Board grapples over fund balance

Posted on Thursday, March 20, 2014 at 10:04 am

County officials expect to see some unused funds at the end of the fiscal year and a few supervisors questioned whether the money could land back in taxpayers’ pockets or support other areas in the budget.

The board of supervisors was presented with a total forecasted fund balance of $43.6 million, money contained in several county savings accounts. Of that total, there is $7.76 million that would roll over to the upcoming fiscal year but doesn’t replenish itself.

Peterson

Peterson

“If we’re saying that we have needs that have not been met in our budget yet, should we be looking at the funds for some of those needs or even put the money back into taxpayers’ pockets?” W. Canova Peterson IV, Mechanicsville District supervisor, asked.

In response, Kathleen Seay, county director of finance and management services, said that amount of money is not considered ongoing revenue and can vary from year to year.

“We have had it as a funding source, but it has not always been the case that we were able to have that amount at the end of the year,” Seay said at the board’s March 12 meeting during her presentation on the Hanover’s existing savings accounts.

The fund balances contains roughly $17.5 million assigned to specific areas such as education, economic development and future capital improvement projects. Of that amount, county officials forecast that there will be $3.2 million ready for assignment, by the end of the current fiscal year on June 30.  But that is subject to change because the year is not over yet.

There is also an unassigned fund, which can be used to cover unexpected expenses and equals 12.6 percent of the county’s estimated revenues for the current fiscal year.

“It keeps us from having short-term borrowing,” Seay said.

This sum of money is also used for complying with policy as well as reassuring that the county maintains its AAA rating, which must be achieved by fund balances that equal 10 percent or more of the budget’s total revenues.

South Anna Supervisor Wayne T. Hazzard

South Anna Supervisor Wayne T. Hazzard

Vice chairman Wayne T. Hazzard, South Anna District supervisor, is concerned the county is spending too much and noted Hanover’s increase in spending for the proposed budget $18 million higher than the current plan.

“Every year we have revenue come in ahead of what we thought it was and so we spend it,” Hazzard said.

During discussions between the supervisors, Hazzard suggested a two-cent real estate tax reduction.

Dropping the levy would forego $2.4 million of existing revenue, based on the county’s penny equivalent of $1.2 million.

“We have $17 trillion in debt at the federal level,” Hazzard said. “I continue to hear our elected officials say, ‘We don’t have a revenue problem, we have a spending problem,’ and I’m going to say it here, loud and clear, if you don’t control revenue, you’re not going to control spending.”

Although Ashland Supervisor Ed Via III did not take a position on this idea, he said it is worth reviewing the county’s current financial status and hearing the public’s opinion.

But some supervisors, including Chickahominy District Supervisor Angela Kelly-Wiecek, feel it was too soon to make any tax cuts because the economy is still recovering. Wiecek announced that she does not support Hazzard’s proposal.

“I just don’t think it would be prudent or thoughtful at this point to have a major reaction and not continue to be thoughtful in funding the savings account,” Kelly-Wiecek said. “We don’t know where we’re at in terms of strong recovery.”

She believes the proposed budget is conservative and feels that it helped restore some areas that she said are some of “the core responsibilities” of local governing bodies, such as education and public safety.

“It looked to me that we were looking to shore up areas that were straining under increasing capacity,” Kelly-Wiecek said.

Citizens will have an opportunity to add their own two senses on the matter at the board’s March 26 public hearing. Supervisors are expected to adopt a budget in April.

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