Dunn County Highway Department looking at $1.4 million budget deficit
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By LeAnn R. Ralph
MENOMONIE — Depending on how much snow falls between now and the end of the year, the Dunn County Highway Department could end up with a $1.4 million budget deficit for 2021.
The deficit is because of an accounting error as the result of purchasing equipment with no revenue to match the purchase amounts, said Paul Miller, county manager, at the Dunn County Board’s November 9 meeting.
If there is not much snow by the end of the year, the deficit could be less than $1.4 million, he said.
Highway departments can end up with budget deficits in a bad snow year because there is no way to predict how much snow will fall and how many hours county workers will have to work to plow snow.
As soon as the accounting error became apparent, steps were taken to mitigate it, such as deferring a construction project to another year, Miller said.
Steps also are being taken on accounting practices to figure out how the deficit occurred and to make sure it doesn’t happen going forward with tighter controls and oversight, he said.
Larry Bjork, Dunn County Board supervisor from Menomonie, asked if the highway department has a value for its inventory of equipment.
Is there a discrepancy in the purchasing of equipment and the value of equipment at the end of year? Bjork asked.
The highway department must file an annual inventory report with the Wisconsin Department of Transportation, said Keith Strey, Dunn County’s chief financial officer.
One change going forward is that there will be a more formalized equipment replacement plan and better reporting of equipment purchases to the highway committee, he said.
Equipment purchases also will be formally included in the budget process. A slow and steady replacement schedule is better than spikes in the replacement schedule, Strey said.
Larry Bjork also asked if, when equipment is replaced, is it replaced with a comparable piece of equipment or is it replaced with something that might be more efficient or capable of taking on bigger jobs?
From a budget perspective, the highway committee would make a decision on replacement equipment, Strey said.
The normal business practice would be to consider equipment replacement when the highway committee and the Dunn County Board decide on a budget, he said.
If something comes up during the year, then the highway committee would give approval in advance of the purchase and would decide on the need for the equipment and how it would be funded, Strey said.
Break even?
Gary Bjork, county board supervisor from Colfax, noted that the Dunn County Highway Department does work for the federal government on Interstate-94 and for Wisconsin on the state highways and wondered if the county highway department breaks even or makes money?
The highway department tries to make a little bit of money but it’s usually break even, said David Bartlett, county board supervisor from Boyceville and chair of the Dunn County Board.
The state of Wisconsin has a specific formula that is used to pay the county highway departments. The payment is intended to reimburse the county for the equipment usage, Strey said.
Kelly McCullough, county board supervisor from Menomonie and chair of the highway committee, said the Dunn County Highway Department comes out “slightly positive” on the reimbursement from the state and federal governments.
Infrastructure
Sheila Stori, county board supervisor from Menomonie, asked if the highway department will prioritize for infrastructure money.
It was not clear whether Stori was referring to the federal infrastructure bill that is expected to be signed into law by President Joe Biden or whether she was referring to some other infrastructure funds.
The money is in the 2022 budget, Miller said, adding that there is a schedule for construction projects every year.
The money Miller was referring to is American Recovery Plan Act funds included in Dunn County’s 2022 revenue budget.
The county will be using $3.2 million in ARPA funds for road projects.
Dunn County and the county’s auditors, Clifton Larson Allen LLP, are auditing the financial activity at the highway department.
Miller informed the Committee on Administration at the October 28 meeting that the audit would be taking place.
According to the audit report the Dunn County Board received at the July 28 meeting, the highway department had a deficit of $4.1 million in the unrestricted fund balance in 2020.
The county loaned the highway department $4 million from the general fund in 2020 to pay for highway operations, said April Anderson of Clifton Larson Allen LLP, at the July 28 meeting.
In 2019, the highway department had a negative unrestricted fund balance of $1.6 million, according to the audit report.
In 2018, the highway department had a positive balance in the unrestricted fund of $1.98 million.
In 2017, the highway department had a positive balance in the unrestricted fund of $3.96 million.
The highway department’s expenditures exceeded the revenue in both 2020 and in 2019.
The adopted budget in 2021 for the highway department was $11.3 million.
The budget for 2022 is $14.9 million.
