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That
data, which is still based on projections, albeit rather
accurate ones because they are predicated on actual results for
most of the year, was contained in a summary report which
Michael Strine, chief financial officer, presented to County
Council's finance committee.
It was
the first time within the memory of current observers that such
a public accounting has been made. In the past, the earliest
that such information was generally made available to the public
has been with the publication in autumn of a comprehensive
financial report. Strine and the executive administration have
agreed to provide the committee with a running account of the
county's financial picture periodically throughout the year.
Strine
told the committee on Jun. 28 that the county's share of tax on
real estate transactions contributed most of the
higher-than-expected revenue. Those collections totaled a
projected $34.8 million, which was 22% ahead of budget. A
booming real estate market also has been a key component of
increases in state revenue this fiscal year. State government
collects that tax and shares part of it with the counties in
which the transactions take place.
Income
from property tax, which brings in about twice as much as the
transfer tax, was slightly below expectations. Most other
sources of income ran fractionally higher than budget while a
couple were fractionally below budget.
Revenue from sewer fees was $3.4 million less than expected.
That, Strine said, reflected a not-unexpected continued decline
in manufacturing activity and the bankruptcy of a major
manufacturing operation. Sewer rates are based on water
consumption. He said the county expected sewer feel revenue to
be 87% lower than in fiscal 2004, but is ending up taking in
about 80% less revnue.
Strine's report showed that the county used $28.3 million of
accumulated reserves to cover the operating deficit and other
commitments and $11.7 million of sewer fund reserves to cover
the sewer service deficit. That resulted in the balances
dropping to $84.1 million and $69.7 million, respectively, at
year-end. Both figures are exclusive of the respective 'rainy
day' reserves to meet unexpected emergencies.
The
report confirmed previous calculations that continuation of
present fiscal policy coupled with anticipated annual growth
rates will result in general fund reserves running out in the
fiscal year which begins on July 1, 2008. That would indicate
the need for enacting a property tax rate increase before that
date.
The
already approved sewer rate increase in the coming fiscal year
is intended to put financing that service on a public
utility-like cost covering basis.
In
another matter having to do with county financial reporting, the
committee was told by county auditor
Robert Wasserbach
that K.P.M.G., l.l.p., has been selected to audit this year's
comprehensive financial report. That firm had the contract to do
so for each of 15 fiscal years before Ernst & Young was hired
for the past two years.
Chief
procurement officer Yvonne Gordon said K.P.M.G. was the only one
of the 'big four' national accounting firms to submit a timely
proposal for the business this year. A proposal by Price
Waterhouse was received after the deadline and returned
unopened, she said. Two local firms, which she did not identify,
submitted proposals which fell far short in the
proposal-evaluation process.
Responding to some behind-the-scenes rumblings to the effect the
Ernest & Young was caught short by the request-for-proposal
process, Councilman George Smiley said, "They knew their
contract was up [but] did not make a move [to seek its
renewal]."
Wasserbach said Ernst & Young has just begun the preliminary
stages of conducting a risk assessment, which originally had
been expected to be completed during the summer. Referring to
that project, Council president Paul Clark said, "It's running
way too long. ... I don't have a lot of confidence in Ernst &
Young."
Because of consolidations in the auditing business, which has
cut the number of major firms in half, it has become a sellers
market, the committee was told. Contract negotiations with
K.P.M.G. are not completed, but it appears the firm will be paid
$210,000 to conduct the audit. That compares to $170,000 paid to
Ernst & Young last year and $180,000 budgeted for the work.
Wasserbach said K.P.M.G.'s proposal included a $225,000 fee,
which has been reduced through negotiation.
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