SALISBURY – County officials introduced a bill this week that would cover a $530,000 shortfall in the Wicomico Youth & Civic Center budget for fiscal year 2020, but not before a lengthy discussion on accounting processes.
On Tuesday, the Wicomico County Council voted unanimously to introduce a legislative bill amending the fiscal year 2020 operating and capital budget. The amendment would allow the county to transfer $200,000 from the recreation and parks prior year fund balance, $75,000 from recreation and parks current year budget savings and $255,000 from general fund contingency to account for a $530,000 shortfall at the Wicomico Youth & Civic Center.
In March, Recreation, Parks and Tourism Director Steve Miller came before the council to discuss revenue challenges at the facility.
Each year, the civic center – which operates under the umbrella of the county’s recreation, parks and tourism department – receives appropriations from the county to fund salaries, benefits and other expenses and to balance the budget. As a special government fund, the facility also relies heavily on event revenue to make the overall budget work.
But Miller told officials earlier this year net revenue targets had been increasingly difficult to achieve. And each year a larger percentage of county appropriations is used to cover employee benefits. To make matters worse, officials projected the civic center taking a financial hit because of the COVID-19 pandemic.
“We’re a public event facility and right now we don’t have the ability to run public events,” Miller said in March. “Three weeks ago, we thought the gap would be around $300,000 in the worst case scenario, and we felt like we could close that gap with the events we had scheduled. At this point I even hesitate to throw out a number because we simply don’t know how long events are going to postpone or cancel, and we don’t know what that impact will be.”
Since March, the county has entered a new fiscal year. But officials this week came before the council to discuss revenue shortfalls at the civic center in the fiscal year ending June 30, 2020.
“Mr. Miller came to you guys back in March and mentioned we had a rough start to our fiscal year and that we would be coming to you with this …,” said Recreation, Parks and Tourism Deputy Director Pam Oland. “It hasn’t been a normal year since the day after Mr. Miller came to you guys. We have had zero revenue come in and no ability to cover our day-to-day expenses.”
Miller told council members this week the department had left several positions vacant at the civic center and had reduced operational expenses since their discussion in March. He noted, however, that three-fourths of the revenue budget is derived from user fees.
“The bigger problem is revenue generation,” he added. “We’re trying to reinvent ourselves here without having the ability to sell tickets and those types of things.”
Despite their efforts, officials noted the county would still need to transfer funds to cover a $530,000 shortfall in fiscal year 2020. Councilman John Cannon, however, questioned if it would impact the fiscal year 2021 budget.
“The amounts we carried forward in fiscal year 2021 are no longer the same amounts,” he said. “Wouldn’t that also require us to go back and amend the operating budget for fiscal year 2021?”
Pointing out provisions from the county’s charter, Council attorney Bob Taylor said he believed it would.
“Once fiscal year 2020 ends, any remaining money will flow back into the general fund with the exception of anything that has been earmarked …,” he said. “The appropriate way to do this is to appropriate money in this year’s budget to cover the deficit from last year.”
Oland, however, disagreed.
“In my years working in government, between here and my prior employer, the fiscal year itself is not closed until the audit is complete and you’ve paid all of your bills and you’ve completed your audit associated with those bills for that fiscal year,” she said. “So you have the ability, if the council so desires, to make changes to the budget because the budget is part of the audit process that then gets presented in your audit report.”
Taylor noted the council still had to follow the charter.
“You can look at it from an accounting side and you can do anything with your books …,” he said. “The problem is we have charter provisions, which are essentially legal provisions.”
Councilman Joe Holloway said officials did not dispute the need to cover the shortfall within the civic center budget, but rather the process for doing so.
“I think what we are seeing here is a fallacy between the financing and the charter …,” he said. “Somehow, we need to make this work so it follows the charter.”
Levin Hitchens, the county’s internal auditor, agreed. He said he would reach out to Wicomico’s accounting firm in the coming days.
“We have to find a balance,” he said. “Do we want to challenge the charter, or not challenge the charter and possibly get an audit finding?”
After further discussion, the council agreed to introduce the legislative bill with plans to discuss the issue further after a public hearing scheduled for Sept. 1.
