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County Officials Defend Reserves at Budget Session

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BRADENTON – For the past two years, a citizen activist and veteran CPA has consistently criticized Manatee County for holding what he said was a level of reserves that were not only unnecessarily high but put the county in non-compliance with state limits. At a budget session this week, county staff explained the nuances of government accounting and why the perception of hundreds of millions of dollars in unrestricted reserves was not accurate.

Mike Meehan is a Chartered Financial Analyst who holds an MBA from Rochester Institute of Technology. He retired to Florida in 2002 and has become a citizen activist on the issue of the county's budget, its reserves, and the resulting impact on property taxes.

Meehan submitted a guest column to TBT on the issue that was published last month and can be seen here. Another articlewas published recently in the Observer, which County Clerk Angel Colonesso criticized sharply at Tuesday's work session for not seeking comment from the county, can be seen here.

Meehan regularly gives public comment on the issue at board meetings and submits spreadsheets and other data to the record. Some commissioners had their interest piqued by data compiled by Meehan and reached out to staff with questions. As a result of the ongoing confusion, a detailed presentation was given at the start of this week's budget work session.

Jan Brewer, Manatee County Director of Financial Management, explained in detail how and why Manatee County held reserves where it did, as well as why looking at them blanketly did not offer an accurate picture of county finances or how much discretionary cash is on hand. Brewer explained that the vast majority of reservesare designated for future capital projects. One example was setting aside fund a new landfill in the near future. Brewer and her staff said that the county's stabilization fund, which amounts to just under $20 million and could be increased by about a third under state law, is the fund that represents funding that is available for offsetting unexpected expenses or shortfalls

Tim Gruters of Carr, Riggs, and Ingram also spoke at the work session. The firm does the county's outside auditing, as well as for 15 other Florida counties while consulting for others. Gruters said that the firm spends thousands of hours auditing the county each year and, when issues from the public such as Meehan's are introduced, auditors eagerly test the claims to ensure compliance.

"To date, we haven't found any non-compliance in the budget," said Gruters. "We test the Florida State Statutes, the investment compliance, the auditor general will give us rules, gives the auditor rules, and says these are the things you have to test for non-compliance. We certainly test those to find non-compliance, which we haven't. Manatee County has been compliant every year."

Later, Gruters seemed to be referring to Meehan when he explained the complexity of governmental accounting and how it differed from other practices in its adherence to governmental auditing standards and general accounting principles specifically related to the government.
"You can show a CPA, a 30-year experienced person that's not into the weeds of governmental accounting, and they won't really know what they're looking at," said Gruters.

I followed up with Meehan after the meeting. He seemed unmoved.

"My numbers are directly from the CAFR report published by the county,“ said Meehan. "We heard a lot about why the numbers published in terms of unrestricted cash reserves do not necessarily reflect the accurate amounts. However, there are no footnotes in the report noting this."

Meehan said that if the county was truly interested in transparency, it would not only include a footnote to help the public understand that the numbers reflected don’t tell the entire story, but publish the changes in the monthly budget updates that are published through July each year.

Commissioner Stephen Jonsson, who has been the board member most receptive to Meehan’s movement, said that he thought the county put on a very well-orchestrated presentation, but he remained unconvinced that even the actual unrestricted reserves were necessary.

"Whatever that number is, I’m just not convinced we need to be holding onto hundreds of millions of dollars in taxpayer money,“ said Jonsson.

Meehan has suggested that the county give a 20 percent tax credit to homeowners for the upcoming year along with waiving December utility payments, which he estimates would return $70 million to taxpayers that could be spent into the local economy during the current downturn.

The majority of commissioners, however, seemed uncomfortable with the prospect of not having that cash on hand, were the county to suffer a serious economic setback similar to that which accompanied the Great Recession when property values and sales tax revenues dropped precipitously or were a natural disaster or unexpected infrastructure need to burden the county coffers.

"The taxpayers of Manatee expect and deserve to have core services provided, no matter the economy, natural disaster, or pandemic that hits us,“ said Commissioner Misty Servia. "The county has made fiscally prudent decisions in the last few years, which is why we have not had to raise taxes when disaster strikes. I equate the same line of thinking to running my family’s budget, which is how we were able to weather a recession, layoffs, and unexpected expenses. During my time in private business, we always assumed some risks for higher profits. In government, we are spending the people’s money and can’t do that. I am always open to ideas for operating more efficiently for our community."

The first public hearing for the budget will be on Sept. 14. On Sept. 22, the second public hearing will be held after which the budget will be adopted.

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