By Debbie Hall
As local leaders continue to discuss a proposed tax hike, a review process is underway to determine whether the county is among localities experiencing financial distress.
Rachel Reamy, Local Government Manager in the Virginia Auditor of Public Accounts office, said the state review is continuing although attempts mid last week to reach county staff to schedule a conference call were unsuccessful.
She speculated that likely was because local officials were busy working on the budget proposal that includes an up to .11 cents increase in the real estate tax rate, an across the board 10 percent cut to outside agencies and other proposals to shore up the county’s current financial position.
The fiscal distress program was created when the 2017 Virginia Acts of Assembly directed to the Auditor of Public Accounts to establish the prioritized early warning system and annually monitor data and information from this system to identify potential fiscal distress within local governments across Virginia.
“The legislators added in the language of Virginia’s appropriation act establishing the fiscal distress process that a structurally imbalanced budget could be an indicator of fiscal distress,” Reamy said.
Patrick County, which has approved budgets with a deficit, according to previous reports.
During the review process, state officials will make a preliminary determination of potential fiscal distress based on an analysis of calculating 10 key financial ratios using audited financial statement data, along with considering other nonfinancial and qualitative factors, according to online information.
The analysis, referred to as the Financial Assessment Model (FAM), ranks each locality’s 10 ratio results in the model to determine and overall composite FAM score for each locality, which is a starting point to determine whether the state office performs additional follow up with a locality. The follow-up includes, in part, a financial assessment questionnaire and further discussions with local officials.
If the county is found to be in financial distress, Reamy said a first step is the state providing financial assistance, for instance to help pay for the cost of a consultant.
Since the county previously hired Davenport & Company, LLC, to help with the budget process, the nest step by the state may be intervention, Reamy said.
She said that she does not know what form that could take because it has not been necessary to intervene in the past.
