August 24,  2011

County finished fiscal year
in the black -- Or did it?

According to County Executive Paul Clark, county government wrapped up the past fiscal year with black ink. But, depending upon how you read it, the monthly general fund cash flow report presented to County Council’s finance committee had a tinge of red ink.

A press release issued on Aug. 23 by Clark’s communications director Jim Grant said, “Pre-audited figures show the county ending the fiscal year with $1.3 million in net income.” A more detailed presentation to the Council committee the same day by acting chief financial officer Ed Milowicki had general fund expenditures exceeding revenue by $700,000. But, according to Milowicki that was

It's not every session that County Council's finance committee receives earth-shaking news. But it literally happened this time.

During a presentation on fiscal 2011 budget results the eighth-floor conference room vibrated noticeable for a minute or so, feeling effects of the earthquake in Virginia that rattled most of the East Coast. That was followed by the sounding of the emergency alarm and orders to evacuate the Redding Building.

Meeting attenders joined men and women from other city and county government offices walking calmly and orderly  down the stairwell and exiting onto French Street. The evacuation lasted about 20 minutes while officers of the Wilmington Fire Department inspected the building.

It remains to be seen whether financial officer Ed Milowicki will ever be able to top that reaction in future presentations.

after making mandated transfers of $5.5 million to the real estate tax stabilization fund and the so-called ‘rainy-day fund’ to meet unexpected emergencies.  For accounting purposes, the transfers are listed as expenditures.

The press release went on to say that county government got through the past year “without the expected use of budgeted reserves of $7 million.” The cash flow report, however, showed a budget reserve going into the present fiscal year of $49.3 million, down from $50 million at the start of fiscal 2011.

A year ago, during the administration of former Executive Chris Coons, the finance department reported that county government had, for the first time in several fiscal years, not experienced a deficit. The cash flow report published then showed revenue exceeding expenditures by $500,000. That was after transfers of $7 million. The budget reserve – previously referred to as the property tax stabilization fund – reportedly grew during fiscal 2010 to $48.9 million from $48.4 million. Delaforum was not able to account for the $1.1 million discrepancy in the size of the reserve as stated in the two reports.

Milowicki’s presentation to Council showed an anticipated cumulative budget shortfall of $51.1 million over the next five fiscal years if there are no significant changes in county revenue or spending trends. The projected five-year shortfall a year ago was $76.9 million. The current report has the budget reserve being exhausted shortly after the end of fiscal 2016. A year ago it was expected to last until just after fiscal 2013.

Milowicki told Council that higher-than-expected revenue as a result of real estate transfer tax generated by some large non-residential transactions and fees from sheriff sales of foreclosed  properties coupled with continued cost-cutting and operating efficiency in county departments accounted for the somewhat improved financial situation. But he cautioned against undue optimism in light of continuing problematic local and national economies.

A separate cash flow report pertaining to the sanitary sewer fund showed revenue exceeding expenditures by $1.8 million after a transfer to reserves of $700,000. That was marginally better than the $1.7 million projected a year ago. The sewer fund is accounted differently from the general operating fund because it is run as a utility business rather than being predominantly tax supported.

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Read previous Delaforum article: County came out ahead in just ended fiscal year

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