Emergency reserves not needed to cover operating expenses

By Marcy Stamper

Okanogan County no longer needs the ability to fall back on $605,463 in emergency funds to cover payroll and other regular county expenses.

At the end of June, after Okanogan County took in enough property tax and other revenue to replenish $500,000 borrowed from its reserve fund, the county commissioners adopted a resolution rescinding a previous resolution from April that had authorized the potential transfer.

At the end of June, even after repaying the $500,000 to the reserve fund, the county had more than $3 million in its current-expense fund, said county treasurer Leah Mc Cormack.

The $605,463 in contingency funds were available in case anticipated revenues from property taxes, payments for nontaxable lands, and federal disaster reimbursements didn’t come in as expected.

The commissioners passed the April resolution after the county treasurer and auditor raised concerns that the county might not have adequate funds to cover payroll in the spring. The county’s financial committee had already transferred $500,000 from the current-expense reserve fund to bridge the gap.

That transfer prompted Mc Cormack to alert the commissioners and ask department heads to postpone large purchases.

“It was a cash flow problem,” said Mc Cormack last week. It was not overspending or extravagance, she said.

The county was expecting $5.3 million in 2016 property taxes and had received $3 million of that by the end of June, said Mc Cormack. The rest will most likely be received in October, when second-half taxes are due.

In addition, the county received payments in lieu of taxes (PILT) from the federal government in June — in fact, the county got $125,000 more than anticipated from this program, which compensates counties for nontaxable federal lands. That brought in $2.4 million, said Mc Cormack.

PILT funds

The county also receives PILT payments from the state for lands managed by the Washington Department of Fish and Wildlife. This year, the county received $151,400, the annual payment since 2012, when the Legislature froze PILT at the 2009 level, according to Madonna Luers, a public information officer for the agency.

Even in the spring, Mc Cormack said she expected the problem would be resolved once property taxes started coming in, but the commissioners canceled all regular business and devoted a day in April to budget meetings with department heads. The meetings resulted in the resolution that allowed the transfer of $605,463 from three reserve funds — current expense, vehicle and medical — at any time during the year. The money was never needed, so it remained in the original accounts.

Current expense is the main account for day-to-day county operations, funding 27 county departments as well as emergency services, health services and the drug task force, said Mc Cormack.

Because taxes are not due until the end of April, the county typically starts the year without much of a cushion, said Mc Cormack. This year the county’s finances were even tighter than usual, because it started the year with a $250,000 deficit. Some of the deficit was attributable to expenses related to last year’s wildfire, but there were also trickle-down effects from other economic sectors, according to County Commissioner Ray Campbell.

Department heads may think they have the funds to make purchases because the money is in their budget, said Mc Cormack. “But it’s not cash — it’s not the same beast at all. It’s all a timing issue. We asked them to wait because the money was not really there,” she said.

“When cash wasn’t there in March to meet the payroll, I thought it was time to talk,” said Mc Cormack. “Thank goodness our current-expense reserve was there so we could meet payroll, but there was a real possibility, in case the money didn’t come in as projected.”

FEMA payments

By July, the county had also received payments from the Federal Emergency Management Agency (FEMA) as reimbursement for emergency services and related expenses incurred during the 2015 Okanogan Complex Fire. Only $81,000 of that went to the current-expense fund (for overtime for sheriff’s deputies and vehicle usage), according to Okanogan County Emergency Manager Maurice Goodall.

Emergency management received $307,000 from FEMA, almost all to pay people who came from around the state to work in the county’s emergency-operations center. About $32,000 covered overtime in the county’s emergency management department, food and supplies, said Goodall.

Okanogan County Public Works is also billing FEMA for reimbursements, but doesn’t have a full payment yet — in fact, they haven’t even completed all the work, said Josh Thomson, the county engineer.

This year, Public Works received $120,000, but almost all of that was for expenses from the 2014 Carlton Complex Fire, said Thomson. He expects his department will submit another $600,000 bill to FEMA once the outstanding projects are completed.

The FEMA reimbursements cover 75 percent of eligible costs. Washington state is paying 12.5 percent and the county is covering much of its portion through in-kind contributions of labor and supplies. “We [emergency management] won’t be out any money — we will be made whole,” said Goodall. A final 10 percent payment is forthcoming once all paperwork has been reviewed, he said.