Guest Editorial, November 3-5, 2010
November 3, 2010
Much has been made regarding Summit County’s general-fund balance during this year’s elections. Many questions have been addressed to the candidates about how the county ended up with a negative fund balance. This letter is an attempt to clarify and answer some of the questions that have been posed during debates.
First and foremost, as was stated by the external auditor during the presentation of the financial report to the council on September 1, 2010, the county is in excellent financial condition. Total fund balances for governmental funds increased from $42.5 million beginning to $43 million ending fund balance. The General Fund, which is only a portion of the county’s "operating funds," has an ending fund balance of $3 million, combined reserved and unreserved portions.
It is true that the unreserved portion has a negative fund balance of $753,000, which is $1.6 million lower than what is required by Utah State Code. A significant portion of that shortage is a result of the county’s commitment to pay $1.25 million for the recently completed Landmark Drive extension. Because of this commitment, that amount went from being "unreserved" to the "reserved" portion of General-Fund balances.
In 2009, the county made every attempt to cut and reduce expenditures to match anticipated revenues while preserving a high level of service to the public. In the end, revenues for the General Fund ended lower than anticipated. Due to economic circumstances, property-tax revenues as well as sales and use tax revenues were not received as budgeted. However, actual expenditures were lower than budgeted.
The county has, during previous prospering economic times, preserved fund-balance amounts to pay for future large construction projects such as the Landmark Drive improvements and recent extension. From 2008 to 2010, Landmark Drive has undergone significant improvements and extension. The county has paid for those improvements and extensions without incurring long-term debt. As a result, the county has benefited by not incurring additional expenses related to bonding costs and interest expenses.
During 2010, at a council meeting held October 6, 2010 (just one month after the financial report was presented to the council), the council approved steps in order to correct the fund-balance shortfall. These steps included transferring monies from the county’s "rainy day" fund to the General Fund, closing inactive funds and delaying capital-facility projects. By taking these actions, the county has restored the unreserved portion of the General Fund balance, continues to maintain services to the public and not incur costs related to long-term debt.
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It is overly simplistic to take a myopic view of county finances and concentrate solely on the General Fund. The council, county management and the auditor’s office must look at and make decisions based on the overall fiscal health of the county. The overall picture of the county’s finances is that the county, as reported by an independent auditing firm, is in excellent shape. Total fund balances for government funds at the end of 2009 were $43 million. Of that amount, "operating funds" fund balances, combined, were $11.4 million less than half of which was reserved.