MORGAN -- Morgan County should get past the Garth Day debacle and focus on decreasing revenues because of a damaged economy, according to its latest independent audit report.
"Garth Day was a major distraction," said auditor Charles Ulrich. "It created a lot of uncertainties, but the county can go on. You don't need to worry. It has been resolved. Focus on doing business in the county and the economic crisis."
Day, former county council administrator, pleaded guilty to six charges in federal court and admitted he stole nearly $1 million from the county.
"During the year, the county has been dealing with the discovery and prosecution of an embezzlement of funds by a former county employee," the audit reads.
"The county has been working to identify and recover the missing funds and pursue insurance claims for unrecovered amounts. While some matters are still pending, it is the opinion of management and legal counsel that losses, if any, will be minimal and have no long-term adverse financial consequences to the county."
Ulrich advised county council members to strive for consistency in the application and implementation of policies and procedures among departments in county government.
This means a hard look at policies and procedures that govern payroll, overtime and vacation pay.
"Take a hard look at those policies. Focus on a policy that applies to everyone, and adherence to the policy by all involved," Ulrich said. "There are a lot of inconsistencies. Be careful. Because of those inconsistencies, there could be some backlash."
Ulrich hinted that the county may have to look at hiring the council an assistant, similar to a council administrator like Day.
"There's a lot of ways to skin it, but you've got to do something. There's too much fragmentation," Ulrich said.
"It's going to take some debate and discussion. You're still a young county, and you're still trying to figure out how to make this work."
According to the audit, Morgan County has $7.6 million in total net assets. Its garbage enterprise fund is doing well, with revenues exceeding expenditures by $74,309.
The county's revenue comes largely from taxes, 68 percent of total general fund revenues. Property taxes make up 45 percent of total tax revenues and 31 percent of total general fund revenues.
But those revenues are on the downward slope as collection rates continue to wane.
After adjusting for bond proceeds, the county experienced a $592,000 shortfall of revenue in the year ending Dec. 31, 2010. That translates into a shortfall of revenue over expenditures of $265,000 for regular recurring expenses, Ulrich said.
"Ouch," he said. "All sorts of things affected it, but it was pretty much tied to the economy."
Council members said their next round of budget work sessions will be conservative, considering zero growth and tax collection rates of around 80 percent.