It all began with a mistake in tracking the dates that airport improvements were put into service.
And after an auditor's published warning that executives of the Airport Authority of Washoe County may have committed a misdemeanor violation of state law, a state tax official has said there's no reason for worry.
Tucked away in the financial footnotes at the back of the glossy annual report issued by the airport authority last week is this note from the Reno-based auditing firm of Kafoury, Armstrong & Co.: "Actual expenses exceeded operating expenses by $1,514,320, an apparent violation of (Nevada Revised Statutes) 354.626." That provision of state law says that local governments can't spend more than they have budgeted although it provides a list of 15 exceptions and says that any public official who violates the law can face misdemeanor penalties and loss of employment.
The airport's expenditure of $1.5 million more than its budget was the result of higherthan- budgeted depreciation expenses, said Joan Dees, the airport's senior director of finance and administration.
Depreciation, an accounting tool, doesn't require a cash outlay.
The clock begins running on depreciation expense when an asset is put into service, and Dees noted that the airport has seen the recent addition of a number of expensive assets such as a $10.2 million runway project that generates annual depreciation of more than $679,000.
Because the airport's budget for the fiscal year ended June 30, 2004, didn't correctly time the dates that assets would be put into service, the budget got out of whack.
Predicting when assets will come into service is particularly tricky in northern Nevada because of the effects of weather on multi-year construction projects, said Krys Bart, the airport authority's executive director.
Airport officials asked for a review of the question by the State Department of Taxation.
Gordon Hella, supervisor of local government finance,wrote that he didn't see a problem.
The state law, Hella said, refers to expenditures of money.
Because depreciation is a non-cash item, it doesn't involve money.And that means the law wasn't broken, the state official said.
Bart said airport officials believe the auditing firm's position was "very conservative," and they were heartened by the state ruling.
"We don't want anyone thinking we're running around violating the law," Bart said.
While the airport authority is covered by the same state laws that cover agencies such as city councils and water districts, Dees noted that the airport's operation relies entirely on its own revenues and doesn't receive any tax dollars.
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