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HomeMy WebLinkAboutBudget Transfer - Accounting (002)GRANT COUNTY COMMISSIONERS AGENDA MEETING REQUEST FORM (Must be submitted to the Clerk of the Board by 12:00pm on Thursday) REQUESTING DEPARTMENT:Auditor REQUEST SUBMITTED BY:Emili Wash CONTACT PERSON ATTENDING ROUNDTABLE: CONFIDENTIAL INFORMATION: E]YES ®NO DATE: PHONE: DAgreement / Contract DAP Vouchers DAppointment / Reappointment DARPA Related • Bids / RFPs / Quotes Award 013id Opening Scheduled D Boards / Committees 1771 Budget • Computer Related OCounty Code 0 Emergency Purchase DEmployee Rel. DFacilities Related OFinancial 0 Funds ElHearing 0 Invoices / Purchase Orders D Grants — Fed/State/County OLeases EIMOA / MOU DMinutes 00rdinances DOut of State Travel ElPetty Cash OPolicies OProclarnations 0 Request for Purchase DResolution DRecommendation OProfessional Serv/Consultant OSupport Letter E]Surplus Req. OTax Levies OThank You's EJTax Title Property OWSLCB 14 Need review and approval for cash transfer for the amount of $66,663.83 from Fairgrounds tc BEET 2 imires ieum review. -route to inciavror review r If necessary, was this document reviewed by legal? 0 YES 0 NO 0 N/A DATE OF ACTION: 4'w I APPROVE: DENIED ABSTAIN D1: D2: 4/23/24 DEFERRED OR CONTINUED TO: I DEPARTMENT: EFFECTIVE DATE: DESCRIPTION: REQUESTED BY: GRANT COUNTY CASH TRANSFER REQUEST AUDITOR 04.23.2024 132TO116COR2024 EMILI WASH ACCOUNTING JE NO. 959,488 TRANSFER DETAILS: MOVING INELIGIBLE EXPENSES FROM REET 2 TO FAIRGROUNDS EXPENSE REQUESTED BY BOCC TREASURER GL NO. TRANSFER TO TRANSFER FROM v, -.ate .�� �ar%: k�. �. ., 1. ..- /. -. ate/ �. ji.:: :,.. .. '� if .���,./% f t. -/.+, <.. ... k- -�f.� / . / d/-/ l �9 Jim. ,D - AC T- � �; . r � CR �„ i si aSY:s ., / , './ - ,yi�i i,. f.:n rfr �r rs�': di'�- ./.. REAL ESTATE EXCISE TAX 2ND 132.000.00 0000 101000000 $ 661663.83 FAIRGROUNDS 116.000.00 0000 101000000 $ 667663.83 Completed By: Approved By: $ 669663.83 TOTAL TO uu $ 66,663.83 TOTAL FROM System: 4/23/2024 12:49:23 PM County of Grant Page: 1 User Date: 4/23/2024 GENERAL TRANSACTION EDIT LIST User ID: eswash General Ledger # Intercompany Journal Entry Batch ID: 132TO116COR2024 Batch Comment: Approved: No Batch Total Actual: Approved By: Trx Total Actual: Approval Date: $266,655.32 Batch Total Control: 1 Trx Total Control: $266,655.32 0 Journal Transaction Transaction Reversing Source Transaction Entry Type Date Date Document Reference ------------------------------------------------------------------------------------------------------------------------------------------ User-Defined 1 User -Defined 2 ------------------------------------------------------------------------------------------------------------------------------------------------------- 959,488 Standard 4/23/2024 GJ 132TO116COR2024 Account Description Debit Credit ------------------------- 132.178.00.9116.594766003 ----------------------------------------------- ---------------------- Fair Grounds.CAPITAL OUTLAY ASSET > $5,000 ---------------------- $66,663.83 132.000.00.0000.101000000 R.E.E.T 2ND QRT.. CASH $66,663.83 116.000.00.0000.101000000 FAIR & PARK.,CASH $66,663.83 116.159.00.9702.594766003 FAIR GENERAL.CAPITAL OUTLAY ASSET >5,000 $66,663.83 Total Distributions: 4 -------------------------------------------- Totals: $133,327.66 $133,327.66 Total Journal Entries: I REVIEWED.� ft� AM By e swash at. 2024k: APPR ED By Katie Smith at: 10:32 am-', A r 24� 2.,11.--,* 8 z r- ,OK-.. j){_ `fi' File -1 Add..' idols . [ ! i iY (i - _. lis-er 6P. .. ........ ........ - ��f�i�dit Tail �C&d� 1 T ���i�����'��-' . � - T ren kion ate 1'/23/2024'- ours C acument--. Ptd T R _.T I� � _ r r� a rber R oc1 l� a1 Cfap�`,O ut-� f 32-5 ...Oser- e _ ------ . .. . �- I_iser- Crfirii� _ e it t re ik id. z� r i f ..-: .- Mum..... ........ if St�� 3 i tam' �"�s- ..,R:..c.,,.�:. d..s";S:i.."+.c,..;,a'.,•",�.....,"✓_.+.�. Lam._ .. �.. ...�... ♦ r .. .. .,�k ZY .. ..-: a... .. .- ..tib s. > A :',-..r. :.:.:. :..:.:.. .,i- . 9� t 132 .17.8 00 .9116 .594766003 DID 418,828. 6' 69.E .:0O. -t- 00 ",0,000 a :100,0000 $0.,00, 5 t r jj a 2024 Expenditures Fairgrounds ASSET ABI Speedmaster arena groomer 18,828.86 1.23.2024 132.178.00.9116.594766003 Fairgrounds ASSET Barber arena rock rake 47,835.00 1.23.2024 132.178.00.9116.594766003 66,663.86 From: Katie R. Smith To: Rob Jones; Cindy Carter; Danny E. Stone; Michele Jaderlund Cc: Emili Wash; Rebekah M. Kaylor; Darryl Pheasant; Carrie Heston; Christopher Young; Jim Anderson -Cook; James C. Mckiernan; Tom Gaines; Joseph S. Goe Subject: Eligible use of REET funds Date: Tuesday, April 23, 2024 9:49:11 AM Attachments: REET - MRSC.pdf REET EQUIPMENT EXPENDITURES.xlsx REET Purchasing Equipment Non-Qualifying.docx Good Morning, Following a recent audit conducted by our office, it has come to our attention that utilizing Real Estate Excise Tax (REET) revenues for equipment purchases, such as vehicles, is not permissible according to RCW 82.46.010 and RCW 82.46.035. In order to clarify these restrictions, we conducted thorough research, consulting an opinion from the Washington State Attorney General's office and seeking guidance from the Municipal Research Services Center (MRSC). Upon compiling the information and feedback received, a meeting was promptly scheduled on March 11th, 2024, involving the financial team, the prosecuting attorney's office, and the Board of County Commissioners (BOCC). The objective was to review the gathered information and assess whether any equipment purchases necessitated coding corrections. Subsequently, the board instructed us to identify all questionable equipment purchases and transfer the expenses out of REET funds. Equipment purchases, in 2023 and 2024, that utilized REET funds, which were all designated for the Fairgrounds, have been attached for reference. Accordingly, the board directed the expenses to be transferred instead to Fund 116 — Fairgrounds, given the availability of sufficient 2023 budget remaining to cover the additional expenses. I did note that this correction will obviously have an impact on the Fairgrounds cash balance, which will need to be monitored and may require additional funding from Fund 001 - Current Expense during 2024. communicated to the Board our intention to prepare a correction transfer and await Rebekah's review of the provided documentation and resources before proceeding. Rebekah has now reviewed the documentation and resources, providing her recommendation (attached). Considering Rebekah's concurrence with the AG opinion and the MRSC guidance, it is anticipated that the Board's directive will remain unchanged. Therefore, we intend to submit the corresponding transfer request for next week's consent agenda. WA AG QQinion Thank you, Katie Smith Chief Financial Officer Grant County Auditor's Office Phone: 509.754.2011 ext. 2740 Email: krsmith rantc0unt wa. ov P.O. Box 37 Ephrata, WA 98823 htt s:/ www. ra ntcou nt wa. ov 269 Accou nti n Confidentiality Notice: This email message, including any attachments, is for the sole use of the intended recipient(s), and may contain confidential and privileged information. Any unauthorized review, use, disclosure, or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply email and destroy all copies of the original message. Katie R. Smith From: Cheryl Grant <cgrant@mrsc.org> Sent: Friday, February 23, 2024 3:40 PM To: Katie R. Smith Subject: MRSC inquiry Inquiry: Via e-mail wants to know if a department can purchase 4 -wheelers or arena groomers to maintain the fairgrounds property..I do not believe these purchases would be an eligible use of BEET funds. Do you agree? Hi Katie, Josh passed your question to me and I agree with you. Below is the answer I provided to another county who asked the same basic question involving the purchase of equipment. "The county would not be able to use BEET funds to purchase equipment. Again, as you have noted in your inquiry, the RCWs provide a rather exhaustive list of definitions for "capital project" for both REET I and 2. In addition, the definition. of "maintenance" for both (RCW 82.46.015) and (RCW 82.46.03 7) is the same and reads as follows: "For purposes of this section, "maintenance" means the use offunds for labor and materials that will preserve, prevent the decline of, or extend the useful life of a capital project. "Maintenance" does not include labor or material costs for routine operations of a capital project [emphasis added]." Given the comprehensiveness of the definitions, and the opportunity for the legislature to include language such as "and the equipment necessary to perform such maintenance", I do not believe that silence equals an allowable expense." (23-4119) Please let me know if you need additional information regarding this matter. Cheryl Grant Finance Consultant 206.625.1300 x302 206.905.8536 Direct MRSG Empowering local governments to better serve their communities MEMORANDUM TO: Katie Smith FROM: Rebekah Kaylor Chief Civil Deputy Prosecuting Attorney DATE: 04/22/2024 RE: Whether Equipment Is Eligible for REET Funds? Can equipment be purchased with BEET 1 or 2 funds? I have attached the MRSC explanation of REETs for background information on BEET 1 and 2. Attach. 1. Whether BEET 1 or 2 allows for equipment to be purchased from its funds is not clear. Of note, equipment is not mentioned in capital projects definition in either RCW 82.46.010(6)(b) for BEET 1 or in RCW 82.46.035(5) for BEET 2. MRSC in the MRSC article, Attachment I. notes the difference between the two definitions as: Note that the definition of "capital project" for REET 2 is more restrictive than it is in the REET 1 statute. REET 2 funds are more specifically directed to infrastructure and parks capital projects. (However, note that park lands "acquisition" is not an allowed use for REET 2.) REET 2 omits public facilities such as law enforcement, fire protection, libraries, administration, and courts that were listed within the REET 1 statute. While I have been unable to find any authority for direction regarding whether equipment falls within the definition of a "capital project," a letter from the AG's office is instructive. I have attached the letter in full as Attach. 2. In this letter the AG's office addresses a question on REET 1 (RCW 82.46.010) for a county which did not have a population over 5000 and which was not required to plan under the GMA. At the time the RCW 82.46.030(2) provision stated, "These capital improvement funds shall be used by the respective jurisdictions for local improvements, including those listed in RCW 35.43.040." The county was inquiring whether they could purchase vehicles for the Sheriff's Department under Chapter 82.46 RCW. The AG's office noted that the "listing of authorized local improvements seems to us to be limited to the various kinds of things which may be done to a tract or parcel of tangible real property as an improvement thereto." It went on to say that "we would find it most difficult to support the critical proposition here; namely, that such vehicles qualify as `local improvements' as that latter term is used in RCW 82.46.030(2), supra, and in RCW 35.43.040." Similar to the lists for "local improvements," the list for capital projects as defined for both REET 1 and 2, is a very specific and limited in scope. This very specific limitation on the scope suggests that if the legislature was intending for equipment to fall within a capital project definition, they would have specified "equipment." They did not. While the law is not clear whether "equipment" falls within the definition of a "capital project," the AG's letter suggests that such things as vehicles and equipment does not fall within the scope of the definition. When Katie Smith reached out to the State Auditor's Office regarding the question of whether "equipment" falls within REET 1 or 2, on March 5, 2024, they responded with, "Our understanding is that a purchase of equipment would not normally be considered a `capital prof ect' or `public works proj ect' as defined in RCW 82.46.010(6)(b) or 82.46.03 5 (5), nor be a "capital project specified in a capital facilities plan element of a comprehensive plan'." Additionally, MRSC sent an email to Katie Smith on February 23, 2024, supporting purchasing equipment with REET funds is not an allowable expense. MRSC provided the following analysis: The county would not be able to use REET funds to purchase equipment.... [T]he RCWs provide a rather exhaustive list of definitions for "capital project" for both REET 1 and 2. In addition, the definition of "maintenance" for both (RCW 82.46.015) and (RCW 82.46.037) is the same and reads as follows: "For purposes of this section, "maintenance" means the use of funds for labor and materials that will preserve, prevent the decline of, or extend the useful life of a capital project. "Maintenance" does not include labor or material costs for routine operations of a capital project [emphasis added] ." Given the comprehensiveness of the definitions, and the opportunity for the legislature to include language such as "and the equipment necessary to perform such maintenance", I do not believe that silence equals an allowable expense." I also agree with MRSC that equipment does not fall within the definition of maintenance. In addition to their explanation, one of the Miriam Webster definition of "materials" is: "apparatus 41 necessary for doing or making something" and they give the example of "writing materials." In turn, "apparatus" means "a set of materials or equipment designed for a particular use." As the definition for "apparatus" distinguishes between "material" and "equipment," I think a reasonable conclusion is that they are two different things. Additionally, I found one case from Pennsylvania discussing what "materials" means, albeit in a very different context (liability of stockholders for materials furnished to the company). Moyer v Pennsylvania Slate Co., 71 Pa. 293, 294-95 (1872). The litigation turned on whether hay fed to mules which were used to transport slate (the manufactured good) to the railroad depot fell within the meaning of "materials furnished." In this case the court found that if the legislature had intended that hay fell within the meaning of "materials furnished" they would have specified "provender" or "farm produce." Id. at 95. While from Pennsylvania and dealing with a different issue, the court used a very common interpretation technique to come to its conclusion. Conclusion Ultimately, I agree with both the State Auditor's Office and MRSC, and I would not recommend using BEET 1 or 2 for equipment purchases.