Do county officials have a responsibility to stay within budget?

By Eddie A. Jones
AAC County Consultant

The short answer to the question is “yes.” A county official is responsible for staying within his or her budget — the appropriation provided by the quorum court. There also is a responsibility to live within the cash available at any given time. A budget is based on projected revenues expected to come in over a 12-month period. The budget is not based on “cash in the bank” on day one of the year.

Some county officials “go over their budgets” very carefully — week after week, month after month making sure they remain in compliance with the constraints of the appropriated funds for their office operations. Other county officials just “go over their budgets.” That should not be.

Budgets are real and should be realistic. Jacob Lew, a former U.S. Secretary of the Treasury, said in reference to the federal budget, “The budget is not just a collection of numbers, but an expression of our values and aspirations.” The county budget should be the same — not just a collection of numbers, but also an expression of priorities as established by the quorum court. Yes, they get to set the priorities. Some years you may like it — other times — maybe not. But it’s your job as an elected official to work within the financial perimeters set by the court.

As the legislative branch of county government, the quorum court is given the authority by the state constitution [Amendment 55] and state law to adopt ordinances necessary for the government of the county, including the adoption of a county budget through an appropriation ordinance as prescribed in Title 14, Chapter 14, Subchapter 9 of Arkansas Code Annotated.

U.S. Sen. Everett Dirksen, a Republican from Illinois in the 1950s and 60s was attributed with saying, “A billion here, a billion there — sooner or later it adds up to real money.” In Arkansas county government we would say, “a thousand here, a thousand there — before long it adds up to real money.

County quorum courts should be — in fact must be — in tune with the county’s needs and then be thoughtful and professional in allocating precious financial resources in the form of appropriations so the fiscal affairs of the county are conducted on a sound financial basis in accordance with Arkansas Constitution, Article 12, § 4. It also is the court’s responsibility to properly establish priorities as set forth in § 14-14-802. Each county official and department head must then be diligent in how they expend the appropriated funds for their office to get the best bang for the buck and serve their constituency to the best of their ability under the constraints of the budget given them — the legal limit of their spending.

Does the quorum court get to tell a county official how and for what to expend their appropriation? The simple answer to that question is “no.” While the quorum court should always be concerned with ensuring fiscal responsibility, there is this thing called “separation of powers doctrine.”

County government is somewhat like state government. County government is comprised of separate branches in order to provide a system of checks and balances. Under the classic division of powers, the legislature [quorum court] makes the laws and appropriates public revenues, the executive branch [county officials] administers the laws and expends the appropriations, and the judiciary interprets the laws.

No one questions the power of the quorum court, the legislative branch of county government, to appropriate county funds. However, it does not follow that a legislative body retains the right to administer a previously approved appropriation. The Arkansas Supreme Court recognized this principle of separation of powers in the case of Chaffin v. Arkansas Game and Fish Commission (1988).

The Arkansas Attorney General has issued several opinions over the years addressing this issue. The opinions cite case law and the separation of powers doctrine. To summarize the conclusion of these opinions, the quorum court may not attach conditions to an appropriation which purport to reserve to the quorum court powers of close supervision that are executive in character. The quorum court cannot do indirectly through means of line item appropriations and conditions what it is impermissible for it to do directly. Line item appropriations become constitutionally impermissible when the authority of the executive branch [county officials] is infringed by legislative control over expenditures.

In other words, a county official does not have to come before the quorum court for approval before purchasing equipment or anything else as long as there is a validly adopted existing appropriation by the quorum court for the expenditure. Neither can an appropriation ordinance get into the specifics of requiring that an official buy a specific brand or do business with a specific vendor. Remember, the legislative branch — the quorum court — makes the appropriation. The executive branch — the county officials — administers the appropriation.

Many counties have an article/section in their budget ordinance addressing nonrestricted expenditure categories, which basically allows for the transfer between line items in each of the major categories of expenditures, except for the Personal Services category. Under this scenario, usually the county judge is required to report to the quorum court each month the line item transfers made during the previous month.

Some counties enact their budget ordinance with an article/section that provides that any transfer of monies between the major categories of expenditures can be made only with prior approval of the quorum court. Either way is proper and constitutional. It is simply a matter of how much latitude a county quorum court wants to provide. An AG opinion released in 2002 did not view this type of restriction as an encroachment on the executive branch, “rather by requiring its approval of the transfers of monies, the Quorum Court has simply ensured that it retains its appropriation authority.”

Case law has rendered that an official must live within their appropriation. In a 1988 case, Venhaus v. Adams, the Supreme Court ruled “an agency of county government that performs a function imposed by law must live within its appropriation unless that appropriation is unreasonable.” So, there is an onus on the quorum court to be reasonable in making appropriations for the various offices and departments of county government.

However, appropriations made by the quorum court are presumed to be reasonable and the burden rests on the office or entity filing the claim in excess of an appropriation to prove unreasonableness. So said the Arkansas Supreme Court in Union County v. Union County Election Commission.

The penchant to overspend should be stopped on the front end. I believe we all understand that the quorum court is the authority when it comes to appropriating county funds. Arkansas Code § 14-14-801(b)(2) lists one of the court’s responsibilities as “appropriate public funds for the expenses of the county in a manner prescribed by ordinance.” As it relates to the annual budget, Arkansas Code § 14-14-904(b)(1)(A)(ii) requires, “Before the end of each fiscal year, the quorum court shall make appropriations for the expenses of county government for the following year.”

At the point of appropriation, it then becomes the duty of the executive branch to administer the expense side of the budget. The county judge, under the authority of Amendment 55 and § 14-14-1101(a)(2), must authorize and approve disbursement of appropriated county funds. More specifically, § 14-14-1102(b)(2)(B) provides in pertinent part:

(B) Before approving any voucher for the payment of county funds, the county judge, or his designated representative, shall determine that:

(i) There is a sufficient appropriation available for the purpose and there is a sufficient unencumbered balance of funds on hand [cash] in the appropriate county fund to pay therefor;

(ii) The expenditure is in compliance with the purposes for which the funds are appropriated;

(iii) All state purchasing laws and other state laws or ordinance of the quorum court are complied with in the expenditure of the moneys;

(iv) The good or services for which expenditure is to be made have been rendered and the payment thereof has been incurred in a lawful manner and is owed by the county ...

(C)(i) No money shall be paid out of the treasury until it shall have been appropriated by law and then only in accordance with the appropriation.

The county judge can do a lot to stop overspending by following this section of law. And if a claim gets approved where the cash is not in the fund on which the claim has been approved, the treasurer has a duty to refuse to issue payment. Arkansas Code § 14-15-805 basically says the treasurer shall refuse payment of any warrant or check that would cause a deficit balance in a special revenue fund or a deficit balance of the general fund in aggregate.

What happens if a county official overspends his or her appropriation and the county receives goods and/or services as a result of the over expenditure? Does the county have a cause of action against the official to recover all or part of the over expenditure? That’s a good question not specifically addressed in law.

But there are any number of codes dealing with misconduct with respect to an official’s budget, such as:

§ 14-22-103 declares it a misdemeanor, subject to a fine and removal from office, for any county official to violate the procedures for purchasing;

§ 14-23-202 declares it a misdemeanor, subject to removal from office, for any county official to violate the rules with respect to the handling of claims presented to the county;

§ 14-23-106(b) clearly declares it a misdemeanor, subject to a fine and removal from office, for a county court, a county judge or a county clerk to willfully violate or neglect to perform his or her duties concerning the handling of claims against the county and specifically forbids paying any claimant more than he is due; and

§ 14-14-1202(d)(3) declares it a misdemeanor, subject to a fine and removal from office, for any county official to violate the ethical rules of conduct.

Also, misconduct with respect to an official’s budget could very well amount to nonfeasance or malfeasance in office. The failure to perform the duties of one’s office [which include the administration of a budget] could amount to nonfeasance, if based purely upon negligence … or to malfeasance, if the failure is based upon some intentional motivation. Of course, removal from office is under the jurisdiction of the circuit court in accordance with Arkansas Constitution, Article 7, § 27.

In summary, under the classic division of powers, the legislative branch makes the laws and appropriates public funds, and the executive branch administers the laws and expends the appropriations. But it is the job of the quorum court to be the watchdog of public funds. The quorum court has the authority and duty to appropriate county funds, and the statutory authority to “adopt, amend, or repeal an appropriation ordinance” [§ 14-14-907(b)].

Remember the Old Testament story of Job? Job said, “The Lord giveth, and the Lord taketh away.” Arkansas law is written in such a manner that the quorum court can give and take away. Sometimes it is necessary, either because of a shortfall in revenues or because a county official does not control their spending. A county official has the legal authority only to spend the amount appropriated by the court for his or her operation — no more.

The quorum court has a responsibility to make a reasonable appropriation, and then the county official has the responsibility to stay within that appropriation — so ruled the courts.

Dave Ramsey, America’s trusted voice on money, said, “A budget is telling your money where to go instead of wondering where it went.” The county budget is not a “play pretty” it is a “real tool” and should be used as such. No county official wants to hear “the light at the end of the tunnel has been turned off due to budget cuts.”