By: Jesse Davis
THE VILLAGE REPORTER
jesse@thevillagereporter.com
A failure to correctly appropriate special levy funds for Delta’s municipal waterworks system slowly eroded its financial position for seven years before being noticed in 2024, according to a recent pair of audits.
The results of the audits of the village’s finances in calendar years 2023 and 2024 by the state auditor’s office showed that the funds from the 0.5 percent tax passed in November 2001 for “financing, constructing, operating, maintaining, and improving” the waterworks were correctly collected and appropriated from its inception until just over halfway through 2017.
“Beginning in 2018 and retroactive to 2017, the village incorrectly began including the 0.5 percent income tax for the Municipal Waterworks System in the total income taxes to be allocated in accordance with the Village ordinance,” the audit report states.
With the 0.5 percent special levy lumped in with the 1 percent general levy, the full amount was then split with 70 percent going to the general fund, 27 percent to capital improvements, equipment, maintenance, and enlargement of municipal services, and 3 percent to the park fund.
After the error was discovered in 2024, village council members passed an ordinance reallocating 33 and one-third percent (comprising the full 0.5 percent levy revenue) of the combined funds back to the waterworks, with 46 and two-thirds percent going to the general fund, 18 percent going to capital improvements, equipment, maintenance, and enlargement of municipal services, and 2 percent going to the park fund.
During the time that the funds were misappropriated, the village racked up more than $2.9 million it legally owed the water fund.
Earlier this year after the full accounting of that money was made by auditors, Delta Finance Director Joanne Clapp was forced to transfer the full amount from other village funds.
That transfer brought the village’s 2025 ending cash balance to -$622,242, with estimates showing the balance will end this year at -$588,614.
The transfer also dropped the police fund 2025 ending cash balance to $175,714.74, with estimates showing it will end 2026 at -$253,968 and 2027 at -$655,836.
In all, the audits resulted in four findings of material weakness and six of noncompliance, split evenly between the two years.
Beyond the water levy issue, auditors noted understatements and overstatements of various numbers in amounts up to the hundreds of thousands of dollars, and stated that Ohio Water Development Authority loan payments not recorded until 2025 caused understatement of charges and overstatement of fund cash balances.
“The failure to adequately monitor financial statements and notes to the financial statements could allow for misstatements to occur and go undetected,” the report states.
Additional unrelated misstatements ranging up to almost $150,000 were also discovered and brought to the village’s attention.
“The Village should adopt policies and procedures, including a final review of the financial statements and notes to the financial statements by the Fiscal Officer and Village Council to help prevent similar errors from occurring in the future,” the report states.
One noncompliance finding caused by “inadequate policies and procedures in approving and reviewing budget versus actual information” led the village’s grant construction fund to have expenditures in excess of appropriations across both 2023 and 2024 totaling $809,761.
“The Village Council should closely monitor expenditures and appropriations and make the necessary appropriation amendments, if possible, to reduce the likelihood of expenditures exceeding appropriations.
Additionally, the Fiscal Officer should deny payment requests exceeding appropriations when appropriations are inadequate to cover the expenditures,” the report states.
Clapp previously reported to council members that the village would be labeled in “fiscal distress” as a result of the audit, although it was unclear whether the village would be placed under a fiscal caution, fiscal watch, or fiscal emergency designation.
A caution is triggered when there are general issues caught early that require correction before they worsen, a watch is triggered when accounts payable are more than 30 days past due or there are significant deficits, and an emergency is triggered by significant deficits, unpaid bills, and defaults on debt or payroll/benefit payments.
The status of the village’s finances and the necessity to dig out of the hole have led to several efforts by village staff to look for potential ways to save and recoup money moving forward, including renegotiating leases of village-owned properties, denying tax abatement options for current development, and eliminating a reciprocal tax benefit for residents which currently allows them to deduct from their Delta income taxes any income taxes paid to another municipality where they work.
The audit results are likely to be discussed at the next regular meeting of the Delta Village Council, which will be held at 5:30 p.m. on Monday, Aug. 3 at 401 Main Street in Delta.