City of Hillsboro's general fund at 10-year low

Officials for the city of Hillsboro say they will continue to monitor the city's financial situation after the general fund fell below $100,000 for the first time in more than a decade during the month of March.

According to the year-to-date fund report submitted April 9 to the Hillsboro City Council by Hillsboro Auditor Gary Lewis, the unencumbered balance was $99,707.49 for the end of March.
   
The general fund was at $426,218.67 this time last year.

"Currently, the number is approximately $111,000," Lewis told The Highland County Press. "This is not a very healthy number to be at, and it will take some managing to get to a more stable number. Fortunately, April and May are heavy tax collection months. So, we should do OK, but I am watching virtually every general fund expenditure with a lot of scrutiny."
   
Council did not discuss the issue during the April meeting, and Lewis said that only one council member and the president of council have
approached him regarding the general fund.

Council President Lee Koogler said, "It is a situation that causes concern. One thing about government financing is that the unencumbered balance fluctuates on the gross receipts from tax revenue and other sources."

"We knew things were going to be tight with the current budget. I will continue to review this with the auditor and administration."

Hillsboro Safety and Service Director Rick Giroux said that while all finances are a cause for concern, the current issue is one that will self-correct. 

"I talked to the auditor (Thursday) morning," Giroux said. "It's my understanding it's a very temporary issue and will self-correct. I think it is important that we always watch finances, and we do. But I don't think - according to the auditor - that we're in any immediate jeopardy." 

Lewis said that the recent loss of a contract for EMS and fire services with Paint Township, which resulted in an estimated $126,000 loss in revenue, was a contributing factor. However, there were also other issues that led to the low general fund number.
   
"A big factor lies with the contracts with the townships for fire protection," Lewis said. "Up until this year, the contracts were due at the first of the year. The new administration submitted contracts that call for a split payment: half due on or before June 30 and half due on or before Dec. 1. In addition, our EMS collections are down a bit for the obvious reason. Had the contracts been drafted the same as in years past, the general fund would have been around the $350,000 mark at the end of March. That would have been much more manageable. 

"However, I was never consulted to let my concerns about cash flow be known," Lewis said. 

Giroux said that he would attribute the low fund number to the payment change with the township contracts. Because negotiations have been ongoing through the first part of the year, the city did not require the townships to pay, he said, and the city is not looking to make any additional cuts. 

"It's a work in progress," Giroux said.

During his report to council this week, Hastings said of the townships' contracts: "As you know, Paint (township) fell by the wayside. We kind of figured ... with that, we kind of saw it coming. It's created a budget hole. We're not overly concerned about it. It's something that will have to be dealt with. It will be dealt with. We've got a number of options we're looking at to plug that hole."

Koogler said that he discussed the general fund balance this week with Lewis and that he had spoken last week with Hillsboro Mayor Drew Hastings on the city's "overall finances. We had not received the fund report at that time."

"The bottom line is that council passed a balanced budget, and the departments live within the means they are given," Koogler said. "Certainly, there is a shortfall from Paint Township leaving and going to another fire district. At this point, that department is going to have to shore up its expenses. I think we're going to have to look hard at what our figures are and make good decisions for the rest of the year."

Lewis said that a large estate tax payment has helped the city pay toward its debt obligation.

"Fortunately, we did get a larger than expected estate tax payment (of $190,000). It was large enough to take care of the city's general fund debt obligations," Lewis said. "Since our debt is my number-one priority, I took care of it by transferring that money to the General Bond Retirement Fund. So, we won't have to worry about taking any more money out of the general fund for those obligations for the rest of the year. We just need to get through this difficult patch, but it was wholly unnecessary in the first place."

   In the past 10 years, the highest general fund was in 2009, when the unencumbered balance was at $2,520,597.90. However, that figure represents proceeds from a bond anticipation note for the construction of the Hillsboro Police Department and Hillsboro fire station, according to Lewis. March 2012 was the lowest.

   Previous general fund balances:
• March 2012: $99,707
• March 2011: $426,218
• March 2010: $570,558
• March 2009: $2,520,597
• March 2008: $1,433,115
• March 2007: $1,377,387
• March 2006: $1,169,702
• March 2005: $578,306
• March 2004: $266,783
• March 2003: $671,856
• March 2002: $1,391,444.