Casting a dissenting vote

“First, I need to elaborate that there has been an issue sleeping behind the scenes for the Town for quite some time. Namely, the adjustments from the auditors have simply never been made in the accounting records of the Town.”

A February 28 email from James Childress, the Cheyenne-based certified public accountant engaged by the Town of Saratoga, served as the catalyst during the March 3 meeting of the Saratoga Town Council for Councilmember Jon Nelson to vote against approval of accounts payable for the Town of Saratoga.

Nelson Dissents

It has been several months since the governing body has failed to unanimously approve bills for the Town of Saratoga. In September 2019, Nelson provided the lone dissenting votes and did so again on March 3. Referencing the email from Childress, the council member stated that he had reservations about approving the accounts payable for the municipality.

“As was pointed out by our accountant that the approval of expenditures constitutes an implicit approval of transfer between enterprise funds and the general fund, I would reserve my right to vote against approval of the bills tonight,” said Nelson.

Nelson’s concerns led to Councilmember Judy Welton questioning how he expected the Town of Saratoga to pay their bills. In response, Nelson stated that her question was part of a larger discussion on how the municipality would continue to operate the general fund.

The approval of accounts payable passed by a 4-1 vote.

When it came to approval of payroll and payroll liabilities, however, Nelson stated that he did not feel that the governing body had any choice but to approve the two items. With little more discussion, the items were approved by a unanimous vote.

Implicit Approval

In the email from Childress, which was provided to the Saratoga Sun, it is explained that for, at least, the past five years, the general fund has seen a repeated excess of expenditures over revenues. That excess was $270,654 in 2014, $477,596 in 2015, $432,849 in 2016, $507,092 in 2017 and $238,933 in 2018.

Childress stated in the email that net transfers into the general fund were recorded for all years except for 2018. Those transfers ranged from $28,654 in 2014 to $504,521 in 2017. Childress clarified in the email that to deal with the overruns, transfers were made into the general fund from the Town of Saratoga’s enterprise funds. 

An enterprise fund is a self-supporting government fund that is sustained by selling services to the public for a fee. This includes fund balances such as the Water and Sewer Fund, which is sustained by the fees paid by in-town and out-of-town users who are connected to the system.

According to Childress, it is possible for a municipality to transfer money from one fund to another. Indeed, Wyoming State Statute 16-4-112 states that a governing body may transfer from one fund to another through resolution following a public notice of its intent to do so. Such an action, however, has not taken place in any recent meetings of the Saratoga Town Council.

“I believe it has been understood by the auditors in the past that the approval of expenditures on a deficit fund balance by the Town constitutes an implicit approval of the required transfer of funds from the surplus fund balance to the deficit fund balance,” wrote Childress. “In truth, the general fund was relying on outside inputs from other funds to satisfy its disbursements.”

The accountant added that the enterprise funds showed unrestricted status through 2018, “which means the transfers were allowable according to the governing rules. So, the conclusion is that the transfers were allowable, implicitly approved/requested and necessary.”

According to Wyoming State Statute 16-4-117, while a governing body may transfer from one fund to another, it must do so at an interest rate and a term of repayment. This question was asked by Childress in the email, “A different question comes up now … if it is on the docket to transfer back to the enterprise funds what is considered necessary and valid by the council.”

The next meeting of the Saratoga Town Council will be at 6 p.m. on March 17 at Saratoga Town Hall.