Grays Harbor will get a clean audit for last year

MONTESANO — Grays Harbor County escaped another finding from the State Auditor’s Office this month by approving a balanced budget, building reserves and no longer relying on interfund loans to cushion the county’s payroll.

Those practices were achieved largely through the use of across-the-board cuts and relying on a controversial road levy shift that raised property taxes on residents within city limits in 2012 and again in the coming year. County commissioners have been criticized over the budget and two of the three commissioners on the last board — Terry Willis and Mike Wilson — were voted out of office last November . But the state Auditor’s Office clearly said the budget results put the county on the right footing, according to documents reviewed by The Daily World.

The newly convened county commissioners — including Frank Gordon and Wes Cormier along with incumbent Chairman Herb Welch — may have had their ceremonial swearing-in on Monday, but had their first meeting last Thursday, with officials from the state Auditor’s Office.

Last year, the state reviewed the 2010 financials and issued a finding of fault focusing on the way the county commissioners have routinely done budgets, saying they need to do a better job of building reserves and stop relying on interfund loans.

When state officials came back to review the county’s 2011 budget practices, they saw improvements. Instead of issuing a “finding,” the State Auditor’s Office issued a “management letter” to help the county continue its progress.

The letter notes that the county relied on an interfund loan to provide cushion to its dwindling reserves from 2009 until December of last year. The county is not slated to take the loan in 2013.

The county’s reserves had also gone from $5.254 million in 2007 to $2.383 million in 2010. In 2011, the reserves went up slightly to $2.722 million. But even more across-the-board cuts and the reliance on the road levy shift helped put the county’s cash balance at $5.55 million in November of last year.

About the only issue the state found was when the county’s Auditor’s Office used $149,540 out of a separate account called the Auditor’s Operations and Maintenance Fund to help pay the salaries of two positions — an elections worker and a records clerk.

“The law states these funds are to be used for preservation of historical documents of all county offices and departments,” the management letter states, noting that there was no documentation providing that the two employees should have been paid under that fund. Grays Harbor Auditor Vern Spatz says he’s not surprised by the statement in the letter.

“The fund really can’t be used in such a fashion,” Spatz said. “And this is a situation we’re going to have to deal with this year.”

Welch said he’s acutely aware of the situation, which means that the county can’t use those funds this year. Spatz estimated he’ll have a $130,000 to $140,000 hole in his budget this year because he can’t used the fund. “We’ll have to figure out something or we could deal a big blow to Vern’s office,” Welch said.

The management letter also encourages the county to “establish a formal, comprehensive plan that includes detailed financial benchmarks and guidelines to specifically target cash flow issues” and “closely monitor and evaluate the financial activities to ensure the plan is being followed and the desired results achieved.”