover from the deficit.

“The faster you can get those adjustments made, to bring your current year budget back into balance, the more time you’ll have to spread those adjustments out,” Edmundson suggested. “If you wait until March or April of next year, you’ll end up having to make some pretty severe cuts.”

Gates County Manager Natalie Rountree has worked to devise a plan of action, which would need the board’s approval. The most significant move to help fill the $625,127 void is using $350,000 of grant money for the wastewater project to reimburse the county’s General Fund that was used as that project progressed.

“Money was moved from Enterprise Fund and General Fund balances to the wastewater project,” Rountree explained. “The original intent was for money from the project to be moved back to both funds when the project was completed. Since the budget issue has come up and following discussion with LGC, the money that has been reimbursed from grants can be moved at this time to the General Fund. I am recommending $350,000 be moved.”

To account for the remainder of the deficit, Rountree said extra funds are available thanks to an $111,000 increase in sales tax revenue (more than what was budgeted) plus a few minor adjustments in capital projects and software and IT expenses. Also, the county has now received the actual numbers for its property and liability insurance premiums. Adjustments are planned there as well to help overcome the deficit.

Other than the $350,000 reimbursement to the General Fund from the wastewater project and the sales tax revenue increase, the remaining lion’s share to cover the deficit will come through budget cuts to each county department. The three largest cuts will be to the school system (approximately $50,000), the Sheriff’s Office (an expected $13,255 cut), and Social Services ($10,733).

Other county departments that may experience a four-digit cut, as noted at a Sept. 27 special meeting of the commissioners, are Administration & Finance ($4,942), Emergency Management ($4,649), Building & Grounds ($4,183), Tax Department ($3,013), Community Center ($1,219), and Cooperative Extension ($1,009).

Rountree did make a point at the Sept. 27 meeting about following a state statute when it comes to making adjustments to the local budget of a public school system after the passage of a fiscal year budget. NC General Statute 159-13 (9) reads as follows:

“Appropriations made to a school administrative unit by a county may not be reduced after the budget ordinance is adopted, unless the board of education of the administrative unit agrees by resolution to a reduction, or unless a general reduction in county expenditures is required because of prevailing economic conditions. Before a board of county commissioners may reduce appropriations to a school administrative unit as part of a general reduction in county expenditures required because of prevailing economic conditions, it must do all of the following: a. Hold a public meeting at which the school board is given an opportunity to present information on the impact of the reduction; and, b. Take a public vote on the decision to reduce appropriations to a school administrative unit.”

Rountree said the second portion – “prevailing economic conditions” – is what has taken place. All departments have received some type of cut and the school board will have the chance to present information on the impact of the reduction before any vote is taken.

Commissioner Jonathan Jones asked Edmundson over the course of her long career with the LGC, how many instances mirror what Gates County is currently experiencing with an unbalanced budget?

“It’s not an unusual thing, particularly in a smaller county where there is a tight budget to begin with,” she answered. “Unfortunately in the more rural parts of the state you have difficulty in finding qualified staff. Ya’ll have had some turnover in your finance officer position and that has an effect because different people have different ways of doing things.”

Some of the blame for Gates County’s budget shortfall was placed on a change to the NC Fast program, which re-directed some of the DSS business practices traditionally conducted at the county level back to the state. The change in those business processes caught some counties across the state off-guard, perhaps due to a lack of communication.

“It wasn’t a smooth roll-out,” Edmundson said, referencing the NC Fast program. “This has affected your entire budget.”

Commission Vice-Chair Jack Owens was concerned over the lack of communication. He questioned why DSS at the state level did not send out an email to the counties, notifying them of the change and directing the counties to place “x number of dollars into certain accounts so that the revenue and the expenditures would even out.”

“You may have budgeted in good faith, anticipating revenues to balance expenditures, and then those revenues are not realized, then your budget is not going to be balanced,” said Edmundson.

Owens referenced his next comment as going back to 2001.

“Was it proper back then for us to take money appropriated to DSS and put it in a big pot – knowing it was state and federal DSS dollars – and spend that for our other departments,” he asked.

“For most federal grants, once you get reimbursed for expenditures that you’ve made, when it comes to you it’s not restricted money (for DSS only),” Edmundson answered.

“So, now that NC Fast has rolled in, we can no longer expect those dollars,” Owens said.

Jones, who is also the vice-chairman of the Gates County DSS Board, said he is being questioned by county citizens on how could the DSS Board make a $627,127 mistake, and the same question is being directed at him in his position as a commissioner.

“Where’s the blame; this is a big issue to overcome in a small rural county,” Jones stated. “We’re nickel and diming department heads to balance the budget.”

While the board opted to table approving any suggested budget cuts until their next scheduled meeting, Rountree confirmed that county spending, other than payroll and other necessary expenditures – is frozen until that Nov. 6 meeting.

However, the commissioners have scheduled a special called meeting today (Wednesday, Oct. 23) at 4 p.m. in the courtroom of the county courthouse to discuss and possibly vote on amendments to the FY 2019-20 budget.