2012-06-21 / Front Page

County discusses DTR fund, outlook

Officials warn of unknowns, despite positive balance

MANISTIQUE – Commissioners recently heard an update on the delinquent tax revolving fund, a source of confusion for many residents. During the audit-finance committee meeting, the status of the fund, often used to balance the county’s budget, was detailed.

According to Julie Roscioli, county treasurer, the fund currently sits at approximately $453,194 – around $10,000 less than last year’s balance. As described by the Michigan Department of Treasury website, a DTR fund is, “segregated into separate funds or accounts for each year’s delinquent taxes. Each year’s separate fund or accounts continue in existence until the delinquent taxes for that tax year have been collected and the county board of commissioners have transferred any surplus to the county’s general fund … the county retains all delinquent taxes, interest and penalties collected to offset its tax collection costs. The surplus earned, after any borrowing is paid off, is under the control of the board of commissioners.”

The bankruptcy of Manistique Papers, Inc. contributed to a spike in the number of delinquencies within the county, explained Roscioli.

“This year, delinquencies are up about $180,000, and that’s due to the Manistique Papers taxes, but they’re on a payment plan, they’ve made two payments already, so that will be coming in regularly,” she said. “Of last year’s delinquencies – the $861,535 – $179,472 is still delinquent.”

While a significant amount remains delinquent, Roscioli added the collection cycle usually takes approximately two years, depending on what actions are taken.

“It’s a two year cycle, it gets delinquent for a year, and then it goes into forfeiture, and then you have one more year and it goes into foreclosure,” she said. “We either get the money or the property. And the longer they wait to pay it, the more money we make.”

Normally, the state requests counties to keep DTR balances at $1 million, however, Roscioli noted that Schoolcraft County’s continual balance of approximately $500,000 has been accepted. Last year, the county “borrowed” $42,000 from the fund in order to balance the budget, she said.

“We don’t actually take that money. We wait until the end of the fiscal year, after everything is said and done, and then, we hope that we don’t have to use it, but if we do have to, we do,” Roscioli explained. “So when we say we are using ‘x’ amount of DTR to balance the budget, that doesn’t mean we’re using that money – we’re using it to balance the budget and see where we make out.”

Audit-finance Chairperson Dan LaFoille added the county must use this method since they are required to complete their budget before the state – meaning county officials must make educated guesses as to what funds to expect. Despite this routine, officials have been able to anticipate state funding; making small gains in the county’s budget.

“What we’ve been doing for basically four years; we’re gaining,” he said. “The first priority was to make sure we keep the emergency managers, those folks away from our doors, and that we don’t have to borrow money to remain whole.”

These gains should not be viewed as a surplus in the county budget, though, explained County Clerk Dan McKinney.

“Revenue has essentially stayed flat, I think our property tax is up $25,000 this year, which is not a lot, and our expenditures continue to skyrocket,” he said. “We are gaining because of the cuts we made, and we have this money here, but … we don’t know where we’re going to land this year.”

With a projected county employee health insurance increase, capital improvements looming in the near future, as well as an expected revenue shortfall of more than $200,000 and employee retirement funded at only 70 percent, McKinney emphasized the county is not in the clear.

LaFoille agreed, adding the county has witnessed numerous funds deplete their balances – a phenomenon county officials are currently working to reverse.

“We still have a lot of work to do,” he said.

In other business, commissioners also heard an update on the Central U.P. Community Corrections program, currently under the operation of UPCAP (Upper Peninsula Commission for Area Progress). The organization took over operation of the program in January, making numerous strides since then, according to Becky McIntyre, UPCAP employee and community corrections advisory board manager.

“We’re very pleased with the transition, we feel that we’ve gotten a great deal of support from both communities in Alger and Schoolcraft,” she said.

The program has recently acquired a new van, via a grant obtained by UPCAP, as well as a new trailer. UPCAP will lease the van back to the program, beginning next year, so the vehicle will eventually belong to the program.

According to the UPCAP website, the Community Corrections program provides local Circuit and District Courts with community based sentencing alternatives, allowing non-violent offenders sentenced to intensive supervision, substance abuse treatment, or community service to work through the program, effectively reducing the daily county jail population.

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