County owes $250,000 to the state

Error resulted in overpayment to the county last year

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Some unknown retailer made a mistake while paying their taxes and now Austin County is paying the price to the tune of $250,000.
According to the state comptroller’s office, from June of 2016 to January of 2019 a retailer paid $250,016 to Austin County rather than the City of Austin and now the state wants that money back. The money was paid to the state comptroller and then distributed to the county.
County Auditor Billy Doherty read a letter to the Austin County Commissioners Court Feb. 24 notifying the county of the overpayment and setting options for repayment.
“Our options are: full reimbursement by one-time check, apply all monthly collections to the overpayment until the amount has been repaid, or option three, we can get on the 32-month payment plan and late charges of 2 percent of interest,” he said.
Ultimately the commissioners opted for the 32-month payment plan, but not without a lot of handwringing first. Nor is it the first time it has happened to the county.
“We are also doing this already because it happened three or four or five years ago,” Doherty said. “Our current balance, still currently with them, was $95,565. We still owe them, with this, $345,581.62.”
Under the previous debt, “We pay them $1,837 per month to May of 2024 on this last issue we had,” Doherty said.
County Judge Tim Lapham explained that the problem is much bigger than reimbursing the state.
“So, here’s where this really causes us problems. This was done in early ’19. Several months in early 2019. So we took the sales tax income that the county brought in over that time period to set our budget; to set our tax rate. So now not only do we have to pay back the $250,000, that we were given in error, which is fine, that’s not our money to get, but now we’re $250,000 short in our budget because we anticipated that sales tax coming in and now it’s not,” he said. “This is a half a million dollar flip that we have to deal with because of, it wasn’t the comptroller’s office, it was some business that did it.”
“If we make payments we have to pay interest, even though it wasn’t our fault?” Commissioner Bobby Rinn asked.
Lapham explained that the state would cut the county a 2% break if the money were paid back immediately or else charge it a one-time 2% interest payment to go on a payment plan.
“Can we do this one time and get it over with because it’s just going to keep haunting us?” asked Commissioner Mark Lamp. “Do we have any kind of recourse and file a letter with the people who did this and tell them y’all have cost us a half a million dollars?”
Lapham said that would be hard to do. He asked Doherty if there was enough money in the reserves to make a one-time payment. Doherty reluctantly said there was.
“We need to find out who’s doing this because this becomes heartburn,” Lamp said.
“There is no way we can monitor that. There is no way I’ll know who did it,” Doherty replied.
Lapham reviewed the cost to the county using the three repayment options.
“If we do option three it only costs us $5,000 versus pulling that money out right now and that money’s in the bank at what interest rate, 2.5%, 2%?” he said.
After doing some calculations, Lapham figured the county was better off to pay the $5,000 in interest and make payments rather than lose the interest it would make by taking a lump sum out of reserves. The commissioners agreed and voted unanimously to do that, with the exception of Randy Reichardt who was absent.
Lapham said the comptroller’s office will withhold a $7,814 payment out of tax revenues it sends to the county for the next 32 months.
Kevin Lyons, a spokesperson for the comptroller’s office, told The Sealy News, said this type of error “happens to a lot of folks.”
He said there is no way to know without an audit if a company is marking the correct entity when it makes sales tax payments. He said this instance was caught in an audit, which is how most of the mistakes are caught.

Construction project update
In other action, the commissioners set minimum wage rates for subcontractors for the upcoming construction projects of the new justice center, new Sealy EMS station, and renovations to the county jail and sheriff’s office.
David Bartay, project manager for Gaeke Construction, which is building the sheriff’s office and the justice center, talked to the commissioners about setting subcontractor wage.
“Our contracts were written with Davis-Bacon wage rates (federal minimum wage rates for construction) in there and I got to talking about it with Kenny (Burns, the project architect) and since we don’t have any federal funds we don’t have to use Davis-Bacon wage rates,” he said. “The reason this came up, in Austin County, a journeyman electrician is $42. In Washington County, a journeyman electrician is $22. In truth, it’s between there for most. I think we can save another $200,000 if we just adopt a different wage rate because we’re not required by law since we’re not using any federal money on these projects.”
Lapham clarified that it didn’t mean it was a set rate for all contractors.
“That doesn’t mean that’s what we’re going to pay; that just sets the floor. If we set the floor at the Washington County rates, then you’re still going to have to pay them at their going rates,” he said.
Commissioner Mark Lamp made the motion to adopt the Washington County rates. It was approved unanimously. Construction on the sheriff’s office and jail is expected to start soon.

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