According to Northampton County's independent auditor, the county is in desperate financial straights. That's what Nancy Gunza, a CPA with CliftonLarsonAllen, told council's Finance Committee June 18. She explained that the unrestricted reserve at the end of last year was just $11.1 million. The county spends about $9-10 million per month.

"That's a pretty low amount," explained Gunza, who added that the Government Finance Officers Association recommends six months of expenses in reserve as a best practice, with a three-month minimum.

What happened to $25 million stabilization fund?

Council member Ken Kraft challenged Gunza's statement, insisting that the $11.1 million figure she quoted is in addition to the county's $25 million stabilization, or rainy day, fund. In fact, he insisted that $25 million is there "to keep this ship going" in the event of a catastrophe.

It's not.

"We have a $25 million stabilization fund that we're not allowed to touch," he insisted.

"You had $25 million," explained county Fiscal Director Doran Hamann. "I think the word is you 'had' 25." The fiscal director added that last year, "We spent $14 million in excess of our revenues," which brought the stabilization fund down from a healthy $25 million to an unhealthy $11.1 million. Hamann also warned council last year, during budget hearings, that the county would need to dip heavily into reserves because it was spending more than it was taking in.

Gunza added that the total fund balance at the end of last year was just $28 million.

Still perplexed, Kraft asked Controller Steve Barron to name the $25 million rainy day fund. Barron was unable to do so, while Gunza and Hamann explained a second time that it is called a stabilization fund.

Gunza later told council member Bob Werner that quite a few other municipalities are struggling with low fund balances.

McClure denied deficit prior to audit reportCouncil member Lamont McClure, who unsuccessfully ran for executive last year on a no-tax pledge, was absent from this Finance Committee meeting. But just two weeks before he insisted there is no deficit.

Council member Hayden Phillips opposed open space projects that include a defunct golf course because "[w]e don't have the money. We shouldn't be spending it." But council member Lamont McClure denied a deficit exists.

"We are not deficit spending," he insisted. "The money from the fund balance was over taxation."

"We won't be paying our expenses this year with this year's revenue," said Phillips. "Isn't that the definition of deficit spending?"

According to McClure, the answer is "no." But to the county's independent auditor, the answer seems to be "yes."

Barron talks about custodial contractController Steve Barron said nothing about the deficit. In 2011, Barron had recommended that council not raise taxes. He promised there would be an $8 million increase in funds the following year. Instead, the fund balance decreased $2.2 million.

Rather than discuss $14 million in deficit spending, Barron honed in on a privatized, $51,000 custodial contract with Service Master for the new centralized human services building. "The AFSCME union that does the cleaning in the building didn't necessarily sign off on this," he warned. He raised privacy concerns and noted that some thefts have been reported.

Barron repeated these concerns the following evening at a full council meeting.

An indignant Lamont McClure, instead of discussing the independent auditor's report, demanded that someone explain why council was not notified that someone stole a pair of jeans and knickknacks at the centralized human services building.