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Kootenai County finds $342,000 overtime tax-and-benefits shortfall; staff to use contingency, return for approval
Summary
County staff discovered a configuration error in its finance system that left FY26 overtime budgets short $342,000 for payroll taxes and benefits; staff proposed using contingency funds and will return to the board next week for formal approval.
Kootenai County staff told commissioners on Jan. 13 that a software setting and a recent vendor update revealed a long-running error that left FY26 overtime budgets without associated payroll taxes and benefits, creating a $342,000 shortfall.
Brandy Falcon, who presented the finding to the Board of County Commissioners, said the county's New World financial system had a setting dating to 2008 that relied on a now-fixed bug. A Tyler Technologies update last year removed the bug and caused overtime lines to stop including the associated employer payroll taxes and benefits. "I discovered something in our FY '26 budget in New World," Falcon said. "For FY '26 ... all of the overtime budgets in the county did not get budgeted with the appropriate taxes and benefits."
Falcon told commissioners the $342,000 total affects multiple funds. Funds 30, 36, 37 and 60 are not tax-supported and can cover the shortfall with their own revenues. Funds 10, 15, 35, 45 and 46 will need additional county support. Falcon proposed using contingency: $91,000 from Fund 10 (which currently has $234,000 in contingency) and $225,000 from Fund 15 (which currently has $300,000), leaving an estimated $142,000 in Fund 10 contingency and $74,000 in Fund 15 contingency if the board approves the transfers.
Falcon said the county is tracking sales tax revenues closely; sales tax receipts were up 4.2% in November compared with the prior November and up roughly 3.9% year to date. She also said netting sales tax-sharing and liquor revenues in FY25 produced a $390,000 surplus.
Commissioners did not take a formal vote at the meeting but gave direction for staff to come back to next week's business meeting with paperwork to use contingency funds to "make these overtime budgets whole," Falcon said. Commissioner Duncan noted that if contingency is exhausted the county would draw on fund balance, and commissioners emphasized that using contingency for this ongoing taxable cost was appropriate. "This should be the only contingency needed for these overtime budgets," Falcon said.
The board's next formal action on this item is expected at the subsequent business meeting, when staff will present the required transfers and any required ordinance or budget amendment language.
