Fiscal Emergency

State auditor places Wellsville under emergency after analysis

Members of Wellsville Village Council sat in chambers during Tuesday's Village Council meeting, following Mayor Nancy Murray's announcement that the village was placed by the State Auditor's office into fiscal emergency for an unprecedented third time. (Photo by Steve Rappach)

Members of Wellsville Village Council sat in chambers during Tuesday's Village Council meeting, following Mayor Nancy Murray's announcement that the village was placed by the State Auditor's office into fiscal emergency for an unprecedented third time. (Photo by Steve Rappach)

WELLSVILLE – For the third time, the village of Wellsville has been placed under fiscal emergency by the state auditor’s office.

State Auditor Dave Yost made the declaration Tuesday, via a press release, following an analysis conducted by the auditor’s Local Government Services (LGS) section at the request of Mayor Nancy Murray.

The LGS found deficit fund balances totaling $93,021 as of Dec. 31, 2015, and $28,710 as of May 31, 2016.

The village will now come under the oversight of a financial planning and supervision commission, to which the commission must develop a plan to eliminate the conditions within 120 days of its first meeting. The Auditor of State will act as “financial supervisor” to the commission.

“Wellsville has a long history of financial struggles,” Yost said. “There’s obviously an underlying problem at hand, and I encourage village officials to work with my office to root it out for good.”

With Tuesday’s declaration, Wellsville is now the first village in the state to be placed under fiscal emergency status on three separate occasions since the declaration was created in 1979. The first time took place June 1984 through March 1989, while the second occurrence was August 2001 through December 2005.

The village’s finances have been in question since the summer of 2015, when it was learned a previous fiscal officer had lumped the village’s funds into one account, which caused confusion as to what the village’s finances had been in its several funds. Reconciliations have since been completed, along with audits from the state’s office.

Murray addressed the situation during Tuesday’s village council meeting, noting when she succeeded former Mayor Susan Haugh at the beginning of 2016, Murray’s administration inherited an overall deficit of $300,687.

“The books had not been reconciled for several years, costing the taxpayers an additional $14,000 for the Auditor of State’s Local Governmental Services to perform a complete reconstruction of the records including reconciling the village books each month for two years,” Murray said. “This does not include the additional audit costs incurred thus far with the audit.”

Murray also stated that current fiscal officer Hoi Wah Black spent several weeks researching, correcting and posting more than 800 financial adjustments needed to bring 2014 and 2015 finances to order. Among the deficits noted were $202,292 for the General Fund; $5,030 for the Street fund; $3,006 for the State Highway Fund; $20,010 for the Cemetery fund; $58,486 for the Fire levy; $5,655 for the Police Salary Fund; and $6,207 for the fire fund.

Murray assured residents the village will continue to make efforts to get escape fiscal emergency, noting council will need to make several difficult choices in order to “regain stable financial footing.”

“I will strive to put forth my best effort to show the residents that we will recover from this devastating situation,” Murray said. “We will not let the residents of this village down, so we will be out of this as quick as we got in it.”

Black, who was not in attendance for Tuesday’s public meeting, also issued a statement, read by Murray, where she mentioned some of the steps the village took to help fix the problem, which included entering the delinquency program with the Regional Income Tax Agency (RITA).

“For the past two months after the village entered into the delinquency program with RITA, we have collected over $36,000 extra in distributions, and for the first time in many years, the village received a $260 rebate from Worker’s Comp since we paid all the premiums on time,” Black wrote.

Murray also noted all pension funds and payments so far in 2016 have been made on time, whereas in 2014 and 2015, the village was assessed $40,000 in penalties and interest due to late payments. Those included late fees for credit cards, utilities, pensions for fire, police and the Ohio Public Employee Retirement System (OPERS), and federal withholding taxes.

“Not once since Hoi and I have come on has there been one late payment, and I assure there will never be as long as I am mayor,” Murray said.

Per Ohio Revised Code, a village can be placed in fiscal emergency status if any of the six criteria are met. Those six circumstances include:

– A default on a debt obligation for more than 30 days.

– Failure to make payment on all payroll.

– An increase in the minimum levy of the village, resulting in the reduction in the minimum levy of another subdivision.

– Significant past due accounts payable.

– Substantial deficit balances in village funds, to which the village was cited in this case.

– A sizable deficiency when the village’s treasury balance is compared to the positive cash balances of village funds.

The fifth option listed was based on the adjusted aggregate sum of all deficit funds, which were computed by the auditors. Auditors subtracted all accounts payable and encumbrances from the year-end cash fund balance, and made a determination if the aggregate deficit fund balance exceeded one-sixth of the general fund budget and receipts of those deficit funds. This led to the deficits of $93,021 as of Dec. 31, 2015, and $28,710 as of May 31, 2016.

Aside from that, the auditor’s office determined the village was not in emergency based on the other five criteria.

A detailed copy of the state auditor’s declaration is available on the office’s website, www.ohioauditor.gov.

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