PORT ANGELES — Millions of dollars can be transferred from one area to another in the Clallam County budget without a vote of the commissioners.
Although the money can’t be spent without a vote of commissioners, Commissioner Mike Chapman said there is a “loophole” in county budget policy that needs to be fixed.
Chapman on Monday said it was “inappropriate” for County Administrator Jim Jones to sign a $3 million budget modification, redesignating 2015 funds for the delayed Carlsborg sewer project to other projects within the Opportunity Fund, in May without a board vote or public discussion.
“That’s just wrong for a lot of fundamental reasons,” Chapman said in a work session.
“We’ll find out from a court whether it’s legal. Just because something’s legal doesn’t make it right.”
Commissioners Jim McEntire and Bill Peach voted Aug. 25 — with Chapman opposed — to seek a declaratory judgment and order from a Superior Court judge to force County Treasurer Selinda Barkhuis to release warrants for $1.3 million in Opportunity Fund grants to the port and city of Port Angeles.
Barkhuis had rejected the warrants, saying the public process had been insufficient.
The remaining $1.7 million in Jones’ budget modification was intended for “undesignated” projects that the board had discussed informally.
“Modifying the budget does not authorize the spending,” Jones reminded the board.
“The spending comes to you to the smallest penny. If we write a check for one penny, it comes to you to approve before it goes out.”
Commissioners voted unanimously May 12 to award a $1 million grant to the Port of Port Angeles to renovate a building for the future Composite Recycling Technology Center and a $285,952 grant to the city of Port Angeles for its waterfront improvement project.
They did not vote on the budget modification that moved the money from the Carlsborg sewer project.
McEntire said the commissioners followed county policy and state law during the May vote.
“The main point here is we don’t make policy on the fly,” McEntire said in a Thursday interview.
“We’ve got to follow our policy in every case, and that’s what we did.”
In late June, commissioners voided the warrants and returned the grant applications back to the Opportunity Fund Advisory Board, which recommended both grants a second time.
In August, on a 2-1 vote in which Chapman was opposed, commissioners approved the grants. They have not issued the warrants.
Chapman said he “clearly understood” Barkhuis’ concern when he realized that $3 million had been moved within the Opportunity Fund projects with a stroke of a pen on a single sheet of paper.
“I think that is a loophole that has to be changed,” said Chapman, who still supports the port and city projects.
“Personally, I believe that one of you two guys had to plant $3 million in [Jones’] mind, or he just pulled it out of the air.”
Jones said he had been directed by the board to make available all Opportunity Fund reserves for shovel-ready projects.
The board had received correspondence from the Sequim Aquatic Recreation Center and the city of Port Angeles requesting Opportunity Fund grants for facility improvements at the pool and lights at Civic Field, McEntire and Peach agreed.
At the time of making the budget modification, the Opportunity Fund reserve had a balance of $3 million, Jones said.
“It was my own judgment that it was the board’s intention to get as much of that money working in the community as was possible,” Jones said.
“We didn’t talk about the other $1.7 million. . . . The rest of the change was just on my volition, knowing the will of the board, that other projects might come along as well.”
The Opportunity Fund is a portion of state sales tax that supports infrastructure in rural areas.
Chapman in a Thursday interview said he encouraged reserve spending.
But unlike other board-approved expenditures from general fund reserves or lodging tax revenue, there was no budget emergency hearing for the Opportunity Fund projects, he said.
“Clearly, the treasurer has legitimate concerns on behalf of the public, and I hold those concerns,” Chapman said.
“I just think it’s inappropriate for $3 million to be moved without the Board of Commissioners knowing it, and I think the public would not be pleased that $3 million was moved without the board approving that particular number.”
Chapman on Aug. 25 said he would apologize publicly if Jones could find a record of the board voting on the $3 million budget modification and challenged McEntire to apologize Monday.
“I certainly apologize that my memory was faulty and that we didn’t have an explicit discussion of the $3 million figure,” McEntire said.
“But I do not apologize for the fact that in my mind, we had had a series of discussions from the very first of this year on through today regarding all of this spending.”
Commissioners discussed Monday a proposed change to county policy that would require a formal approval of budget modifications that exceed $50,000.
According to Jones’ research, there had been 270 budget modifications since 2010, none of which were presented to the board for formal approval.
The largest budget modification was $12.8 million to update an accounting code for a public works project.
Jones has approved 30 budget modifications since 2010 that exceeded $50,000, most of which were public works projects.
Chapman said public works projects are vetted for inclusion on the six-year Transportation Improvement Plan, or TIP.
“The reason the treasurer in the past released those dollars is because those were in the TIP,” Chapman said. “They’ve gone through a public process.
“These projects came out of nowhere.”
Before commissioners vote on the $50,000 threshold for budget modification, the proposal will be vetted by a budget advisory committee that includes Barkhuis and County Auditor Shoona Riggs.
“Let’s let the finance committee do its work and make its recommendation,” McEntire said Monday.
“In the meanwhile, we can take whatever steps that are appropriate so that we are fully — each one of us three — fully aware of all of the administrative changes to the budget.”
McEntire suggested that Jones produce a list of all budget modifications for commissioners to review every week.
“I think that’s a step that we can take that produces transparency,” he said.
In a Friday email, Barkhuis said she would release the funds to the port and city if the board would hold the budget emergency hearing and secure contracts.
She said Commissioners McEntire and Peach “are well outside their lane by refusing to produce and sign these documents,” Barkhuis wrote.
Chapman on Thursday said the board “should have listened to the treasurer” when Barkhuis warned that she would withhold the warrants absent contracts and a budget emergency hearing.
He also took responsibility for not following Jones’ advice to budget the projects in 2016.
“It is true that I supported a quicker process,” Chapman said.
“But it is true that there are checks and balances in government. One of those checks and balances is the treasurer in charge of the treasury.
“We would be getting those funds out this week if we had a budget emergency process.”
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Reporter Rob Ollikainen can be reached at 360-452-2345, ext. 5072, or at rollikainen@peninsuladailynews.com.