With the general fund in the red, officials say they may dip into Summit County’s “rainy day” account to help mend deficits in the County Courthouse.
“I’m looking hard at that fund. It’s raining and we have to deal with it,” Summit County Manager Bob Jasper said about the struggling economy in the Park City area. “We put money away in the good years and now we are going to bring some of it down.”
Tax revenues in Summit County have shrunk as the recession has battered the construction and hospitality industries. County revenues were increasing before the economic downturn nearly two years ago.
“We were just going along for three years, revenues growing and growing and growing We were just creating funds to put revenues in,” Jasper said. “We need to keep a tight lid on things and keep our spending base down to a level that we can afford.”
Though flush with cash in 2007, today Summit County’s operating fund has a deficit. County officials have not complied with state law in accruing a $753,603 arrearage, independent auditors said.
Additionally, state law requires that counties have at least 5 percent of their general fund revenues available in the unreserved portion of the fund. A 2009 annual financial report showed Summit County with a $1.6 million deficit in the general fund’s unrestricted accounts.
“We will get a letter from the state saying we’re in violation,” Jasper said. “We start out now in the hole and now we have to dig our way out of the hole We’re not going to get to 2007 revenue levels for a while.”
Jasper said he hopes to find money to fix the deficit within the next few weeks.
“When you start the year with a deficit in your general fund, that’s pretty important. That’s a storm,” Jasper said. “It’s not legal. State rules say that you must have an opening balance and we didn’t. We had a negative one.”
This year, officials expect to withhold about $250,000 that was budgeted for the county’s tax stability fund, which is known as the rainy day account. About $200,000 will also not be placed into the county’s open-space coffers in 2010.
“We just won’t make those transfers so that will reduce this year’s budget,” Jasper said. “And then we’ll look at where we can move money from other funds into the general fund.”
With budget talks underway for next year, officials haven’t ruled out layoffs and cuts in service as ways to trim spending.
“One of the things I am trying to do is maintain service levels,” Jasper said. “Step one is to get out of the hole. Step two is to get a fund structure that we all understand and can work within.”
The old accounting practices used by the County Courthouse should be updated, Jasper said.
“When the county’s revenues were doing well it was a way of creating funds and setting money aside,” he explained.
But Jasper said a problem came to light when officials were unable to transfer funds from some restricted accounts to erase the deficit in the general fund.
“I think there is a real need to modernize our structure. We have money. We just have it in the wrong pockets,” Jasper said. “It’s going to take a while to modernize our fund structure and get money in the right funds that can be spent for community needs. One of the things I guess I’m pushing is that priorities can still be done but they can be done out of the general fund, where the council has flexibility. A more modern structure would allow the council the flexibility to spend based on current priorities.”
Word of the deficit in the county’s general fund caught members of the Summit County Council off guard this month. County Councilman Chris Robinson said the Summit County Auditor’s Office needs to provide councilpersons with more useful financial data.
“So we have some idea of whether we’re floating or whether we’re sinking,” Robinson said. “Are revenues more than expenses? It’s a real simple question.”
Reports from the Summit County Auditor’s Office “are not very productive and they are not very informative,” Robinson said.
“The fundamental reason that we have the problem is we were spending more than we were taking in,” he said. “The question is, are we bleeding still? Are we spending more than we are taking in?”