County’s 2013 audit shows lower than expected revenues, increase in tax revolving fund


ARENAC COUNTY — The Board of Commissioners heard its fiscal year 2013 audit report July 15, and the audit summary showed a decrease of close to $200,000 in revenues, but an increase in $200,000 in the county’s delinquent tax revolving fund.

County Treasurer Dennis Stawowy said the news, which was delivered by accountant Jamie Carruthers, was accurate as far as what the county expected.

“We’re flat. That’s the way I would look at it. We’re holding our own,” he said. “We’ve absorbed a lot of the decreases that we saw in the last couple of years. We’ve not implemented any new programs or anything as far as expanding services, but we really can’t because the money’s not there for it.”

The audit summary showed that revenues were lower due to property tax revenues being lower by $100,000 and charges for services being lower than projected by $68,000. Stawowy told the Independent the property tax revenue was lower than expected due to the 2012 equalization report projecting a growth of 5 percent, when the growth was closer to 3 percent.

Stawowy said 2013’s equalization report is looking much more accurate to what the county received in winter taxes.

“When May came around this year, what we had in our budget this year was right on, so we won’t have that problem next year,” he said.

While the general fund revenues were lower than projected, the tax revolving fund increased $200,000, the audit said. According to the audit, the tax revolving fund had $1.8 million in it at the end of 2013.

Stawowy said that fund is used to buy the delinquent taxes owed to the township annually in June, which takes the tax revolving fund down significantly.

“I pay that out in June,” he said. “In June it drops very low. Last June I probably one had $500,000 left in there after paying the taxes out.”

But it is replenished as delinquent taxes are collected with interest, Stawowy said. Monies from the tax revolving fund can be transferred to the general fund and are sometimes used for one-time purchases and capital improvements, Stawowy said.

“That’s how it becomes a contingency fund,” he said.

The audit shows that $967,000 in delinquent taxes still need to be collected.

Carruthers’ report recommended the county try to increase the fund balance of its general fund, which was at $382,000 at the end of fiscal year 2013, a decrease of $311,000 from the previous year. The report said that is about 7 percent of yearly expenditures, while she recommends fund balance be closer to 15-20 percent.

Stawowy said the audit recommendation was essentially saying the county should have transferred more money from the tax revolving fund into the general fund.

“What we do in order to show it as a legitimate expense where it belongs, we take fund from either tax foreclosure or tax revolving and transfer it in,” he said. “That’s normal. Basically, what she’s saying is we should’ve transferred in more money to keep our fund balance around 15 percent.”

Carruthers also went over the county’s millages and internal control matters with the county, making note that the county’s road patrol millage has seen its fund balance decrease in recent years. Her report shows that the ending fund balance was $14,000 last year.

Stawowy said the road patrol millage has been at one mill for many years, and property values have not risen as fast as the cost of supplies and equipment for the sheriff’s road patrol.

“By the time they buy supplies and tires — everything’s gone up faster than the millage has increased,” he said.

Stawowy said the sheriff’s department had planned to purchase a new patrol car this year, but that purchase is expected to be delayed.

As for internal control matters, the meeting saw commissioners, Stawowy and Carruthers spend most of their time discussing the Arenac County Drain Office’s ledgers. According to Stawowy, the issue in the drain office is not the department’s annual receipts not being correct, but reconciling individual drain accounts.

“If you take the beginning balance from January 2013 and the ending balance from December 2013, and they ran all of their checks on receipts and payments that went out, nothing was found wrong and the balances match — what we show on the general ledger is what’s in the bank,” he said.

Where the problem arises, Stawowy said, is when individual drain accounts are further examined. He said while the department’s accounts as a whole are correct, individual drain accounts have not been reconciled. To explain the issue, Stawowy compared the situation to a landlord having 65 rental units, and not knowing whether he or she had reconciled the accounts per individual unit.

During the commissioners meeting, Stawowy told the board the drain office had begun working with his office to start making its individual drain accounting more accurate.

“It’s recorded in the drain office first, on their ledgers, and then brought to me with a transmittal detailing exactly which line item, how much money goes into a total,” he told the board.

“Now everything flows in one direction,” Stawowy said during the meeting. “It flows into their office, then into mine, and it doesn’t get into the bank unless Treasurer’s office gets it.”

The commissioners voiced concerns about the office’s practices, both in the past and present.

“It seems to me they’re always trying something new, but they never get to a conclusion,” said board Chairman Dave Munson.

Commissioner Jeff Trombley said that $17,000 paid to the engineering firm Spicer Group to balance four drains produced the only reconciliation he was aware of.

“From what I can see that’s the only thing that’s been corrected,” he said.

Carruthers said correcting those four accounts was critical, as the billing issues were for drain projects that had already been finished.

“That was a more pressing issue just because that’s billing for a more specific project that had already taken place,” she said.

In the end, getting the drain office’s 65 individual drain ledgers in place would mostly be a matter of time and effort, Carruthers said.

“Someone actually has to sit down and go through all of the books step-by-step,” she said.


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