Financial crisis to blame for loss of earned revenue from interest in county

Monroe County revenue earned through interest on investments in 2011 was about half of that from the year before, Treasurer Cathy Smith reported during the county’s annual Board of Finance meeting Friday.

In 2011, the county received a $219,703.14 return in interest on investments.

This figure is a decline from 2010, Smith told the Monroe County Commissioners, when interest rates generated $454,456.32.

Before the financial crisis began in 2008, Smith said the county’s interest revenue was substantially higher.

“We do not have the county resources in cash that we had in the past,” Smith said. “For instance, back when we were getting 3 and 4 and 5 percent interest rates, we were putting in over a million dollars back into the general fund from interest. We no longer do that.”

With this decrease, Smith said the county has lost 68 percent of its interest income in five years because of the fragile banking industry.

On Dec. 31, 2011, county funds were invested in five local banks at interest rates of just more than 0.2 percent.

These banks are J.P. Morgan Chase, German American, First Financial, Old National Bank and United Commerce.

Funds generated from interests on investments go directly into the county’s general fund.

While Smith said the county will need to be more frugal until interest rates increase, she said taxpayers’ dollars are secure in the banks they are in.

“But I don’t think it’s fair to say that we will see an increase in interest rates in the next few months or the next year or so to substantially make up the amount that we lost from 2008 until now,” Smith said.

Commissioners Mark Stoops and Iris Kiesling approved the new Public Funds Investment Management Policy, which highlights three objectives: safety, liquidity and return rate.

— Mark Keierleber