County gets state warning

By TONY STINNETT, Courier Sports Editor

Members of the Cannon County Budget Committee and the County Executive warned of concerns regarding the annual budget if the governing body spent down the fund balance in recent years.

Those warnings are starting to come to fruition.

Members of the Cannon County Commission and Budget Committee had an informative meeting at the Courthouse Thursday (Sept. 25) to discuss options concerning the 2014-15 budget, which was passed by the County Commission in August.

"There is a rumor going around that the budget was not approved (by the State) and that is false," County Executive Mike Gannon told Commissioners. "I have provided each of you with a letter from the Comptroller's Office that plainly reads that they approved the budget that was presented by the County Commission."

Although the budget is balanced and ap

proved there are other concerns, Gannon said.
"The problem is that our fund balance is too low," Gannon said. "If you have a fund balance and the first three or four months (of the fiscal year) you don't have enough money coming in to operate then you can run on your fund balance until the money starts coming in from the property taxes. If things are set correctly your fund balance builds back up. Our commission decided a few years ago to start spending down the fund balance. It has gotten so low now that we have to do revenue anticipation notices."

According to Gannon and CTAS official Ben Rogers, some counties generally borrow from the fund balance to operate until funds from property taxes and other revenues are available. The borrowed money must be put back in the fund balance by June 30 of the current fiscal year.

"The problem is our fund balance is so low this year we have borrowed all we can borrow at this point," Gannon said. "We have to run a cash flow analysis by Oct. 15 and provide that to the Comptroller's Office."

Possible solutions are to borrow money from debt services, which is currently enabling the county to operate. There is also the possibility of cutting spending and/or raising taxes, or a combination of both.

Commissioner Russell Reed asked members of the budget committee who were present if they were aware of the deficiency in the fund balance when they passed the budget along to the full commission for approval in recent months.

Three members of the budget committee - Commissioners Jim Bush and Todd Hollandsworth - and Dr. Bill Jennings were in attendance. Hollandsworth and Jennings said they were aware of the situation. Bush said he was not made aware of the deficiency.

"I was aware and I kept saying there is a train wreck coming," Jennings said.

Hollandsworth echoed Jennings' concerns.

"I told you all this was going to happen years ago," Hollandsworth said. "I was told (by commissioners) that we did not want to keep a fund balance. Some of you (commissioners) were on the County Commission then. I asked do we want a fund balance to be healthy enough to fund the services and the general fund from year to year and I was told we don't want to be bankers for the county and that we wanted a minimum fund. I explained, in my opinion, that wasn't prudent. If we are going to keep sitting at this table and spending the fund balance that's fine, but it is not prudent."

Hollandsworth told fellow commissioners the problem is not spending.

"We don't have a spending problem," he said. "We have a revenue problem and there are not many fixes in this county for revenue problems. We have to keep the services and do what is right for the people of this county."
Department heads have been told not to make any purchases without consulting with the County Executive's Office while the situation is being evaluated.

Rogers told the Commissioners Cannon County's situation is not unique.

"This happens quite often," Rogers said. "I'm not here to tell you (borrowing from a fund balance) is good or bad. It is not wrong. Several counties do it this way. No one wants to raise taxes. You want to have a good fund balance."

At one point, Cannon County did; however, those funds have been spent down in recent years.

"I know what the budget committee meant when they said we don't want to be bankers for the county, and I agree, but a reasonable amount is something we need," Gannon said. "About 2011 is when they said we will spend down the fund balance because we don't need this much ahead. In 2010, we had nearly $1.3 million. By 2015 it will be the lowest (fund balance) we have had since 1994.

"It was a conscious decision to spend down the fund balance," Gannon continued. "Once the fund balance is gone what are you going to do? I have been preaching this for several years and here we are."

Rogers told the commissioners Cannon County is not in the red.

"You can take money out of debt services but it has to be put back by the end of June (2015)," Rogers said. "Technically, you are not in the negative right now and you will not be if projections turn out like they have in previous years. If the numbers project out then you will have $152,000 or around that in the fund balance at the end of June. You are repeating the process."

The Cannon County Board of Commissioners will have its regular monthly meeting at the County Courthouse, Saturday, Oct. 18 at 10 a.m.