Thurston County plans to repay nearly $1.9 million to one of its tax funds after a state audit found the county inappropriately used that money.
In May, the state Auditor's Office determined the county did not comply with state law when it used the nearly $1.9 million in real estate excise tax funds for "unallowable" furniture and equipment expenses.
The county used the money to furnish and improve the Atrium, a leased office building at 3000 Pacific Ave. SE in Olympia. The county moved its administrative offices from its courthouse campus on Lakeridge Drive to the Atrium in 2022 as part of a plan to expand and reorganize its facilities.
In its response to the audit, the county said it disagreed with the findings and believed it followed state-law based on a technical interpretation by its own legal counsel. The county reiterated its position in a Tuesday news release but said it would follow the state's recommendation to repay the REET fund.
"While the county does not agree with the State Auditor's Office, we are prepared to repay the REET fund with $1,855,201 from the county general fund," said County Manager Leonard Hernandez. "Processes are already in place to ensure funds do not have negative cash balances. The funds transferred to the REET account will be available for future county capital improvement projects."
The county's REET fund holds money collected by a tax on real estate transfers. State law allows the county to use these funds for capital improvements.
However, the state Auditor's Office found that state law did not allow the county to use those funds for its furniture and equipment purchases. The audit also found the county should have gone out to competitively bid for the build-out work at the property.
Adverse audit findings such as this can affect the county's bond rating, making it costlier for the county to borrow money, Thurston County Auditor Mary Hall previously said during a May conference between state auditors and the Board of County Commissioners.
In its news release, the county maintains it used the funds in "good faith" and exercised due diligence when reaching its conclusion.
The county says it reviewed state law, the Municipal Research and Services Center County Bidding Book, and lease agreements with similar terms agreed to by the state Department of Enterprise Services.
The county's legal counsel also believes the build-out work did not require a bidding process because the county would never own the building.
As for the REET funds, the county argues the REET statue's declaration of legislative intent indicates "capital improvements" includes the "acquisition of real and personal property associative with such local capital improvements."
The county says it shared its legal analysis with the state Auditor's Office but it declined to change its conclusions.
"With a topic as technical as this, there are times when attorneys disagree on interpretations of codes and statutes," Thurston County Prosecuting Attorney Jon Tunheim said in the release. "In this case, we respectfully disagree with the auditor's opinions, and stand behind our team's analysis of the law. However, we also will respect the process and the county will follow the SAO recommendations."
In a separate news release, Board of County Commission announced it would hold a three-week summer recess from June 24 to July 12.
"This upcoming recess allows us to coordinate Commissioners' schedules during the summer," Board Chair Tye Menser said.
___
(c)2024 The Olympian (Olympia, Wash.)
Visit The Olympian (Olympia, Wash.) at www.theolympian.com
Distributed by Tribune Content Agency, LLC.
