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INDEPENDENCE—Grayson County’s financial situation continues to improve, as the county once again saw its ending year fund balance grow over the year before.
Deanna Cox of Robinson, Farmer, Cox Associates provided the county board of supervisors with the 2012 audit report earlier this month and pointed out that the county is continuing its “financial rehealing” process.
Looking back at the last five years, Grayson ended the fiscal year with a cash balance of $675,382 (2008), $291,527 (2009), $96,205 (2010), $3.5 million (2011) and $4.8 million (2012).
Cox said the county has grown its fund balance to “what is now a healthy level.”
Grayson has turned its fiscal situation around through better budgeting, tighter control on its expenses, debt payoff, a trash collection fee and tax increases, she said.
In 2008-09, the tax levy in Grayson was $0.30 per $100 of assessed value. In 2009-10 that number jumped to $0.34 and in 2010-11 taxes increased to $0.49.
Overall revenue from general property taxes increased by nearly $3 million from 2010 to 2011.
“We usually recommend a minimum of 10 percent fund balance” for a rainy day fund, Cox said. “Grayson’s number is well below that 10 percent mark until you get to 2011 and this year it’s come up a lot more than that.”
Another area the county has improved in dramatically over the last five years is debt that was previously required to pay the bills.
In previous years, the county has had to take out tax anticipation notes—which come with hefty interest rates—to pay the bills until property taxes came in.
In 2012, however, the county was able to carry itself through the slower months because it had built up its own cash reserve.
In 2009, the county spent $1.9 million in debt service. In 2010, that number jumped to $2.7 million and in 2011 the total amount was $2.4 million.
“In 2009, 2010 and 2011 you had to borrow temporary financing to get you through the year because you didn’t have enough cash,” Cox explained. “You’ll see that in 2012 you didn’t have to do that. That’s what the healthy fund balance has done for you this year.”
This past year, the county spent only $777,039, most of which can be attributed to payments on the loans for Grayson Highlands School.
Cox added that 10 percent is the very minimum accountants recommend for the rainy day fund and pointed out that the county is continuing in the right direction to build upon that.
Looking at the county’s revenues by category, 55 percent came from general property taxes, 26 percent came from intergovernmental revenues and 9 percent came from charges for services.
Cox said the intergovernment revenues (state and federal funding) have continued to decrease as the federal and state governments continue to pass more costs on to localities. In 2008, intergovernment revenues accounted for 33 percent of the funds for Grayson County, while this year that number was 26 percent.
When asked if that decrease was likely to continue, Cox said she didn’t anticipate it increasing dramatically anytime soon. But, it should “level out” over the next two years or so. She added that she doesn’t think it will go back up.
On the expenditure side, the largest categories included education (29 percent), public safety (21 percent) and health and welfare (16 percent).
Only 8 percent of the county’s expenditures were spent on general government administration.
Looking at a line graph that compared total revenues and expenditures, County Administrator Jonathan Sweet pointed out that Grayson made a positive switch between 2009 and 2010, when revenues outgained expenses for the first time in several years.
Previously, the county was running higher expenditures than revenues, but following tax increases and a new trash collection fee the county began to dig itself out of the fiscal hole it was in.
“In 2010 we made those adjustments and there is a [positive] differential between expenditures and revenues,” Sweet continued. “Both are staying pretty flat between 2011 and 2012. That’s a good indicator that we are keeping expenditures in line with our revenues.”
Cox added that in previous years when she presented her audit, it was clear that expenditures weren’t really being managed as well as they are today. Budgets were overspent and the county was constantly looking for funds from other areas to cover those expenditures.
In terms of debt per capita in comparison with state averages, Grayson continues to stay way below other localities.
In 2011, the county’s debt per capita was around $1,250, while the state average was nearly $3,000.
Following the presentation, Sweet said that he was “very pleased” to see the county’s fund balance continue to grow.
“Will our rate of growth continue?” asked Supervisors Chairman Mike Maynard.
Sweet said the county had some liabilities that are going to be hitting the balance sheets in the coming months and years, and there are numerous things on the horizon that the county that could affect expenditures, such as the composite index shift, required local effort from the school system and the affordable care act.
Additionally, Sweet pointed out that the county at some point will need to not neglect expenditures such as roof replacements, school buses and other capital outlay projects.
“Those activities that have large price tags will end up absorbing some of our surplus,” Sweet said.
If revenue remains flat over the next couple of years and expenditures don’t, they will begin to erode the county’s surplus.
“We have some expenditures coming down the pipe that we can’t control,” Sweet added. “We are going to see a significant decrease in our ability to expand our working capital reserve.”
But for now, the county is in much better financial shape than it was just two years ago.