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Houston County Courier - Local News

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Report Shows $1.6 Million Loss For Houston County


By Alton Porter
Courier Reporter

An audit report compiled by a Lufkin accounting firm reflects the tough fiscal year Houston County had in 2016. The report shows that "overall for the year (ending Sept. 30, 2016), on accrual basis, there was a $1.6 million loss for the county (due to a reduction in revenue and increases in some expenses)," said Kim Johnson, a certified public accountant (CPA) and partner with Todd, Hamaker & Johnson, LLP, the county's outside audit firm. "We had a tough year." Johnson presented highlights of the report to the county's commissioners at a special meeting of the commissioners court Friday, June 30. It was accepted on a unanimous vote on a motion offered by Precinct 2 Commissioner Willie Kitchen and seconded by Precinct 1 Commissioner Gary Lovell. In addition, Johnson noted, when reconciling revenue and expenses for the county's major funds – General Fund, Federal Emergency Management Agency (FEMA) fund and four road and bridge funds – there was a negative net change in the county's fund balance. "In total for the countywide government, there was a $320,000 loss in 2016," Johnson explained. I've already talked about the $1.6 million. But, on a fund basis, it's (the loss) $320,000. It's been several years since we've actually seen a decrease in this. "And, I would say, the biggest factor on that has got to be FEMA's (failure to reimburse the county for expenses the county incurred as a result of the 2015 storms and flooding). That's because there was some $700,000 in monies that have been incurred (by the county) and have not been reimbursed (by FEMA)." Johnson explained further, "The flooding (caused) $1.3 million (in damages), 75 percent of which is to be reimbursed by FEMA. The county does not get reimbursed for the other 25 percent." County Auditor Melissa Mosley added, "The FEMA money has not come in, and that's what hit us really hard." Both Johnson and Mosley acknowledged, part of FEMA's holdup in reimbursing the county for the 2015 flood-related expenses is that some of the information the agency requires had not been submitted to FEMA by county officials in the format the agency calls for until the officials were recently informed that the information needed to be turned in." Johnson said, FEMA requires submission of certain information from project worksheets and other paperwork in a report called a "Schedule of Expenditures of Federal Awards." Mosley said FEMA didn't send copies of forms for the report to the county and they were returned until May." "This year (2016), this FEMA cost everybody a lot of anxiety, as well as a lot of money," Johnson said, noting "$550,000 is still receivable from the government (for the county's FEMA fund) for the 2015 flooding. "These expenses have been incurred. Here we are waiting well over a year and have not received those monies. This is hurting you guys. You have incurred labor and equipment usage expenses, which have yet to be reimbursed for. "A couple of the road and bridge funds ended up with deficit fund balances as a result of this. The General Fund still has a positive fund balance of $2.8 million. And it still has an unassigned fund balance, which is money free to use for operational activities, of about 25 percent of its yearly expenditures. So, you're still in pretty good shape, but we did lose some ground this year (2016). "In a nutshell, the county's net position, which is a term for your assets minus liabilities … (is) $6,163,234 (for the end of 2016)." She said the county's unrestricted net position, was $2,379,000 at the end of 2016, and "that more or less relates into cash money you still have to run the county. That number decreased from 2015. It had been several years since that number decreased; 2016 was a tough year for you guys." Johnson added, the county ended up with a lower cash position, a decrease in fund balances and a decrease in its overall net position in 2016. "Your revenues were down pretty significantly," she said. "One of the things that certainly pops out is a decrease in the grants and contributions from over $5 million in 2015 to under $2 million in 2016." She said, in 2016, the county received $300,000 less in timber money than in 2015, and Mosley added there was a $200,000 reduction in mineral production revenue in 2016 from the previous year's amount. "In addition, fees and fines went down, sales taxes went down," Johnson said, adding, the county lost $300,000 when Trinity County withdrew its inmates from the Houston County jail and ended a contract with Houston County. "That certainly hurt your cash position," she said. Also, a "paper transaction" changing the accounting related to the allowance for property taxes county officials thought they were not going to collect made it appear there was reduction in property tax collections when there was not, Johnson said. On the expense side, the county spent little over $860,000 on new capital assets and refunded a portion of its bond debt, costing about $180,000, she said. Mosley said, "another factor in the $1.6 million" is the burden placed on the county in contributing to the employees retirement plan. Johnson said the audit consisted of two components: a look at the county's financial statements to assess their accuracy and reasonableness and a "single audit" (or compliance) relating to grants and federal awards the county has received. The firm's audit opinion relating to the financial statements is an "unmodified opinion, which is the best you can get," she said, meaning "the financial statements present fairly in all material respects the respective financial position and changes in the financial positon of the county and all its major funds. " Todd, Hamaker has conducted the county's annual audit the last several years.


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