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May 2, 2013

DiNapoli: St. Lawrence County Needs Long-Range Financial Plan

St. Lawrence County is coping with cash flow difficulties and a sharp decline in surplus funds, according to an audit issued today by State Comptroller Thomas P. DiNapoli. The audit notes that the county’s weakening fiscal health has resulted in program cuts, tax increases and a potential operating deficit.

“St. Lawrence County is walking a financial tightrope,” said DiNapoli. “Recent budget decisions may leave the county without sufficient cash available for managing unforeseen events or closing budget shortfalls. Before the county gets in a financial bind, officials should develop a comprehensive long-range financial plan that will help identify operational and capital needs, monitor revenue and expenditure trends, and develop new financing sources.”

Auditors found, from 2007 through 2011, the total fund balance in the county’s general fund decreased 68 percent, from $21.3 million to $6.9 million. County officials relied heavily on the county’s unexpended surplus funds, the portion of fund balance that is not reserved for another purpose and available for use in future budgets, to close budget gaps and keep their tax rate stable. As a result, unexpended surplus funds declined from $11 million in 2007 to a deficit of $1.7 million at the end of 2011.

County officials included an appropriation of nearly $4 million in the 2012 budget from unexpended surplus funds, which was more than it had available. As a result, based on the county’s preliminary close out numbers for the 2012 fiscal year, the county had a potential operating deficit of $3.6 million.

Audit findings also included:

  • In September 2011, the county incurred a cash flow shortage in the general fund that required the issuance of a revenue anticipation note of $8.5 million against the state and federal aid revenue to be received in 2012. This cost the county $260,742 in interest payments;
  • The Board of Legislators has requested state legislation that would allow it to increase its sales tax rate from 3 to 4 percent, which county officials project would initially generate an additional $12 million annually;
  • The board passed a local law to override the state’s property tax cap and increased the county’s tax levy by $6.7 million (14 percent) to $53 million for 2013; and
  • The county is deferring some work on roads and bridges and delaying purchases of vehicles, equipment and computers because of its cash shortfall.

The report identifies a number of demographic challenges that have also contributed to St. Lawrence County’s poor fiscal position. The population in this rural county has remained virtually unchanged in recent years, growing only .01 percent from 2000 to 2010. Median income in the county is relatively low ($43,390 versus $56,951 for all counties in the state) and its poverty rate is relatively high (17.6 percent versus 14.5 percent statewide). Unemployment is also high, with a preliminary unemployment rate for December 2012 of 10.2 percent, versus 8.2 percent statewide.

DiNapoli recommended the Board of Legislators develop a fund balance policy that establishes a reasonable amount of fund balance to be maintained in order to meet the county’s needs, provide sufficient cash flow, and reduce or eliminate reliance on short-term borrowing.

County officials generally agreed with the audit’s findings. Their response is included in the final report. The St. Lawrence County Legislature is required to prepare a plan of action that addresses DiNapoli’s recommendations within 90 days.

DiNapoli’s office recently finalized an early warning monitoring system that will identify local governments facing significant fiscal stress and present a realistic picture of their financial condition and identify the economic and budgetary challenges they face. This system will make available an objective analysis that taxpayers can use to better participate in local financial decision-making.

For a copy of the report visit: http://www.osc.state.ny.us/localgov/audits/counties/2013/stlawrence.pdf

For more detailed information about Comptroller DiNapoli’s fiscal stress monitoring system and to view reports related to local government fiscal stress visit:
www.osc.state.ny.us/localgov/fiscalmonitoring/index.htm

For access to state and local government spending and more than 60,000 state contracts, visit http://www.openbooknewyork.com/. The easy-to-use website was created by Comptroller DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.

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