Council approves budget with effective surplus of about $600,000; 'balance' includes city property

By Al Cross
University of Kentucky School of Journalism and Telecommunications

The budget adopted tonight by the Midway City Council for the fiscal year beginning July 1 contains an effective surplus of about $600,000, not the $1.6 million first reported.

The difference stems from a $500,000 grant for the proposed nursing home, which has been reported, and a major item that was not fully explained until tonight's meeting: $600,000 worth of city property that auditor Robert Ryan said is part of the $1,691,796 "balance" to be carried forward from one fiscal year to the next. The property is commingled with the city's cash assets and is not listed separately in the budget.

The value of property is normally included in final statements dealing with assets and liabilities, but not in government budgets. However, Ryan said in an interview that was the practice when he started working for the city in 2003, and he has continued it. He said the amount varies with the addition, deletion, depreciation and changes in market value of assets, but did not have records with him to specify those amounts.

When asked last month about the large amount to be carried forward, Bozarth referred questions to Ryan, who declined to answer until authorized by Bozarth. Then Bozarth answered a series of written questions submitted by a student reporter, saying that the amount included "all the city's assets," including property, but not saying how much. A recent Midway Messenger story, based on knowledge of standard budgeting procedures, said the budget "will result in $1,691,796 remaining in the city’s bank accounts."

At tonight's meeting, Council Member Charlann Wombles asked if the city "really had that much money." Bozarth and City Clerk-Treasurer Phyllis Hudson replied in unison, "No." Ryan then explained that part of the "balance" is not money, but property such as "buildings, trucks, things the city can look to [in an emergency] to liquidate." He also mentioned the previously reported "windfall" that the city received in 2007-08 from the tax on two very large insurance premiums. That amount, about $552,000, accounts for most of the effective surplus.

Council Member Diana Queen alluded to the unappropriated money, saying "I hope we would work toward allocating money toward projects." Sharon Turner, chair of the council's Finance Committee, said the city has been laboring under some financial issues, but "We're coming out of those and we're going to have a little but to start building those funds." She said development of the failed Midway Station industrial park would add to the city's tax base.

Queen asked several questions about the budget, then told Bozarth that when next year's budget comes up for dissussion, the council should have "a work session" on it. Bozarth said there was such as session this year, referring to a council meeting at which a proposed budget was circulated but not given a formal first reading. At that meeting, Queen suggested more money should be appropriated for sidewalks, and the first-reading version of the budget had more money for sidewalks: $10,000, up from $5,000 this year.

In response to questions from Queen, Bozarth said the budget has no money for additional paving, much work having been done last year; and $20,000 for attorney's fees, up from $8,000 in this year's budget, based on unexpected expenses this year. He said those included the Midway Station development, "open-records requests that have taken a lot of time," the library and "annexation things we had to take care of." He and city attorney Phil Moloney said the "annexation" was a redefinition of the city's boundaries required by the state. Moloney said he expects some of the issues to recede, but added that there could be more work if the nursing home project starts moving or other issues arise with Midway Station.

Queen also asked about funding for a Main Street program manager, which the city was sharing with Versailles and Woodford County until the county chamber of commerce fired the manager and pulled out of the agreement to fund the position and coordinate local tourism promotion. Bozarth said "We will come up with something," in combination with downtown merchants and the Midway Renaissance organization.

Representatives of the Chamber of Commerce asked the city to pay $2,500 that they said was owed for the two months the Main Street manager was employed. Executive Director Tami Vater said Versailles and the county have paid their shares. Bozarth told them, "We will look into it and get back to you."