A routine inter-fund loan from the county’s general fund to the road department has sparked further disagreement among the Sunflower County Board of Supervisors on the handling of taxpayer dollars.
The county leaders called a special meeting on Thursday morning just to receive and approve an $850,000 tax anticipation inter-fund loan from the general county fund to the road department fund.
District 1 Supervisor Glenn Donald insisted the matter could not wait until Monday’s regular meeting, due mostly to information he says he received from the state auditor’s office.
During the brief session, a unanimous 4-0 vote was achieved to move forward with the reassignment. District 4 Supervisor Anthony Clark was not present at Thursday's meeting.
When questioned by The E-T, County Administrator Fred Washington said, "This loan will cover operating expenses for the road department."
Then Board Attorney Johnny McWilliams elaborated on Washington’s statement.
"I'm assuming your cash flow in the road department is insufficient and this loan is made so that you can continue your operations until the tax circulate. Is that correct?" McWilliams asked.
And Washington affirmed that it was.
“Yes, so far all of the taxes have not been collected, so to fill that gap we're just borrowing money from the general accounting fund and it will be paid back," Washington said.
Generally, taxes are not due until January, they become delinquent in February and the county tax sale is not done until April.
"So you really don't get all of your tax money until April-May," McWilliams said.
However, after the meeting, Donald offered a different take on the matter.
“The urgency was the road department couldn't get paid. They couldn't buy one bolt. All (purchase orders) have been ceased," Donald said.
In his justification of the need for an “emergency meeting” for the inter-fund loan, he said there were insufficient funds on the road department budget line to pay the employees.
To be clear, this does not mean the county has a deficit of cash. Donald said there is around $7 million in the bank, so this issue came down to accounting and compliance, Donald said.
Donald, Washington and Board President Riley Rice all acknowledged that the county has done inter-fund loans before and they are common practice.
However, Donald stressed not five hours before a group of workers needed to be paid.
He admits that it is common practice to make temporary loans from the general fund, but he emphasized that it should have been completed prior to the need for a special meeting.
Donald said the board borrows from either a line item or a short-term loan and pays it back from the tax settlements.
"Your first tax settlement ain't until January 20, so when we had the first tax settlement January 20, after that settlement, we were still $650,000 in the hole (on the road department line item). Well, some more stuff went through, and here's the kicker, the reason we're having an emergency meeting is because the road department would not get paid tonight," Donald said.
He said conversations with the independent and the state auditors affirmed that it was out of compliance to pay the road employees with a negative balance on a budget line item.
"You can't pay a payroll on an empty account," he said.
He said the matter should have been addressed at their January 19 meeting, but it did not appear on the agenda.
"See, they won't listen to me. I tried to help them. Mr. Rice takes up on himself to act like he's the king instead of president that presides over the meeting. You don't run the day-to-day operation. That’s what your county administrator does, that's what your comptroller does and they defied everything Stephanie (Washington) said. They defied everything that Fred Washington said, he and Mrs. (Gloria) Dickerson,” Donald said.
Donald said he addressed this issue with the state auditor’s office.
"And they said that there's no way you can pay payroll on an account that is almost a million dollars in the hole," said Donald.
He said the state auditor told them that they would have to have an open, legal meeting to produce a board order authorizing the chief financial officer to do an inter-fund loan.
Donald said he has pleaded with Rice and District 5 Supervisor Gloria Dickerson, who serve as president and vice-president of the board, to address the matter, but according to him, Dickerson told him that the formal process was not needed and that it was simply a matter of a journal entry.
"She knows nothing of what she's talking about, she knows nothing about county accounting," he said.
He said Dickerson adamantly stated that the workers could be paid although the auditors said it couldn't be done as long as there was no money on that line item.
Dickerson told The E-T on Saturday that her position was, and still is, that there was no reason to call an emergency meeting.
“We could have handled it in the regular meeting,” Dickerson said. “It is just a journal entry.”
Dickerson said nothing would have been affected with anyone getting paid, it was something that simply had to be corrected on the accounting end.
Donald then brought up the recently-approved $1.1 million loan to purchase equipment, which he was adamantly against, and said that money could have been better used to fund the road department until tax settlements come in.
Donald alluded to the current state of world affairs where some people have lost their jobs and are unable to pay their mortgages and such and argued that it was not the time to plunge the county into deeper debt with a loan to buy equipment.
"Those who voted to do that, have no business being in office, if that's the accounting ability you have, then you have no business running the business of Sunflower County," Donald said.
He asserted that the county had already spent $35,000 to fix its current chipper-spreader machine and road manager T.J. Fairley, who is charged with running the road department, said they didn't need a new one. He also alleged that Fairley said that he did not need two machines because he didn't have the manpower.
Donald said, "My 6-year-old grandbaby can handle business better than this."
He added, "You got 60-year-old and 70-year-old people sitting up there, if I tell them to do something or tell them to check it in and check it out or this is what we need to do, they will not do it because it come out of the mouth of Glenn Donald."
Donald said he suggested that they delay the purchase of the equipment and added that Washington also advised against the purchase. He also mentioned the trucks that were bought in 2020 out of the road fund and how that too was against his better judgment.
When asked about his reason for the inter-fund loan Rice said, "First of all is pandemic, another reason is we bought equipment and then we gave those raises too. All of that was not budgeted." He asserted that inter-fund loans happen all of the time.
He too weighed in on the whole matter. "This the problem, what they don't understand is we do not have a road department account at the bank," Rice said. He reasoned that all of the county’s funds are together in one account anyway and if the county had eight million dollars in the bank, all of it would be in the same account and thereby accessible.
Rice said they attempted to explain to Donald that no checks were going to bounce because all of the money was in the same account. "As soon as the tax come in, we put it right back in general accounting," he said.
Rice said the money is broken down into budget line items for their purpose and the workers would have still gotten paid if they had not had the meeting on Thursday. “They got paid for November and December," Rice added.
Rice said the reason for the special call meeting was to appease Donald and stop all of the back-and-forth email communications so they could go ahead and get it out of the way because Donald didn't understand.
Despite Rice’s statement regarding the county’s cash being in one account, Washington said, “We're not allowed to pay out from a line item when it's not there.”
He said doing so would be out of compliance and they are striving to remain in compliance.
Washington stressed that the inter-fund loan is simply to put money onto a road department line item because that line had developed a deficit and they have until the end of September to repay the loan and stressed that there is no additional costs or millage due from the taxpayers. “It is really a reconciliation,” he said.
Washington said the independent auditor shared with him that this is a common occurrence especially in the first three months of the year because a certain portion of the tax millage goes to the road department and since taxes have not been recorded yet there's always a shortfall of sort.
Washington said he had earlier asked the county lawmakers to put a moratorium on buying for the rest of the year because the road department only has a $2 million budget and due to having to pay for items that were purchased during last fiscal year, it has put a strain on that budget.
He said there was another inter-fund loan done in December to put money into the road department fund so that it could be transferred back to the bridge fund. "We're reconciling books," he said.
Rice said they are expecting the tax money to come in by April or May and the $850,000 should last them until then.