By RICK MILLER
Olean Star
Cattaraugus County’s audit for the year ending Dec. 31, 2023 showed an expected $2.9 million drop in the general fund balance to $55.4 million.
After the county treasurer’s initial audit in the spring showed reasons for concern, the Cattaraugus County Legislature leadership and County Administrator Jack Searles asked department heads to pump the brakes on their budgets.
Finance Committee Chairman Michael Brisky, R-Franklinville, asked department heads in May to delay automatic backfills of positions where possible. It didn’t add up to much, but it gave a frugal message: Save where you can.
Meanwhile, county officials waited for the annual outside audit by Descher & Malecki, Elma, which was filed in August. It showed the county ended 2023 with a $55.4 million fund balance or surplus. That was down $2.9 million from the 2022 level.
However, the unassigned portion of the 2023 fund balance — $40.1 million — was down $6.6 million from 2022.
The 2023 county budget had used $3 million from the fund balance to reduce the property tax levy. As it turned out, most of that — $2.9 million — was returned to the general fund.
County Legislature Chairman Andrew Burr, R-Gowanda, said after last month’s legislature meeting that after budget reconciliation, the outside audit showed the budget to be “right dead on” where county officials had projected.
“We’re happy,” Burr said. “We need to be more frugal going forward and adjust to the times.”
County financial policy calls for a 15% fund balance. The 2023 budget shows a $40.1 million fund balance, down from $46.7 million in 2022.
2024 Budget grows to $289.7 million; up $16.2 million from 2023 Budget
The 2023 county budget was $273.5 million. That grew to $289.7 million in the 2024 budget.
It’s complicated, Searles said in an interview last week in his Olean office.
The $55.4 million general fund fund balance for 2023 is broken into unassigned, $40.1 million; assigned, $6.7 million; restricted, $6 million and nonspendable, $2.4 million.
The unrestricted portion of the fund balance is above pre-Covid levels, Searles noted. Much of the increased spending from 2020-23 was due to the federal and state governments pumping money to counties to keep the economy going in the pandemic.
For example, the unassigned fund balance went from $37.8 million in 2019 to $45.8 million in 2022, $47.9 million in 2021 and $46.7 million in 2022.
The ratio of unassigned general fund balance to expenditures went from 20.7% in 2019 to 26.2% in 2022, 26% in 2021, 22.6% in 2022 and 18.6% in 2023.
“We ended very positively in a good stance with the fund balance,” Searles observed.
But, he added, “Things are changing. The fund balance is a savings account. The decrease in the fund balance was expected, but there are reasons for the decrease besides using it to reduce the tax levy.”
Covid funding was heavily subsidized, Searles said. When the funding slowed, then stopped, those resources went away.
Loss of COVID subsidies, reduction in tax levy by Legislature contribute to decline in fund balance
At the same time, the state was pulling back on its Federal Medical Assistance Percentage, or FMAP revenues to counties after an influx of funds during Covid, Searles pointed out.
Big ticket items like health insurance increased as more people sought care for illnesses delayed by Covid as well as employee salary and fringe benefits, Searles said.
Sales tax receipts were still up in 2023, but have been somewhat lackluster so far this year.
Total sales tax receipts in 2022 were $35.2 million; $33.8 million was budgeted in 2023 and this year the budget calls for $35.7 million in sales tax receipts.
The county also operates separate three enterprise accounts, all currently with fund balances: They are: The Pines Olean Campus, which has a $10.4 fund balance; the Machias Pines with a $1.7 million surplus and Onoville Marina, with a surplus of $800,612.
The enterprise accounts fund themselves unless they are in deficit, in which case the county picks up the tab.
The county also has the opportunity to receive intergovernmental transfer (IGT) payments by purchasing unused Medicaid funding for long-term nursing care across the state. It costs the county $1 million to receive $2 million in IGT funds.
The problem, according to Searles, is that the state currently owes Cattaraugus County for the last three IGTs it purchased – worth between $6 million and $7 million.
While preparations have been underway on the tentative 2025 county budget, the budget modules for departments just opened at the end of last week. These are the budgets proposed by department heads. They are usually pared down as the budget process continues.
“It’s going to be an interesting budget year,” Searles said. A transition period like this breeds conservatism. I believe this will be a very conservative budget.”
