Wednesday, November 22, 2006
A significant oversight during last year's budgeting process for the city of White Salmon is casting a shadow on the city's 2007 budget.
Eric Greene, White Salmon's newly-hired clerk-treasurer, recently uncovered a serious problem while preparing the 2007 budget.
"Last year, the city neglected to inform the [Klickitat County] Assessor to levy for the general obligation bonds for the new fire hall," Greene said. "If the City Council fails to notify the Assessor, they don't levy the taxes. We did not tell the Assessor to levy for the general obligation bonds, so we are not receiving that money this year. It was an oversight."
The upshot is this: the city still has to meet its bond repayment schedule, but, for 2006, has not been getting the money from the city's property owners to cover those costs.
"It caught my attention as I was going through the budget," Greene explained. "I was trying to put the pieces together, and saw that we didn't levy that tax. We're supposed to do that every year, by Nov. 30."
Greene said he was researching the best way to handle the problem with state officials.
"We don't have a complete answer yet. I've talked to the state Auditor's Office, and they are looking into it to find out how to handle it," Greene explained.
Greene said the city may need to levy extra for the bonds next year to get the funding back on schedule.
"The state doesn't have the complete answer, but they seem to think we can levy for two years of the bond in 2007," Greene explained.
In 1996, the city's voters overwhelmingly approved $875,000 in general obligation bonds to allow the city to build a new fire station.
Since then, according to Greene, the city has been making two payments a year to pay off those bonds. For 2006, the city of White Salmon was obligated to make about $78,000 -- about $40,000 in principle payments and another $38,000 to cover interest.
"We borrowed money to build a fire hall, and signed legally binding documents to pay it off," Greene explained. "The money is not there for the bond fund, but we will make that bond payment. It's not an option. We'll do whatever we have to do."
The next payment is due in December.
Greene said the city would need to borrow money from itself to make the bond payments, and would then arrange to repay the amount next year.
"No payments were missed," said White Salmon Mayor Francis Gaddis. "It shouldn't create any problem -- we just need to repay any of the funds we took the money from. I believe that's what we'll have to do."
Greene, who went to work for the city in August, said he wasn't sure how the error happened, but surmised that the high level of turnover in City Hall staff lately may have played a role.
"There has just been too much transition, with people coming and going. We lose our history," Greene said.
"This happened during the time we didn't have a clerk-treasurer," Gaddis pointed out. "We were kind of in limbo there for quite awhile, and we didn't have someone there with a steady hand every day. It's a good thing we got back on track when we did."
Greene added that the mixup could have further ramifications down the line.
"We'll probably get our hand slapped by the state Auditor," Greene said. "There could be a fairly big audit finding."
"This is very unfortunate," said City Council member Timi Keene. "It will be the City Council's responsibility to establish safeguards to ensure this does not occur again."
The bonds are scheduled to be paid off in 2016.