BUDGET COMMITTEE

January 20, 2010

** NOT APPROVED **

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Committee Members Present

T. Hopkins, D. Fanton, D. Cady, K. LaForge, T. O’Grady, C. Crandall (Absent: P. Curran)

Others Present

M. Alger, L. Ballengee, D. Burdick, W. Goetschius, L. Gridley, M. Healy, J. Margeson, B. Riehle, T. Ross, E. Ruckle, F. Sinclair

Budget Committee Chairman Theodore Hopkins called the meeting to order at 1:08 p.m.

Approval of Minutes

The December 16, 2009, Budget Committee minutes were approved on a motion by Legislator O’Grady, seconded by Legislator Fanton and carried.

Budget Committee

Budget Committee Chairman Theodore L. Hopkins stated that the Budget Committee is a subcommittee of the Ways and Means Committee and has no power to request a resolution. Any requests for resolution would be referred to the Ways and Means Committee.

Legislator Hopkins stated the Budget Committee will monitor the 2010 budget as the year moves along. The larger departments usually report on their financial status on a quarterly basis, and the smaller departments send their financial statements for the Budget Committee to review a few times a year. Legislator Hopkins noted that the 2009 sales tax revenue came in 6.43 percent lower than what was budgeted, stating that many things are fixed, and we can’t make up revenue. The Budget Committee’s role is to look at 2010 with the idea of what we can do to the 2011 budget to adjust for things that happen in 2010 so that the County remains in good financial strength.

Budget Process

County Administrator/Budget Officer John Margeson explained the budget process, noting the procedures and timetable that are generally followed. Mr. Margeson indicated that he personally reviews every budget and makes a determination as to whether each line item should remain as requested, or if it should be adjusted. Mr. Margeson works closely with the Treasurer/Deputy Budget Officer Terri Ross, and they let the Budget Committee know if any particular budget needs committee attention. Department Heads review their budget as amended by Mr. Margeson with the Budget Committee in August, and this presents an opportunity for the Department Head to raise issues with any concerns they may have regarding the changes Mr. Margeson made. Mr. Margeson stated that he works cooperatively with the Budget Committee in preparing the tentative budget, and it is usually released in late September. The tentative budget is presented to the full Board in October, and one or more Committee of the Whole meetings are scheduled to give all Legislators an opportunity to ask questions about individual line items. Once the tentative budget has been officially filed, any changes to amend the tentative budget must be approved by Board resolution. The public is provided an opportunity to comment on the tentative budget at a public hearing held either the first or second Thursday evening in November. At the second Board meeting in November, the Board will consider any resolutions to amend the tentative budget and a resolution to adopt the final budget.

Pursuant to County Law, County governments must adopt a final budget by December 20. If the Board fails to adopt a final budget, the tentative budget plus any amending resolutions become the final budget. County governments do not have the luxury of delaying the passage of a budget.

Fund Balance

Mr. Margeson talked about fund balance, noting that it is a very important aspect of County finances, and it is a fancy word for surplus. Mr. Margeson stated that the Department Heads do an excellent job of trying to operate their departments under budget every year. At the end of the year, if we spend less than what was appropriated, it leaves money left over which falls to fund balance. On the revenue side of the budget, if we collect more revenue than budgeted, the excess helps build the fund balance. Mr. Margeson indicated that everyone has worked very hard to generate a positive fund balance at the end of the year. Mr. Margeson noted that six or seven years ago, we had a negative fund balance and were operating in deficit. The County wants to end every year in the black, and we currently have the largest fund balance we’ve ever experienced -- $9.3 million. Mr. Margeson stated that he does not recommend a tremendous fund balance, but a modest one. Some budgetary experts believe that a fund balance should run at about 10 percent of a County’s appropriations. The fund balance impacts your bond rate, and Moody’s plans to rate Allegany County sometime this coming spring. Allegany County is in excellent financial condition, and our healthy fund balance should improve our bond rating which will enable us to secure a lower interest rate.

County Treasurer Terri Ross distributed a copy of a spreadsheet showing the fund balance history since 2001. Ms. Ross indicated that we used to appropriate money from the fund balance to lower the tax rate which didn’t end up helping our financial position. This year was the first time in seven years that we have appropriated any fund balance.

Sales Tax Report

County Treasurer Terri Ross distributed copies of a Sales Tax Report summarizing sales tax receipts for 2008 and 2009 as well as 2010 receipts through January 13. Sales tax receipts in 2008 totaled $18,240,274.57 with another $17,983.34 in interest for a total of $18,258,257.91. Sales tax receipts in 2009 totaled $17,067,776.05 with another $2,396.08 in interest for a total of $17,070,172.13. The 2009 sales tax receipts were $1,432,223.95 less than the $18.5 million that was budgeted for 2009 and $1,172,498.52 (6.43 percent) less than 2008 collections.

Ms. Ross stated that property tax and sales tax used to be almost even, but now our property taxes are $27.14 million. State and federal revenue also used to be closer than it is now. Ms. Ross distributed copies of a spreadsheet summarizing the tax levy, average County tax rate, County taxable assessed value, total County Budget and sales tax over the last ten years.

Legislator Kevin LaForge asked if it’s possible to obtain a breakdown of where sales tax revenue comes from, and Ms. Ross indicated that the information is not available by jurisdiction or by zip code.

Budget Funds

Ms. Ross explained that the General Fund in the County’s budget represents the general operating cost centers and is the guiding source for all other funds. The other funds are as follows:

Fund CD1 WIA Grant Fund (Employment & Training)

Fund CS Risk Retention Fund

Fund CSH Risk Retention – Health Fund

Fund D County Road Fund

Fund DM Road Machinery Fund

Fund H Capital Projects Fund

Fund S Self-Insurance Fund

Fund V Debt Service Fund

Ms. Ross indicated that different laws dictate how these funds are set up. Ms. Ross briefly mentioned four other funds that are not budgeted such as the Trusted Agency Fund which is used when we hold money for other people, the Payroll Fund which is used to hold money out for various taxes, the Fixed Asset Fund where the County’s fixed assets are accounted for, and the W Fund which represents the County’s long-term liabilities such as bond debt. Ms. Ross distributed a summary of the County’s outstanding debt from 1996 through 2009. Ms. Ross also distributed several spreadsheets listing mandated programs that receive no funding, mandated programs that receive some funding, non-mandated programs that receive no funding, and non-mandated programs that receive some funding.

Ms. Ross stated that reserve funds are a part of the fund they are in and are listed in the schedule. Reserves are not budgeted, and some require a public hearing before the money can be used.

Ms. Ross distributed a spreadsheet comparing the last three years of adopted budgets.

Audits

Ms. Ross stated that they usually have auditors three times per year. By April 30 of every year, Ms. Ross must file a report with the Comptroller’s Office regarding the County’s financial position. Eldredge, Fox and Porretti prepare the County’s annual financial statements. The Cost Allocation Plan is a report done by Maximus that pulls all costs, direct and indirect, so that those costs can be allocated or directed back to some of the departments. Ms. Ross indicated that there are also two actuarial audits for Workers’ Compensation and Self-Insurance.

Constitutional Tax Limit

Ms. Ross indicated that the constitutional tax limit must be filed before adoption of the final budget. Many different factors impact and can change a county’s constitutional tax limit. The state allows things like debt service payments and direct capital expenditures to be excluded from the tax limit which has a considerable impact on a county’s limit. Ms. Ross distributed a copy of the report she filed with the NYS Comptroller’s Office in November showing Allegany County’s Constitutional Tax Limit at 84.11 percent. Ms. Ross noted that the Comptroller’s Office likes the limits to be below 80 percent.

Courthouse Financing

Mr. Margeson and Ms. Ross have been working with our financial advisors at Municipal Solutions regarding options for the Courthouse financing. Ms. Ross indicated that we have a borrowing coming due in April, and we hope to combine the initial courthouse financing into that borrowing.  We anticipate issuing a callable BAN for the courthouse so that in the event we are able to take advantage of some ARRA financing opportunities, we can participate in that pooled borrowing. We may see a higher rate on the callable BAN, but the advantages in the ARRA financing opportunity will outweigh that cost.  The ARRA financing contain interest subsidies payable back to the County from the federal government. Our current bond rating is Baa2.   

Adjournment

There being no further business to come before the committee, the meeting was adjourned on a motion by Legislator Fanton, seconded by Legislator O’Grady and carried.

Respectfully submitted,

Brenda Rigby Riehle, Clerk of the Board

Allegany County Board of Legislators