County removes $194,203 from economic development in proposed budget

Wil Petty

June 10, 2014

The Ashe County Board of Commissioners approved removing $194,203 budgeted for a capital reserve fund in the economic development department, and placing it in the general fund to decrease the amount of money the county will have to take from its fund balance to help Ashe Memorial Hospital pay off debts.

While the Board continues to add amendments and changes to the proposed budget, nothing is official until the final budget is approved. The Board of Commissioners are scheduled to approve the budget on Monday, June 16.

“A lot of the reason for funding (Ashe Memorial Hospital) is due to economic development,” said Ashe County Manager Sam Yearick. “What would affect us is if something didn’t happen (to help the hospital).”

Ashe Memorial Hospital is asking for $500,000 to pay debts the hospital accrued before entering a partnership with Novant Health to manage the facility in August 2013.

Yearick brought up the idea while discussing the economic development budget and talking about where the money for that fund comes from.

“What’s been happening in the past, and I didn’t want to break tradition, is there has been a transfer to the (economic development budget’s) capital reserve fund every year of one-half cent of the property tax,” he said. “That just goes into a fund that keeps accumulating.”

Yearick’s proposal would be to not provide that money to the economic development fund as long as the county is having to fund Ashe Memorial. In addition, Yearick said it would be “devastating” to the county economy if the hospital closed.

“What I would really like to do is to actually not fund that transfer while we are funding the hospital, and that we consider (that money) a part of what we are doing,” he said.

Commissioner Gary Roark asked how much money was in the economic development’s capital reserve fund. The answer of funding was unknown at the time, but Ashe County Finance Officer Sandra Long said the county had used the fund in previous years for helping match funds for the expansion of Ashe County Airport.

Yearick then asked if there was a consensus by the Board of Commissioners for using the money planned for that fund for the hospital instead.

“It’s kind of strange to me to put money into an economic development fund, but fund the hospital out of our current budget when the prime reason to do it is economic development,” he said.

The money will remain in the county’s general fund as a cushion to help lower the amount of money the county would be taking from its fund balance. Yearick then mentioned the importance of keeping a hospital, giving an example of Alexander County losing its hospital and one not yet returning to the area.

“I don’t think the hospital will be going away, but I feel that if the hospital went away, it wouldn’t be back anytime soon,” Yearick said.

All of the commissioners said they were fine with the money being removed from the economic development fund.

Commissioner Larry Rhodes said the county would have to understand that by removing that money, if other businesses needed help in the area, the county would then have to dip into the general fund since that money would not be in the capital reserve fund.

“Yes we would have a leeway, but we have used the money out of this fund to help GE, Gates and other companies,” he said. “We need to understand, to keep them and help them, we’re going to have to take that fund out of fund balance. As long as we remember that.”

Yearick then said the county needs to remember that the vote on the quarter-cent per dollar sales tax is coming up in November, and if passed, that money would be used for the hospital.

“The biggest question we got coming is whether or not the quarter-cent sales tax passes,” he said. “If it passes, then it offsets about 1 or 2 cents of what a property tax increase would.”

If the tax increase passes, then Ashe County would not have to draw from its fund balance to help the hospital. If the quarter-cent sales tax passes, the county wouldn’t start collecting it until late in the 2014-15 fiscal year.

“It would be so late before (the tax) shows up, it’s not going to hit so much in the next year,” Yearick said. “We just track the sales tax revenues, so the (money) would come in through the revenue and it isn’t specific to one thing.”

The board mutually agreed to allow $194,203 to remain in the general fund as a way to help the hospital.

Wil Petty can be reached at (336) 846-7164 or on Twitter @WilPetty.