Why do we elect these County Commissioners? | Eastern NC Now

    Ever see a County Commissioner running at break neck speed or squirming in his chair. Someone must have ask him to explain the financial condition of his county. Some are clueless. That is sad because Commissioners are elected to protect the public money and assets. Most are comfortable to rely on the Manager and Finance officer. Most counties have qualified managers and competent finance officers. Beaufort County does.

    The financial system is weakest in the link between the Board of Commissioners and the Manager/Finance Officer. The reason is most commissioners do not know what to ask for. The Manager supervises the Finance officer but there is a fragile link between the Finance Officer and the Board of Commissioners. The Manager is expected to handle the day to day operations of the county as directed by the Commissioners. His boss is the Board of Commissioners. The Finance Officer works for the Manager and takes care of paying the bills and making sure money is available, is invested and where all our assets are located.

    I will give you a very simplified example of how things can go bad if the Commissioner/Manager/Finance Officer link is weak. This actually happened, however I will not name the county. The county sold a large asset for more than 25 million dollars and put the money in the bank. They had plenty of money for a small county. The commissioners were popular and easy to deal with. The county refused few requests to all comers. Each year a budget was prepared and approved without a tax increase. Everyone was happy. The commissioners got re elected, the manager and finance officer were happy, the public was happy. The happiness lasted for several years.
Beaufort County Commissioner Hood Richardson making himself perfectly clear: Above.     photo by Stan Deatherage
    Then with no notice the county could not pay its bills. They had no money at all. Meetings were called and commissioners demanded to know why the manager and finance officer had bankrupted the county. There was a lot of finger pointing. The State moved in and took charge of the county. Either the commissioners came up with a revised and balanced budget or the State would do it for them.

    Back to the finger pointing. The Commissioners said they relied on the manager to run the county and he should have told them and they would have raised taxes. The Commissioners lost that argument because they are solely responsible for the financial condition of the county. Remember, that is why they are elected. The Manager and Finance Officer said "We give you a budget every year as is required by State law. We told you how much you spent last year, how much savings you have and you decided how much to spend during the coming year. You set the tax rate each year. You have not raised taxes since we got the 25 million dollars and you refused to raise taxes this year because you thought the gravy train would go on forever." There definitely was a weak link.

    Another weak link is in the audit process. Counties are required to have a financial audit at the end of each fiscal year. The fiscal year ends by general statute on June 30th. The auditors usually finish between September and December. The weak link has to do with cash flow or the availability of cash to pay monthly bills. It is the same thing that happens at my house on occasion when we do not have enough money to pay our bills. So both myself and the county either take the money out of savings or borrow from the bank.

    Counties and cities in North Carolina are always very proud of their audits. They are always clean and the auditors always report the counties and cities are sound financially. The good report can be misleading because the county should have spent all the tax money collected by the end of the audited year which is June 30th. The county set the tax rate for the coming year during June and has not sent out tax bills much less collected one penny. In theory the county is broke. However, State law required the county savings (called the fund balance) to not be less than that required to pay the bills for one month. So, if we only have enough money to run the county for one month and we just set the coming years tax rate the question is "Can we get these tax bills out during the month of July an get enough people to pay us enough money quickly so we can pay our bills?" The answer is "No".

    The answer to this dilemma is savings (called fund balance). Most counties like to have at least a 20 percent of their total budget in fund balance. This allows them to pay their bills until tax bills for the new year can be printed, mailed and some of the money collected.

    If you want to know how good of a job your commissioners are doing managing your county, call the finance officer during the month of October or November and ask: (1) What is our total annual budget, (2) How much is our undesignated bank balance plus invested funds as of the end of the month, and (3) Did you borrow money since July 1 to pay bills? This is public information and should be given without hesitation. If the county had to borrow money or delay paying vendors during the last three or four months of the year, your commissioners are doing a questionable job. Counties that get tax bills out during August and September are going to be in better short term financial condition using this test tan those who get them out during October, November and December. Beaufort County is in the process of modernizing our tax software so we can collect taxes earlier during the year. This is a test of short term obligations and is by no means a comprehensive test for county finance.

    The Beaufort County Manager/Finance Officer will make a report on fund balance at our November Meeting.