Ottawa County's first assistant district attorney said Monday that entities shorted in a recently discovered misallocation of county sales tax revenue must be compensated for their loss.

Ben Loring said the law is clear on the matter and states that money shorted the Ottawa County Sheriff's Office and the half-cent road tax fund must be returned - “penny for penny.”

Loring has asked for time to examine the legalities of a proposed three-year plan to pay back the Sheriff's office from county funds.

Commission Chairman Russell Earls proposed repaying the shortage out of the county's general fund over a the next three years, provided that the cushion in the county's general fund does not fall below $500,000.

The shorted accounts have lost more than $275,000 over the past five years due to a misallocation of sales tax revenue that dates back to the 2003-'04 fiscal year.

An improper formula used by the Ottawa County Treasurer's Office shorted the accounts and, in turn, directed an equal amount of revenue overages into accounts for the rural firefighters and the governmental building authority.

“I have personally thanked Terry (Durborow) for catching the error,” said Ottawa County Treasurer Brenda Conner. “I also want to extend an apology to each board for any inconvenience that this has caused. I am sick about it and I take full responsibility.”

Loring said Monday that the accounts with the overages can be corrected with a reduced tax allocation - meaning that the rural firefighters and the governmental building authority will be given less than what voters approved when those sales tax proposals went before voters in 2003 and 2005 respectively.

“The money has to be paid back,” Loring said.

County officials said that, whatever is decided, all entities involved must approve the plan.

The taxpayers do not have to approve any change in the allocation, according to Loring.

Loring said the problem with reducing the tax allocation is that it could devastate the rural fire departments who depend on sales tax revenue to meet lease obligations.

Seven of the nine rural fire departments have entered into one or more lease-purchase agreements for equipment since sales tax revenue began to arrive five years ago.

Last year, the rural firefighters account - which is divided equally among the nine departments - was overpaid more than $78,000.

New calculations will reduce the sales tax to an estimated $2,068 per month per department.

The chief of the Paradise Point Volunteer Fire Department told county commissioners that he understands adjusting the tax allocation to its proper percentage but that he is hoping that there will be a way that the departments do not have to pay the overage back.

“It is almost an impossibility,” Morgan Lennox said. “With the cost of fuel … it sucks … fuel is my biggest nightmare.”

Lennox said he already feels like he has to “work magic” with his budget.

“If there is anyway of not having to pay it back, that is what I want,” Earls said. “We know what (sales tax revenue did for you) and we know what it means if you would have to pay it back.”

The county did not discuss the road tax shortage. It will be discussed at a future meeting.