As the county prepares to begin the months-long process of setting its annual budget, members of the Financial Management Committee will soon consider a policy requiring the county to set a balanced budget.

County Commissioner Brad Johnson spoke to his fellow members of the Financial Management Committee about his concerns with the county’s record for dipping into the reserve fund balance to pay for recurring expenses.

“We are sitting here making decisions that are multi-million dollars,” Johnson said. “What we have done for the last three years since I’ve been here is not what we do in our homes, where we don’t live beyond our means.”

One example Johnson cited as he spoke was the decision by the County Commission to fund raises for employees out of the fund balance rather than to allocate money for those expenses in the budget. Johnson said he feels the fund balance should be reserved for emergencies or helping to fund major projects rather than being tapped for recurring expenses.

In recent years, Johnson said, the county has used money from the fund balance to cover expenses during the budget allocation process.

“We were $375,000 in the hole the second it passed,” Johnson said of the 2017-18 fiscal year budget.

Johnson made a motion for the Financial Management Committee to set a policy requiring the county to adopt a balanced budget and to put limitations on the use of money from the fund balance. The motion was seconded by Carter County Director of Schools Dr. Kevin Ward.

Commissioner Charles VonCannon said he felt uncomfortable voting on such a major policy adoption without having time to properly study it. According to VonCannon, there is a “procedural issue” which must be fixed because commissioners can make motions from the floor to allocate money from the fund balance without the expenditure being on the agenda for the meeting. VonCannon said he himself has been guilty of doing that very thing. Those motions are then passed “without any time to study it,” VonCannon said.

Carter County Mayor Leon Humphrey said he did not know if the Financial Management Committee could set a policy like the one proposed by Johnson.

“The intent is good,” Humphrey said. “However, I just don’t know that it can be binding.”

Humphrey said there needs to be some form of “zero-based budgeting” where the office holders start each budget year from scratch rather than simply starting with the previous year’s budget as a base.

During his tenure as mayor, Humphrey said he has made numerous cuts to the budgets under his purview, and he feels other office holders should do the same.

“There are lots of budgets that need to be cut to offset tax increases,” Humphrey said. “We’ve got to find new ways of bringing new revenue in. There is no treasure chest at the end of the rainbow.”

When asked to provide her opinion, Carter County Finance Director Christa Byrd said she did not think there would be anything wrong with the county having a policy to balance the budget. Each year during the budget process, Byrd said members of the Commission plan to use leftover money returned to the fund balance by the office holders, and that can be a dangerous practice. Once those funds are allocated to the office holder, they can spend all of those funds if they choose, so the county cannot count as a certainty any of that money will be returned.

Carter County Road Superintendent Roger Colbaugh said his department is one that could be severely impacted by a balanced budget policy.

“I’m all for a balanced budget,” Colbaugh said. “I’m sitting on one that’s not balanced.”

This year, the budget approved by the County Commission fell short of fully funding the Highway Department’s anticipated expenditures for the fiscal year by around $500,000. Colbaugh has to dip into his fund balance to cover all his expenses. Byrd said this has been the case with the Highway Department’s funding for the last several years as the Commission has required the Highway Department to tap into its reserves to make ends meet.

Financial Management Committee Chairman Commissioner Danny Ward also expressed his concerns with the Commission’s tendency to not fully fund budgets by leaning on the reserve funds.

“We are starting out in the hole, and as a county, we don’t need to be doing that,” Ward said.

Ward said he felt the Financial Management Committee should institute some policy to help prevent that practice.

“Why have this committee if we’re not going to do our job,” Ward said.

The Committee asked Carter County Attorney Josh Hardin for his opinion on the issue. Hardin said he believes the committee has the authority under state law to set policy and procedure for how the Budget Committee and later the full Commission set the county’s budget.

Part of the problem Hardin said he saw with the county’s budget process is the full Commission making changes to the budget at the final approval stage after the Budget Committee has spent months working on it.

Hardin said he also felt the county’s record of tapping the fund balance to pay for expenditures is troubling.

“It’s kind of basic financial management they teach in high school or elementary school,” Hardin said. “Your savings account is for emergencies and for you to fall back on. Your checking account is where you pay your bills.”

“You don’t need to start monkeying with the savings account on the day the budget is approved,” he continued. “Using the fund balance to fund normal items in the budget is just a mistake.”

While the committee has the authority to set a policy, Hardin said the full Commission could ultimately vote to override the policy.

During the discussion, VonCannon made a “friendly amendment” to the motion by Johnson to have Johnson work with Byrd and Hardin to draft a policy for the committee to study so they could make an informed decision on adopting the policy. Johnson said he would accept the amendment by VonCannon with the understanding that the Committee would vote on the policy during their next meeting and not delay it further.

“Anything past 30 days tells me, and I think it should be broadcast to the public, that you don’t want to balance the budget,” Johnson said.

Humphrey responded that he did not want anyone to think he opposed a balanced budget. According to Humphrey, the Commission already has a duty to balance the budget and he felt adopting a policy was unnecessary.

“I don’t really see this will do anything for anybody,” Humphrey said.

When the votes were tallied, the Committee voted 6-1 to have Johnson work with Byrd and Hardin to draft a policy for the Committee to consider at their next meeting. Johnson, Danny Ward, Dr. Kevin Ward, Colbaugh, VonCannon, and Commissioner Bobbie Gouge-Dietz voted in favor of the proposal. Humphrey cast the sole dissenting vote.