Revenues and expenditures initially cited at the July 21 Swain County Commission meeting may raise questions about sustainability and cash flow.
Finance Officer Cally Elliot presented the fiscal year report, a mixed bag of incorrect forecasts, departmental deficits and revenue surplus.
To the first point, the county expected to rake in $24.4 million, an $8.6 million underestimation of its nearly $33 million in actual revenue. The $24.5 million expense forecast was also inaccurate; true costs amounted to $28.9 million. The difference between revenue and costs was about $4.1 million, classified as net income. But because the county didn’t suddenly become flush with cash, some questioned the surplus funds.
“I would like to know what happened that got us 4 million-and-something back,” said Commissioner David Loftis.
The Smoky Mountain News received a copy of the report. From the document, it seems extra revenue can be explained by a series of one-time transfers and other non-revenues not forecasted by the budget. North Carolina Treasurer AGPIP proceeds — in the form of withdrawn county investments — amounted to almost $5.5 million. Other transfer line items included several smaller sums and $5 million from the 2010 North Shore settlement, a $52 million National Park Service promised payout from for a road flooded in service of creating Fontana Lake, fulfilled incrementally until 2018. A rebuild was attempted but later abandoned, hence its name, “The Road to Nowhere.”
However, SMN reported in 2019 that the “the principal can’t be touched unless approved by two-thirds of voters in a countywide referendum.” That consensus doesn’t seem to have shifted, and Swain County has not recently approved any such referendum.
Another $425,563 in SBITAS and leases are classified in the expenditure report as other finance sources — documented arrangements, rather than revenues.
Of the nearly $33 million reported, $12.6 million came from transfers and other finance sources, leaving $20.4 million in net revenues.
Elliot attributed actual expenditures surmounting forecasts to inflation and unfinished projects.
“Building maintenance, vehicle maintenance, parts have gone up, prices have gone up … We had projects that weren’t completed that finally got completed, and that’s just how that’s how it works,” she told commissioners.
That side of the report included $2,725,000 in transfers, meaning that county net expenditures were closer to $26.2 million — $5.8 million above net revenue. So while the transfer-heavy budget generated surplus money on hand, it would likely be unsustainable long term.
Elliot also broke down the budget for solid waste, the department of social services and the health department, all three of which ran a deficit. DSS expenses exceeded revenue by nearly $1 million, the health department by $1.5 million. And predicted revenue exceeded the true total by similar margins.
Actual revenue is often outside of county — or department — control. DSS, for example, submits a federal and state reimbursement form for each service provided, and the county must fund remaining expenses. A deficit could be impacted by factors such as reimbursement quantity and timing or grant procurement. Non-reimbursable costs, like building maintenance, further add up.
Commissioner Tanner Lawson alluded to this in his comment that “even if we did, you know, allot 2 million or 3 million [to DSS], we could still come out in the red,” to which Elliot replied, “They’re always in a deficit.”