Facing an unexpected deficit in the general fund, high-ranking Summit County officials are suggesting that layoffs and cuts in service may be necessary as real estate and job markets continue to slump.
“It’s a tough situation when you have to start looking at laying people off,” Summit County Auditor Blake Frazier said.
The county’s independent auditing firm, Ulrich and Associates, is concerned because the unreserved portion of the county’s general fund has a negative balance. County officials have not complied with state law in racking up the $753,603 fund deficit.
“Simply put, that needs to be fixed By going into the negative, you’ve created a deficit of $1.6 million,” Chuck Ulrich, of Ulrich and Associates told members of the Summit County Council. “Any time you talk about a deficit, flags go up.”
State law requires that counties have at least 5 percent of their general fund revenues available in the unreserved portion of the fund, according to the Summit County Auditor’s Office. But the county’s 2009 annual financial report showed Summit County with a $1.6 million deficit in the general fund’s unrestricted accounts.
“It needs $1.6 million in order to be made whole, be made back to where the minimum should be. That $1.6 million is what the county needs in order to be in compliance with state code,” said Matt Leavitt, an auditor in the Summit County Auditor’s Office. “Part of why the state does require it is so that counties are fiscally sound. It’s important and we’re addressing it.”
County officials expect a reprimand from the state for the general fund deficit.
“If it doesn’t get corrected in a timely manner then the state’s going to come in and probably look at doing something,” Leavitt said. “They allow you some time to make some corrective action before they get heavily involved I know they’re going to send us a letter telling us to behave and get back into compliance.”
Members of the Summit County Council were surprised by the negative balance in the general fund.
Councilman Chris Robinson asked if deeper funding cuts were needed to keep County Courthouse budgets balanced.
“I see people making more drastic adjustments than what we have made,” Robinson said.
The deficit in the general fund was caused primarily by a decrease in county revenues. The financial report showed the fund has nearly $3.6 million less in property tax, sales tax, charges for services and interest income than anticipated this year.
The deficit has also been blamed on costs for the new public health building at Quinn’s Junction. County officials originally expected to spend about $5.5 million on the building, according to Leavitt.
But the budget for the building increased to about $7 million, he stressed.
“My notes say the original building was only going to be about $3.5 to $5 million,” Leavitt said. “It wound up costing $7 million because we let it grow and grow and grow.”
In the 2009 general fund, county expenditures were roughly $1.1 million more than revenues. The general fund budget in the county is about $30.3 million.
With other accounts operating in the black, Summit County Manager Bob Jasper said some of those fund reserves are restricted and cannot be transferred into the general fund.
“We need to restructure,” Jasper said. “If you look at all our funds, we have money If you look at our operating fund, we have a deficit.”
The Summit County Council is scheduled to discuss the finances at a meeting Wednesday in the Snyderville Basin. Councilpersons are scheduled to hear a presentation from the Auditor’s Office on ways the general fund deficit could be erased. Plugging the deficit could mean forgoing contributions next year to government open space coffers and the rainy day fund.
“Those were a couple of ideas that we put forward to the county manager,” Leavitt said. “There is an issue of a negative fund balance in the general fund and it needs to be addressed. But we think this is something that can be handled and managed within the year.”