WINNEMUCCA - Humboldt County's audit for the 2012-2013 fiscal year (ended June 30, 2013) showed local county government on sound financial ground, with no debt and healthy ending fund balances. The county consistently budgets very conservatively by estimating costs high and revenue low, so that at the end of each fiscal year the money spent is always less than budgeted and the revenue received is higher than estimated.
Last year, there was a larger-than-usual gap between projected and actual revenue, as mining companies' net proceeds advance payments were quite high and the sales tax (mostly on purchases for planned expansions) was also high. Although that's a positive situation, it well illustrated the problem with depending on net proceeds and sales tax - because although both were high for the previous fiscal year, both are likely to be significantly lower this fiscal year. Gold prices are lower (so net proceeds will be lower) and many of the planned expansion activities are on hold (which will be reflected in lower sales tax for equipment and materials.
Because the amount of revenue from net proceeds tax changes from year to year and is not predictable, County Administrator Bill Deist and the commissioners agreed at last year's commission retreat to continue to make it a goal to remove net proceeds revenue from the county's active budgeting. They don't want any department to become dependent on net proceeds for their operating revenue. However, since the net proceeds revenue is put into the ending fund balance, and is in the general fund as a beginning balance for the next year, the money still ends up being used in budgets.
To make sure net proceeds money wasn't sitting in the general fund for the next year's budgeting, the commissioners transferred the $3 million in net proceeds funding out of the general fund.
The idea was to put the money toward one-time capital purchases, so it would not be used in any operating budget.
Commissioners put $2 million of it into building reserve to start building that fund up after it was depleted by construction of the new dispatch center. They put the remaining $1 million in the road department capital purchase fund to be used to replace older road equipment. Deist commented, "Ben (Garrett, road foreman) has a good equipment replacement program and we'll use net proceeds money to get road equipment up to date."
Operating funding for the road department operations was $1.5 million short. The deficit was covered by a $1.1 million transfer from Payments in Lieu of Taxes (PILT), and a $1 million transfer from the general fund. Gas tax revenue comes to the county to be used for roads and bridges, but there isn't enough revenue from gas tax to fund the road department. Commissioners will be focusing at this year's retreat on finding a different way to fund the road department since PILT funding is also uncertain, and, although the general fund has been healthy enough for a million-dollar transfer, there's no guarantee that will always be the case.
The auditors noted a depletion of the building reserve fund, but Deist pointed out that Humboldt County historically saves money over a number of years for large projects. Since the dispatch center has just been built (and paid for in cash), that fund will start low and grow as money is saved for the next project. The dispatch building cost about $3.5 million. Deist said the building reserve fund would be a good place to put net proceeds of mines funding so that it can be used for one-time capital improvements and not continuing operating expenses.
Commissioner Jim French (who went over the audit with the accountants although he wasn't able to attend the meeting where it was presented) and Commissioner Marlene Brissenden said they were pleased to see that none of the separate county departments or offices went over budget. That was technically true, but Commissioner Garley Amos pointed out that several budgets had to be augmented during the year.
Accountant Andree Rose said, "There's a lot of work that goes into making sure there are no violations."
Rose complimented county comptroller Sondra Schmidt and her office on the many augmentations and transfers between the items to help keep everything straight. Rose said "There was a very large volume of augmentations; even though you don't see a large increase to the budget overall, there were a lot of transfers between funds."
Large augments to the sheriff's office were necessary, chiefly for salaries and benefits, as employment contracts that had been under dispute were settled, and in addition to salary increases, back pay was owed for two different contract years.
Augments were also necessary for the road department, as previously noted.
French, who talked with Rose before the budget presentation, expressed some frustration at still not having a full understanding of the source of all the county's funding, how it is allocated into different areas and on what basis expenditure decisions are made. French said Rose proposed an audit committee, consisting of one or two commissioners, Deist, and Schmidt.
French said the purpose of audit committee would not really be oversight, but chiefly for a better understanding of the budgeting process and accounting. French requested Rose to come to the commissioners' retreat in February to talk to all of the commissioners about the audit committee idea.[[In-content Ad]]
