Some background: On Tuesday May 27, Bowie County Judge Sterling Lacy showed in Commissioners Court that the County had a budget surplus of $4,641,758.49, and stated that the county should have plenty of money to pay the bills for at least another month. County Auditor William Tye asserted that the figure was approximately three million dollars less, and suggested the Court ask County Treasurer Donna Burns where the money was. Ms. Burns was taking time off that day, so the Court agreed to meet in special session on May 30. On the 30th, as soon as Court was in session, Tye asked for the floor, and told the Court that the county had a deficit from the previous fiscal year of approximately three million dollars, and that some of this year’s revenue had been used to cover that shortfall.
Many people still had questions after Tye’s explanation, and I wrote an article on Saturday, May 31st attempting to address those questions, with input from a few accountants and people familiar with government finance. No one was satisfied with the article, whether or not they agreed with Tye’s explanation. So, on Monday, June 2, I contacted Todd Pruitt, of Patillo, Brown and Hill, LLC, the firm that performed Bowie County’s audit of the previous fiscal year. Pruitt was the lead auditor, and the audit was completed in March of this year.
As one would expect when dealing with a company with offices and clients statewide, it took Mr. Pruitt a few days to return my call. When we spoke yesterday morning, he was very cordial and patient with my questions, explaining the same things multiple times when necessary. Here’s the bottom line:
- Bowie County had a budget shortfall in the fiscal year ending September 30. Revenues were $26,284,179 and expenses were $27,461,403, for a deficiency of $1,177,224.
- Late in the fiscal year, anticipating the need for extra cash for operating expenses, former Commissioner Pat McCoy arranged an early buy-back of several motor-graders, bringing $1,600,008 into the general fund.
- Because of this, according to Pruitt, the county ended the year with a revenue excess of $422,784 and a positive fund balance of $474,650.
(The relevant information is on page 12 of the Annual Financial Report – September 30, 2013 (PDF), in the first column.)
After Pruitt explained all this, I told him why it was an issue – that the county was considering a tax-anticipation note of five million dollars, and that we were told that it was necessary because of a deficit of approximately three million dollars. Pruitt told me that he didn’t know where that figure came from, and reiterated that the county had a budget surplus, although a small one.
That brought up his presentation of the audit report a couple of months ago, and his warning that the Court needed to be aware of the county’s precarious financial situation, and his emphasis that the Court couldn’t assume there would be another capital asset that could be sold to make up future shortfalls, and his exhortation that the county find a way to not only get expenses under control, but to build up the general fund. I then told him of the current budget surplus of over four million dollars, and he expressed surprise, and asked if I knew how that had been accomplished.
I had asked Judge Lacy the same thing a few days earlier, and shared a short version of Lacy’s explanation – wherever possible, he assumed that last year’s expense over-runs and revenue short-falls (especially from grants) would be the norm for this year, and budgeted for them. In several instances, the expenses had been lower and the revenue higher, contributing to the surplus. Pruitt sounded pleased, responding that it seemed like Lacy and the Court had taken steps to get things on the right track.
The Court discussed the tax anticipation loan at Commissioners Court, and recessed to resume discussions this Friday. Bowie County’s bond counsel, Tom Pollan, hoped to have a buyer ready, pending approval of the loan by the Texas Attorney General’s office. Judge Lacy told me later that if the Court approved the loan for the full five million dollars, that he would personally drive to Austin and lobby against the note. “We don’t need the loan, or at least not nearly that much. My best guess is that the three million dollars was used to replenish some restricted account or accounts. The money simply needs to be returned to the general fund.”