County faces financial crisis

Published 11:55 pm Wednesday, November 19, 2008

For the past three years, the Covington County Commission has used a portion of a 2005 bond issue to make ends meet by loaning the capital improvement money to other county accounts or funds that ran short in operating funds.

But the $6.2 million bond issue has a clause stating that all of the money should be spent on capital improvements within three years, county administrator Brenda Petty Wednesday explained to members of the commission.

“This month is three years,” she told them in an almost all-day workshop meeting designed review county operations with two new members of the commission, Chairman Lynn Sasser and Commissioner David Ellis.

“We’re going to have to do something with it this year,” she said.

At present, she said, $540,000 has been loaned from the capital improvements fund to the General Fund and to each of the four commission districts to cover cash shortages or budget overruns, just as it has in previous years.

For the past three years, or the life of the bond, Petty said, the county has had to “loan” the capital improvement funds to other county operations to meet cash shortfalls, which Alabama law allows counties to do. The loans typically are made near the end of the fiscal year, then repaid to the capital fund account when property taxes are paid, leaving the county in its best cash position of the year.

At one time, the commission had planned to use the remaining capital improvement funds to join forces with the City of Andalusia in constructing a recreation facility. Most recently, commissioners voted to build ball fields “when they had the money,” and also said they would use the capital funds to replace leaking roofs, including the one on the courthouse. Wednesday, commissioners added the installation of an elevator in the courthouse to list of possible uses for the money.

Commissioner Carl Turman expressed support for adding an elevator.

“We need an elevator,” Turman said, adding that the wheelchair lift currently used to assist people who need to get to the second floor of the courthouse, “is a piece of junk.”

While commissioners discussed a number of ways they could spend the capital improvement funds, they did not address how they would cover cash flow problems in the coming year if the money is no longer available to loan to other funds.

Meanwhile, Petty had more grim financial news for the commissioners: A very tight budget adopted for the current fiscal year is about to get tighter.

Before the new commission took office in November, the previous commission adopted a budget in which it projected only $105 more in revenue than it planned to spend in the fiscal year that began in October. Already, that budget is more than $150,000 tighter, Petty said.

Part of that crunch is the result of state actions, Petty explained.

In late October, the state Alabama County Commissions Association notified county governments that the share of Alabama Trust Fund profits earmarked for county governments is expected to be 60 percent less than counties received last year. The decrease is related to the decline in value of stocks, and bonds held by the state’s huge trust fund.

“We included in our budget $220,000 in revenue from this fund,” Petty said. If the state allocation is indeed cut by 60 percent, it will cost the county approximately $132,000 this year. The funds are usually disbursed in April.

The county also receives forestry funding. In the past, the county has used those funds to help pay for its share of the cost of having resource officers or deputies in the county schools. New guidelines dictate how those monies are used and education is no longer an allowed use. That puts another $45,0000 hole in the budget.

Ellis, who was only this month sworn in as a commissioner, urged fellow commissioners of the need to “start addressing some of these things.”

Commissioners discussed three possible revenue-producing measures which will require the approval of the Alabama legislature.

They did agree they should adopt a resolution in support of a proposed local bill that would double the costs of pistol permit, but the approximately $37,000 that bill would generate could only be used by the sheriff for law enforcement expenses as he saw fit.

Commissioners also briefly discussed asking the legislature to approve an increase in the county lodging tax, but did not discuss how much of an increase they would ask for. At present, the county has a 2 percent lodging tax that generates about $5,000 a month, or approximately $60,000 a year.

A third idea floated was to research and ask the legislature to approve a local oil and gas severance tax. County engineer Darren Capps was asked to provide more information about the possible tax.