Oneida County closed 2022 in strong financial position

Oneida County had a very good 2022 fiscally, hauling in $4.9 million in net revenue, according to the county’s annual financial report for the year ending last December 31.

County finance director Tina Smigielski presented the report to the full county board at its August meeting, assisted by Anthony Cervini of Sikich LLP, which conducted the audit. The county is in the second year of a five-year contract with Sikich to conduct the annual external audits.

Overall, the county’s net position as a result of operations was $90.1 million for the fiscal year ending December 31, 2022, with $60.7 million invested in capital assets net of related debt and depreciation, $5.4 million restricted for specific purposes, and $24 million in unrestricted net position, the report stated.

For audit purposes, Smigielski told supervisors, there were two large groups into which financial activity is combined.

“One is governmental activity and that’s the activities that are principally supported by taxes or other intergovernmental revenues and fees,” Smigielski said. “And there’s another grouping and those are the services that are intended to cover their own costs through their own fees.”

The governmental activities of the county include general government, public safety, health and human services, public works, culture and recreation, conservation and development, and interest/fiscal charges, the report stated. The business-type activities include a highway department and a solid waste department.

The governmental net position was $81.9 million, with $54.9 million in net capital assets, $4.7 million restricted for specific purposes, and $22.3 million in unrestricted net position. The business-type net position was $8.2 million, with $5.8 million in net capital assets, $0.7 million restricted for specific purposes, and $1.7 million in unrestricted net position.

“So for the year ending 2022, we had a good year financially,” Smigielski said. “Our revenues in total were $56 million and our expenses were $51.1 million, so we had net revenues of $4.9 million.” 

The total cost of county programs was 91 percent of revenue, the report stated, meaning that, for every $1 in revenue, the county spent $0.91.

In governmental activities — public safety, general government, health and human services — Smigielski said the county had a $2.4 million net return, with $45.7 million in revenues (after a $1.9 million transfer from the general fund to the highway and solid waste departments) and $43.4 million in expenses.

According to the report, the county’s governmental activities had a 1 percent uptick from the prior year to $47.6 million in revenues (before the transfers). While program revenues, including grants, declined by $1.1 million, a combined increase of $1.4 million in tax and other revenues, including sales tax and investment income, kept the county whole, the report stated.

“Total expenses also increased to $43.4 million, essentially flat versus the prior year,” the report stated. “The county did see increased spending in the areas of general government, public safety, health and human services; but declines in public works, culture and recreation, conservation and development, and interest. These trends are consistent with the areas in which intergovernmental grants and funding are trending. Notably, total revenues exceeded expenses by $4.2 million, and after net transfers, the governmental activities net position was improved by $2.4 million for a total of $81.9 million.”

For business-type programs, Smigielski said the highway department and solid waste also had good years: “Our total revenues were $10.3 million and expenses of $7.7 million, so $2.6 million net on those.”

Property tax leads the way

The largest source of revenue for governmental activities was the property tax, bringing in $18.1 million, or 38 percent of total revenues collected, Smigielski said.

“Second is grants and contributions of $14 million,” she said. “So the majority of our funding comes from property taxes, grants, and contributions.”

The county’s largest area of spending for the year was in the area of health and human services, the finance director said. 

“So 34 percent of our governmental spending, or $14.6 million was in that area,” she said. “That includes our social services department, public health department, veteran services and human service center.”

A close second in spending was public safety at 31 percent, Smigielski said. 

“That was 13.3 million,” she said. “So that’s the sheriff’s office, emergency dispatch services and ambulance services. And then general government made up 20 percent of our spending and then ‘other’ is 6.6 million or 15 percent.”

Smigielski said the “other’ expenses include such things as the forestry department and building and grounds.

The general fund, which is part of governmental services, is always talked about a lot in budgeting because that’s where most activity happens, Smigielski said.

“For our revenues we had revenues of $31.7 million in the general fund, which was over budget by $2 million,” she said. “Of that 66 percent of our revenues were from taxes. So we did finish 5 percent higher than budgeted and that’s largely attributed to the performance of sales tax last year.”

In general, the report stated, conservative budgeting practices led to the favorable variance. 

“Notably, prisoner housing revenue, while still lower than prior years, did finish the year nearly double of the original budget for a total just under $500,000,” the report stated.

Then, too, Smigielski said, the county was under budget on expenses by $1 million.

“We had a total spend of $30.2 million,” she said. “Forty percent of the general fund dollars went to cover the cost of personnel, which is $15.7 million for last year. This was under our budget by $400,000.”

As a result of operations, Smigielski said the county ended the year with an operating surplus of $1.5 million. But the county did transfer out $3.5 million for capital projects, which the finance director said was part of the plan.

“So that brings us to our fund balances at the end of the year or, as our chairman likes to call it, our tin can,” she said. “So our general fund balance at December 31st is $22.2 million. This is down $1.8 million from the prior year. Of that $22.2 million, $16.6 is set aside for specific purposes.”

When it rains …

Some $3.1 million is continuing appropriations for projects or programs that were started in a prior year that will carry forward, while $9.5 million is in the county’s stabilization fund, Smigielski said. 

“The county adopted a resolution to set up a rainy day fund or stabilization fund and that’s $9.5 million at the end of the year,” she said. “So that leaves us with unreserved or unrestricted fund balance of $5.7 million at the end of 2022.”

The rainy day would be used for unanticipated major expenses, Smigielski said.

“I believe that we crafted it, that it would be used, it would have to come back to at least the administration committee, probably the county board, and it would be used for things like weather emergencies, unforeseen emergencies that weren’t part of your budget and you need cash now. Maybe you’re waiting for insurance reimbursements, things like that.”

For business-type operations, Smigielski said the highway department had a good year in 2022. “Revenues were $8.4 million,” she said. “We also did transfer in $1.9 million and then expenses were $7.7 million. So we actually finished the year up by $2.6 million in our highway fund.”

Solid waste also had a good year, Smigielski said, with revenues of $2.1 million and spending at $1.9 million.

“And there was a $400,000 transfer in, so the solid waste fund ended up $600,000 from the year before,” she said.

Combined capital assets — which includes the airport’s assets because it is a subsidiary unit of the county — the land stayed pretty much the same, Smigielski said. 

“Again, a lot of that is either forestry or the airport,” she said. “Our building and improvements increased by $1.4 million for a total of just under $18 million. Machinery and equipment went up about $600,000 to $10 million. And then infrastructure, which is our roadways, things like that, went up about $800,000 to $18 million. This is net of depreciation.”

Smigielski said it was nice to have a net positive increase in those assets. 

“That means that our reinvestment in our assets is outpacing the cost of depreciation,” she said. “So overall that’s a positive that our capital assets net of depreciation went up compared to the prior year.”

During questioning, Smigielski said that some of the $5.7 million in unrestricted funds would be used to fund capital improvement projects for 2023.

The county also spent $400,000 less than budgeted for personnel, almost entirely because of agency vacancies.

Supervisor Robb Jensen asked if the $5.7 million unrestricted fund balance was in line with other counties and wondered why the county kept asking departments to present zero percent increase non-personnel budgets when the county was in such robust financial condition.

“I think there are some departments that are saying, well if you keep coming out in the black significantly, why are we restricting non-personnel by not allowing them increases,” Jensen said. “And I know you said, we had good sales tax year, and it’s always good to construct a budget conservatively, but I think some look at the 5.7 and [ask] why aren’t we getting some increases?”

Servini answered that question, saying that looking at the absolute total of unrestricted fund balances of other counties was not necessarily the most apt comparison.

“In terms of the unrestricted or the available resources there, I would more so encourage the supervisors to look at your fund balance as a percentage of your current year expenditures for that,” Servini said. “So when you look at those percentages there, you’re in line with other counties … operationally. You are afforded flexibility when you have unrestricted or unreserved amounts if you will, in that fund balance, whether it be for future capital needs or other operational considerations that may come up from time to time.”

Servini said the county was not outside of the norm and on par in terms of the other counties in the benchmarking his company does.

Other budget notes

The report observed that the county’s business-type activities increased operating revenues at a faster clip than the operating expenses, 13 percent and 8 percent respectively, resulting in an operating gain of $200,000: “After non-operating revenues and transfers-in from the general fund, the business-type activities net position was improved by over $2.6 million for a total of $8.2 million at year end.”

As for the general fund, actual results had a positive variance to the budget for both revenues and expenses. 

“Total revenues for the general fund were $31.7 million, $2.1 million over the final budget with higher than anticipated revenues in every category except for fines and fees,” the report stated. “Taxes finished $910,000 or 5 percent above final budget, driven largely by sales tax receipts. The other area with a significant variance to the budget is intergovernmental revenues and charges for service, exceeding the final budget by $515,000 and $798,000 respectively.

Total expenses finished under final budget by 3 percent, the report stated, with savings in every category but for an overage in health and human services, with disbursements to third-party agencies via grants and contributions exceeding the budgeted plan. 

“Transfers into the general fund at year end included excess tax levy from social services or public health funds,” the report stated. “Due to these positive variances, and the return of excess tax levy from the noted special revenue funds, the county did not need to tap prior year fund balance to fund general fund operations for 2022, instead growing fund balance by just under $1.5 million by year end. However, transfers-out were made for pay-go capital projects completed by the county’s highway, solid waste, buildings & grounds, and/or information system technology departments.” 

That reduced the general fund balance by a net of $1.8 million for a final fund balance of $22.2 million.

The report also addressed other funds, such as the ARPA (American Rescue Plan Act) fund, social services special revenue fund and highway special revenue fund.

“The ARPA fund finished under budget, as projects are multi-year in nature and will continue to roll-forward to 2023 and 2024,” the report stated. “The social services special revenue fund performed well versus its budget as well with revenues finishing on budget at $5.5 million, and expenses finishing under budget by $92,000. The county’s highway special revenue fund did better than budget as well, increasing its year-end fund balances to be used for future year projects.”

The county is also in good condition debt-wise, the audit stated.

“Non-current assets such as debt payments due in more than one-year decreased by $(2.6) million to a total of $10.8 million for 2022 as the county had general obligation debt roll off the books,” the report stated. 

State statute limits the amount of general obligation debt the county may issue to 5 percent of its total equalized valuation, so the current debt limit for the county is $452 million, the report observed. 

“As of December 31, the only outstanding bond is a State Trust Fund Loan issued for economic development,” the audit stated. “The balance decreased by just under $3 million to a new balance of $3.2 million. It is anticipated that this bond will be fully retired by December 31, 2023.”

Richard Moore is the author of “Dark State” and may be reached at richardd3d.substack.com.