City employee questions auditor on budget numbers WATCH THE VIDEO

A city employee said she was just asking the Hillsboro auditor for answers when she alleged there were "$600,000 unaccounted for" in budget figures, while he said she was trying to play a game of "gotcha" during a tax budget hearing held Monday, prior to the start of the Hillsboro City Council meeting. 

The city's 2011 tax budget was on the agenda to be considered by council, as required by law, before the auditor submits it to the Highland County auditor, and a hearing on the tax budget must be held prior to council's consideration of it.

During the hearing, Hillsboro Auditor Gary Lewis said he would answer questions regarding the tax budget. 

Hillsboro Mayor Dick Zink asked Lewis to explain an area of the tax budget in which total estimated revenue for 2011, shown at $4,783,425, was $116,500 less than 2010 estimated total revenue, shown at $4,899,925.

"Then I go back to total expenditures, and according to this, that's $922,984 less," Zink said. "I guess my question is ... if we're going to be $116,000 short, why are we taking $922,000 out of the budget? I just don't understand that."

Lewis questioned Zink on which numbers he was referring to in the 17-page tax budget before responding, "Again, that was just looking at the way everything worked out with regard to what council was looking to do and everything, and that's the way the numbers worked out."

For the past several months the city of Hillsboro has been dealing with a budget shortfall projected by the end of 2011. It has been estimated as high as $730,000 and as low as $164,000. During the July council meeting, council voted to authorize Lewis to prepare the 2011 tax budget so the city would have a carryover balance into 2012 between $400,000 and $450,000. The city asked for and received an extension to prepare the budget, which Lewis said must be submitted by Aug. 15.

"Well, I guess if I was a taxpayer ... well, I am a taxpayer," Zink said. "If I was a taxpayer out here and looked at (the city) cutting services to equal $922,000 to save $116,000, I'd have a question for that."

"I can answer that question for you, Mr. Mayor," Lewis said. "It will take a while to go through all this stuff to add those up to get to your answer. If you had that question this afternoon, I could have done that this afternoon, but right here, spur of the moment, I am not even going to venture a guess on that."

Kirby Ellison, an administrative assistant who works in Hillsboro Mayor Dick Zink's office, came forward, saying she was a Hillsboro resident who lived on Oak Street.

"I had some questions on the tax revenue budget for 2010 vs. what was submitted in 2009 from some actual figures," Ellison said. "Just, there's been a lot of comments made about transparency and figures and what figures everybody's getting. On our 2009 tax budget, the 2008 actual figures showed an unencumbered fund balance at the end of the year of $698,915. In our 2010 tax budget those figures for 2008 were $1,106,293.56, showing that from ... 2009 tax budget to 2010 tax budget our 2008 actual revenues and expenses increased $407,378. I wasn't sure why there was a difference."

Lewis asked Ellison for clarification on which numbers she was referring to, and from what documents she was reading, and said to not confuse the tax budget with the actual budget. "I know," Ellison said. "I'm going to look at actual budget here in a second.

"In the expenditures in 2009, listed in the 2009 tax budget - which I'm saying I took this off the 2010 tax budget for the year 2009 - expenditures were $7,329,357.47," Ellison said. "Actual expenses - which what I'm taking that from is the end of the year 2009 all expenses out of the general fund ... Actual expenditures is $7,181,565. That's a difference in expenditures of $147,792. So that affects the unencumbered end fund balance, which was shown in the 2010 tax budget for the year 2009 of $414,280.10. I am wondering why the actual expenditures in the tax budget are more than the actual expenses for the year."

Lewis said that Ellison could have come to him at any time to ask those questions, when he would have been more prepared to answer those specific questions. 

"Clearly you have dwelled on this more than I have today," Lewis said. "Ms. Ellison, if you come to my office tomorrow we'll look at those numbers."

"Well, you know it's the budget hearing and everybody is looking at the budget for 2010 to 2011," Ellison said. 

"You have information that you obviously collected and looked at that I, again, have not looked at," Lewis said. "And I'm not going to venture any guesses or anything like that. Like I said, come to my office tomorrow and we'll be happy to take care of those numbers for you."

Ellison said that she had another question, but for the 2010 budget. 

"In the tax budget, we have $5,406,879 for expenditures," she said. "The actual appropriation budget ... the appropriation budget in the general fund passed by council in the appropriation is $5,358,598. It's not a big difference, it's $48,280. But, we're looking at possibly decreasing the 2010 budget by 10 percent. The tax budget and the difference in the expenditures - unless we're losing a good amount of money, which I assume we're not, because the estimated revenue budget for 2010 was $4,899,900.25. (The) 2011 estimated revenue is $4,783,425, which is just a decrease of $116,500. So, I don't think our estimated revenue is down a whole bunch."

"So what's your question?" Lewis asked Ellison. 

"I'm not sure I understand, even though it was stated that because two employees at $17,500 were not laid off that warrants, given what that the tax budget says given as far as the income and fund balance ..."

Lewis interjected, "You threw so much there so quickly, Ms. Ellison, I don't know exactly what all you were referring to."

Lewis again invited Ellison to go to his office Tuesday, when he had those numbers in front of him. "I would have done it for you this afternoon since you had that information."

Ellison again referred to transparency and, "If we all don't have the same figures, be it the public, the administration, council, or the auditor, it's hard for any one body to make a decision."

She said that as of the end of July that the general fund balance Lewis reported to council showed it was $359,609, which Lewis concurred was correct. 

"However, if you look at the actual expenses, which the mayor and safety and service director have to deal with ... year to date expenses in the fund balance that council has is ... $3,689,571. Year to date expenses are $3,234,699 ... If you go to the year to date expense report, for general fund, year to date expenses are $3,234,699. Encumbrances on the fund balance before council shows $255,138.52 encumbered. Encumbrances on the expense report is $87,266."

Lewis asked her to repeat the numbers and then said, "Come here, you're just getting too confusing." Ellison showed him numbers from a stack of papers she was reading from. 

"No, it's in black and white," Ellison said as she pointed out the various numbers she was looking at. 

"What is your point here?" Lewis asked. 

"My point is, if I take an ending balance of $1,151,535, year to date receipts are $3,152,184, actual expenses are ..."

Lewis interjected, "Hang on, now you're jumping back and forth here."

"They're the same funds, why aren't they the same figures is what I want to know," Ellison said. "Why aren't they the same figures."

"You're coming to this here," Lewis said gesturing toward the figures on the page. "What you don't see are what's called the combined expense report. Which also includes encumbrances from the previous year that were carried over."

"But we have that," Ellison said. 

"I don't think you have the combined report," Lewis said. 

"No, but we have it on your tax report," Ellison said. "If it's all transparent ... And then it even gets more confusing and you go out into the public sector and read on (July 29) the unencumbered fund balance written in The Highland County Press was $629,254."

"Well, I won't vouch for the press," Lewis said. 

Ellison said she was referring to a column that Lewis had written for The Highland County Press. 

"So I am asking, what is the true unencumbered balance in the general fund," Ellison said. 

"The true unencumbered fund balance in the general fund, if you will look, as of the end of July this number right here states $359,609.20," Lewis said. 

"OK," Ellison said. "But it's still $300,000 off from what you stated in your newspaper article."

Lewis said he did not have the article in front of him and that he did not recall, but, "I'm sure you're going to show it to me."

"I can," Ellison said. "I'm just saying the transparency is not there for the public, council, administration."

Lewis said that after he and Ellison meet Tuesday, and she can ask her questions, he can find her answers, "and then we'll publish it in the paper. How's that for transparency?"

"I would prefer that we give it to council because they are the ones that have to make the decision, and the safety and service director," Ellison said. "Unless we want to read the paper."

"Clearly you have spent your whole day looking at this," Lewis said. 

"Actually, I've had this information since Friday," Ellison said. "Because it's a concern to me. Because there's $600,000 not accounted for."

"And all that time I was in the office and you never bothered to come back and ask me," Lewis said. 

Ellison said she actually went to council finance committee chairperson Peter Pence. 

"I'm right in the same building as you, Ms. Ellison," Lewis said. "What it really seems to me is that you're playing a game of 'gotcha' right now."

"I'm not," she said. "I'm asking for answers."

"I think you are," Lewis said. 

"You know, you should be able to tell me the differences," Ellison said. 

Lewis said that he would see that the answers to those questions were published. 

"Again, as a member of the public, I think my questions need answered, but I think they need answered for council and the mayor and safety and service director first," Ellison said. 

Ellison thanked council for the opportunity to speak at the hearing. Council did not respond, except for council member Mary Brown Turner, who said, "Thank you." Council president Lee Koogler asked if there were any questions by council members, and after a long pause, council member Bill Alexander asked Lewis if the numbers he intended to publish would be given to council as well. 

"If Ms. Ellison comes and we discuss it, I will disseminate that to you," Lewis said. 

Council then adjourned the tax budget hearing. Lewis left the meeting and did not return for the regular session of council that immediately followed. Council was presented with a resolution to adopt the proposed 2011 budget.

Council voted 5-2 to adopt the resolution, with Turner and council member Bonnie Parr, voting against the measure. 

Zink then noted that the resolution did not have a line for the mayor's signature, and he asked Koogler and Hillsboro Law Director Fred Beery how he could veto the legislation.

"If I don't agree with this, and Mrs. Ellison doesn't get her questions answered that she asked tonight, or tomorrow at the meeting, how can I veto this ordinance?"   

Beery said statute provides that all ordinance and resolutions are submitted to the mayor and he has 10 days to consider them. Zink said he understood that. Beery said he didn't need to have a denoted signature line, he could sign it or not sign it. 

"I have to at that time be able to write my objections," said Zink. "If we get the answers she's looking for tomorrow, then there won't be a problem. But if she doesn't get the answers she's looking for, there will be a problem."