2018-10-10 / Front Page

Treasurer raises concerns about budget

BY STEVEN KOVAC
810-452-2684 • skovac @mihomepaper.com

Sanilac County Treasurer Trudy Nicol expressed her concerns last week to the Board of Commissioners that it was about to violate one of its own financial policies.

Nicol pointed out that certain fund transfer proposals in the current budgeting process would exceed the minimum balance requirement of the delinquent tax revolving fund (DTRF) as established by the board’s own policy.

The more than $6 million fund maintained by the county enables the treasurer to pay schools and local governments the full amount up front of the portion of each local tax levy that is delinquent, providing significant cash flow benefits to the local units.

The DTRF also provides a pool of cash from which county departments have borrowed for purchases and emergency needs which are not planned for or budgeted.

The fund is one of the wells commissioners draw from in their effort to keep a balanced budget under the revenue constraints imposed by the millage rollbacks mandated by the Headlee Amendment. Another well is the fund equity balance left over from the previous fiscal year.

Despite rising costs, the Sanilac County Board of Commissioners has been able to provide basic services to residents within the limits of the Headlee Amendment, a state law which prevents governments from reaping the automatic financial windfall from rises in the value of real property each year.

Though Sanilac County has a half-dozen small voter approved special millages, general governmental operations are funded at the statutory minimum millage level for county operating.

According to the 2019 General Fund Draft Budget Presentation, 41 percent of the funding for government operations comes from the five-mill operating millage prescribed by the Michigan constitution. Headlee takes that down to 4.0484 mills, the statutory minimum.

The rollback saved county property tax payers about $1 million last year.

Nicol told the board, “I am here requesting an audience. I am asking for some of your time. I feel like I wasn’t included in the budget process. My concern is that, if the (delinquent tax revolving) fund transfers continue along this trend, it will deplete the fund completely. If your plan is to eventually have me borrow money to pay off the local units, let me know.”

Commission Chairman Dan Dean thanked Nicol for her presentation and supporting documents and said, “We will review our policy of using the delinquent tax revolving fund.”

After the meeting, Finance Committee Chairman Gary Heberling told the News, “Trudy has some concerns. We are all on the same team. It takes all of us working together. We want to talk to her.”

In a follow up email to the News, Heberling wrote, “Unfortunately, there are times when tough decisions have to be made in order to ensure the integrity of viable county operations. The thought process behind utilizing surplus (funds) from the Delinquent Tax Revolving Fund was not to jeopardize the county’s ability to pay local units for delinquent taxes without borrowing, but to ensure the availability of contingency in the event an unbudgeted expense occurs in 2019.”

Dean further explained in an email to the News, “After receiving the budget submissions from the department heads, a thorough evaluation of anticipated revenue and requested expenditures is made. The board set a goal of increasing contingency funds…In order to accomplish that, a search for additional revenue sources was made. The Tax Foreclosure Fund has proven to be a reliable source and appeared to have a significant surplus. The Delinquent Tax Funds likewise appear to have significantly more reserves than are needed to pay the local governments leading to a preliminary discussion about the possibility of a slightly larger transfer to the general fund that would still maintain the self-funding nature of that program.

“I realize that this would require a modification of the current board policy…I believe the process has been transparent with a great deal of input from department heads. The county treasurer plays a crucial role and we look forward to continuing to work with her.”

Commissioners are planning to adopt the 2019 general fund budget following a public hearing on Nov. 6.

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