Alleghany County staff present draft contract tying fire-tax payments to documentation, audits and insurance

Alleghany County staff presented a draft contract that would tie distribution of fire-tax revenue to quarterly compliance with documentation requirements, require certificates of insurance and expand audit and inspection rights for the county, staff said at a meeting where commissioners and county staff discussed the proposal.

County staff said the draft would require each volunteer fire department to provide, by quarter, an IRS Form 990 or the most current filing, a line-item general ledger, a roster and evidence of capital purchases and equipment expiration dates. "The payment would be contingent on the compliance with the requirements per each quarter," the staff member said.

The draft also would require departments to provide bylaws and to notify the county within 10 days of bylaw changes, and to submit a plan for reducing or maintaining their fire-protection rating. County staff suggested moving contract deadlines to match the county fiscal-year budget cycle so the signed contracts and required documents are available before the budget is finalized.

On insurance, the draft currently requires workers' compensation; staff proposed adding explicit requirements for property/building, vehicle and equipment coverage and for departments to provide certificates of insurance showing limits. Commissioners raised the risk that uninsured facilities or equipment could expose taxpayers to claims and asked for certificate verification as part of documentation.

The draft adds two audit-related provisions that drew the most discussion. One is continued use of an agreed-upon-procedures desk audit (AUP) the county currently pays; staff said the county pays about $4,000 per department for that AUP. The other is a new requirement, taken from other counties' contracts, for an annual CPA audit with results provided within six months of the department fiscal year-end. Staff estimated a full audit would likely cost between $5,000 and $7,000 (and possibly more), and said other counties sometimes pay for audits on a rotation.

Commissioners and staff debated frequency and cost: some favored a full audit every other year rather than annually to limit cost and administrative burden; others said regular third-party review improves fiscal transparency. County staff noted existing county audits run on a multi-year rotation and said the contract language is intended to give the county an enforceable method to verify use of taxpayer funds.

As an enforcement mechanism, staff said the county's practical remedy for noncompliance is withholding payments until required documentation is provided. "We're saying you have to meet what these requirements are in your contract in order to get your funding," the staff member said. Participants acknowledged litigation against volunteer departments would be unlikely and that withholding funds is the primary leverage the county has under contract law.

Staff also proposed a provision allowing county inspection of books and records, including minutes, corporate documents and rosters, and adding an equipment inventory with expiration dates so future replacement needs are visible during budget planning.

No formal vote or contract adoption occurred at the meeting. Staff said they would revise the draft to reflect the discussion (including adjusting quarter/deadline language to the county fiscal year), circulate the revised document and provide the previous contract for comparison.

Ending: County staff will return a revised draft and the prior contract to commissioners for further review; commissioners asked staff to note budget implications of any new audit or insurance requirements before finalizing language.