A carryover of $1.8 million means the Lawrence County Government will not operate in the red in 2015…until February.

After Lawrence County Auditor Jason Stephens closed the books for 2014 on Wednesday he explained why the largest carryover in the past 20 years isn’t enough.

“Although Dec. 31 is the day we always look at for the year-end numbers it is not when our cash is at its lowest,” Stephens said. “We’re at the end of the year and it seems we have all this money left over. The best time to look at how we are doing financially as a county is not Jan. 1, it’s April 1. Our fiscal year begins Jan. 1, but from a cash flow standpoint, April 1 is a better day to look at how well the county is doing.”

The $1.8 million carryover is the money used to pay employees’ salaries and health insurance as well as other necessary expenditures. The first stream of income seen by the county in 2015 is sales tax revenue, which is usually around $400,000. Even before that money comes in on Jan. 20, the county will have paid two payrolls – Jan. 2 and Jan. 16 – and the year’s first health insurance payment.

“In order to make payroll we’re spending money that’s not there,” Stephens said. “It’s deficit spending. That’s where the issue of a carryover becomes debatable. It looks like we have $1.8 million, but, not really.”

In 2013 the county had an overall carryover of $1.2 million. At the end of February there was a deficit of roughly $525,000.

“The thing is those numbers are probably worse earlier in those months because we get our sales tax revenue on the 20th,” Stephens said. If we have a payroll on the 2nd and 16th or 4th and 18th we still don’t get our sales tax until the 20th.”

Property taxes being paid in March propels the general fund into the black beginning in April, at least over the past three years, where it remains until January of the following year.

“Property taxes are due in March and by April we have the money settled out,” Chris Klein, chief deputy auditor, said. “Our revenue stream isn’t steady, it comes in spurts. We get our sales taxes every month, yes, but our property tax is our second-biggest revenue stream and it comes in two lump sums.”

Klein said each payroll is $200,000. The first receipt of sales tax revenue covers the first two payrolls, and there is another payroll due Jan. 30.

Also coming out of the carryover is payment for the county’s group home, soil and water and other first-of-the-year expenses.

“Then in February they really hit,” Stephens said. “Lots of debt payments, liability insurance premium is due, which is $400,000, plus the ongoing expenses like the electric bill, gas bill and other things that create a big cash crunch to the county in January February and March. Therefore, having that carryover is essential to operating in the black, which we haven’t done.”

Being one instance away from a fiscal catastrophe is something Stephens fears.

“What if our retail falls apart?” he said. “What if Walmart decides to remodel and closes for four months. What if something happens where Sam’s Club and Walmart both are closed for two months?”

Klein mentioned other possibilities.

“What if the state legislature decides to take away the local government funding altogether when the biennium budget comes out this year,” he said, “or if the state decides counties don’t need that much sales tax.”

Klein said a Bill was introduced in the Ohio Legislature in December that would take half of what the county gets and give it to the townships.

Both Klein and Stephens are optimistic about the overall carryover.

“That’s a good number, and better than it has been” Stephens said. “But it’s still not very good. It still doesn’t keep us in the black for the entire year. It’s much better than it was, but not as good as it needs to be.”

Achieving financial health, Stephens said, could be accomplished with a consistent annual carryover between $2.1 and $2.5 million.

“If the carryover gets more than $2.5 million, I think there could be some debate about the county holding back too much. We are not teetering on the edge financially as a county. We are much more stable than we used to be, but we’re still not financially healthy as a county.”

Consistency, Klein said, is vital.

“We don’t need a spike for one year,” he said. “We have seen that figure stay and operate that way and be at that level for an extended period of time.”

Commissioner Les Boggs said he is pleased with the carryover amount.

“When I took over in 2009 we had a carryover of $150,000,” he said. “Since then, we have worked hard to put back a little more ever year. This proves the commission has been frugal with taxpayers’ money and shows how far we have come since 2009. We’ll have obstacles facing us in 2015, but we will still do the best we can.

Commissioner Freddie Hayes Jr. praised those who abide by the county’s budget.

“The officeholders deserve lots of credit,” he said. “We have had some real tough budgets and they have lived by them.”