Allen County department heads have been admonished to keep expenditures close to the vest the remainder of the year.
Commissioners said Tuesday morning the county had less than $650,000 cash in general fund coffers and departments that depend on the general fund had accumulative budget authority of $1.1 million for the remainder of the year.
In simple terms that means they have about $550,000 less to spend than budgeted expenditures over the last two and a half months of 2011.
Additionally, Commissioner Dick Works noted the budget was constructed with anticipation of carrying forward $400,000 to 2012. Cash carryover gives a jump start on a new fiscal year.
So why is the county’s financial back against the wall?
Simple, answered Counselor Alan Weber, “We’ve spent about $700,000 on the hospital,” from the general fund, “and that won’t be reimbursed until (revenue) bonds are sold about the middle of December.
“The delay in (identifying and confirming) a site is the cause,” Weber continued, noting that arrangements to sell the bonds couldn’t be made until trustees confirmed a site. That occurred last week when Iola council members voted to change zoning for the North Kentucky site from residential to commercial.
The infusion of cash from the first issue of bonds — $10 million in December — will swell general fund revenue beyond anticipated expenditures, but will come so late in the year that discretion is required to ensure no violation of the Kansas cash-basis law.
Most of the $700,000 in expenditures in support of a new hospital translate to its construction, meaning the money wasn’t wasted, Weber explained.
“Expenditures of over $600,000 are for planning and architect fees that are required regardless where we build, as well as money for legal fees and soil testing for the site (selected) on North Kentucky,” he said.
The remainder went to exercise options and soil testing on the East Street and Huskey sites, both now out of consideration.
The second bond sale of $15 million will occur in January. Another $5 million issue will be floated sometime later to provide working capital when the hospital nears opening.
Money for debt service on the bonds will come from proceeds of county-wide quarter-cent sales tax, expected to generate $400,000 a year for 10 years, and a quarter-cent sales tax dedicated by Iola commissioners that is expected to raise $300,000 a year and run through Dec. 31, 2019.
Other sources of revenue will be profits from the hospital and Medicare reimbursements to support construction. Also, a foundation will raise money to enhance equipment and operation of the hospital.
At the conclusion of their meeting Tuesday, commissioners sifted through to-date expenditures of each department and said they may speak individually with department heads about massaging their budgets the remainder of the year.
“We need to spend only what is absolutely necessary,” Works said, until money spent on the hospital is reimbursed.
