Auditor has cautious good news on Kankakee County's fiscal health
Kankakee County remains "in dire financial straits," County Auditor Jacob "Jake" Lee's said in his recently released third-quarter report, but he had some cautious good news as well and advised fiscal conservatism in the path ahead.
"All things being equal, current projections still indicate that there will be more revenue than expenditures this year," Lee said the report to the Kankakee County Board. "I must strongly advise that if there is more revenue than expenditures that we do not increase expenditures."
Interfund borrowing, highway department debt, a $1 million loss in cash advances from tax anticipation warrants and an accounts-payable backlog "are claims against any positive revenue balance that may manifest," Lee said in the cash-basis report. "The 'cash-strapped' position in the county is a going concern."
Lee announced the release of the third quarterly report on his Kankakee County Auditor Facebook page on Oct. 25. Lee also included a link to the report in the same post.
"I am very pleased with much of the progress we have made, but we have a long way to go," Lee said in the post. "Please remember that this report is for the period ending 31 AUG 17. In other words, there is no SEP or OCT data in the report."
Lee also reported there isn't as much money in the county's general fund as the report indicates. "I did do a quick analysis and the surplus in the GF projected in this report is much less than the $590K reflected in this report," he said in the post.
The news is a change from more than two years ago when the county's finances were reported to be in a "crisis situation" as its debt increased and budget cuts were on the block. To meet payroll, the county then had not repaid accounts payable as far back as August 2014.
In August 2015, Moody's Investors Service downgraded Kankakee County government's bond rating to junk status and predicted the county's financial position would continue to deteriorate.
While there has been improvement since then, Lee predicted in his report that the county's general fund "will not be above zero until 2022 or beyond." That could change given factors such as an increase in the county's economic activity and population growth, but "absent these economic changes, I have little confidence in faster progress," Lee said in the report.
The county's highway department debt has been paid back $1.1 million, leaving a balance of $3.4 million, and though revenue has increased for fiscal 2017, so has spending, Lee said in the report. "The county is still in dire financial straits, which remain a concern in the opinion of the auditor's office," Lee said in the report.
"The projected revenue exceeding expenditures this year is not 'free money' or 'extra money.' It is paramount to understand that from a cash-flow perspective, the county must get to a level whereas revenues, by the end of the year, exceed expenditures by $5 M(million) at a minimum. A 'cash-balance' of $5 M(million) is only enough to keep from accessing 'outside money', it is not enough to 'dig out of the whole,'" Lee said.