South Berwick council to present budget calling for 18% tax increase
Foster’s Daily Democrat
After weeks of budget sessions, the Town Council is ready to present its revised 2009 municipal budget of $5763795 to residents at a public hearing Monday at 6:30 pm in the Town Hall auditorium.
Shipyard dry dock is of utmost importance to area senators
Foster’s
A Suggested Solution to the “Budget Crisis.”
Over the last 7 years the Town of South Berwick’s budgeted proposed expenditures have increased from year to year with percentage increases ranging from 3 to 9 percent. The proposed expenditure budget for fiscal year 08/09 shows a remarkable and unexpected increase of 16%.
Between the 3 fiscal years 04/05, 05/06 and 06/07 the Town of South Berwick has drained it’s savings by $717,425 without replenishing it. The figures for 07/08 are not in yet so who knows how much more the savings have been drained.
The savings account, termed the “Undesignated Fund Balance,” is important because it is used to cover “timing” issues. A household example of the “timing” issue that we can all relate to is:
I put into savings every two weeks so that when the time comes I have a large amount of money to pay an upcoming bill such as a property tax bill. After that bill is paid I then continue to replenish my savings account so that I can do it again the following year. In this scenario, as long as I actually do replenish my savings account I am living within my means.
When the Town of South Berwick votes to use Undesignated Fund Balance towards the upcoming budgeted appropriations it must realize that during the year the undesignated fund balance needs to be replenished. Without replenishing the fund it is simply known as living beyond your means. This is what the Town of South Berwick has been doing. For the past three years it has been living beyond its means.
The combination of the remarkable proposed budget increase of 16% and the drained savings account creates this current “budget crisis.”
At this point, along with the knowledge that we need to stop draining savings I see the following as a possible solution to the immediate “budget crisis.”
(1) The Town Council cannot possibly have the detailed knowledge to determine the internal budget of each department. Instead, this year it seems entirely reasonable that the Town Council ask each department head to limit their respective budgets to only a 5% increase.
Economic realities require the leadership and responses by each department head including:
Acting Interim Town Manager: Roberta Orsini
Assessing: Craig Skelton
Code Enforcement: Joseph Rouselle
EMA: Blaine Cote
Highway Department: Jay Redimarker
Library: Mary Margaret Anthonine Ney
Fire: George Gorman
Planning: Jim Fisk
Police: Dana Lajoie
Recreation: Sharon Brassard
Rescue: Doug Cummings
Social Services: Vicki Desilets
Transfer Station: Gary Boucher
We have professional department heads and they should be relied upon to recommend to the town manager and town council the choices necessary within their departments to meet the real fiscal constraints this year.
(2) To compensate for the over $700,000 net drain on the Undesignated Fund Balance during the last 3 years, the Town of South Berwick should suspend for one year most of the capital improvements program. This suspension would be for a limited time while savings are returned to the Town of South Berwick and the financial planning is restructured under a new fiscally responsible manager.
In conclusion, if the department heads limit the increase in their budgeted expenses to 5% and most of the capital improvements budget of $760,000 is stalled for the following year, the Town of South Berwick’s municipal funding for the following year will fall under the LD1 cap. (LD1: the state law that limits annual growth in each municipality’s property tax levy to the state’s average annual growth in personal income plus each municipality’s property growth factor.)
I must say, the LD1 cap does bring to focus any town that is living beyond its means. Though failure to meet the LD1 cap is not fatal, it may be a worthy goal.
Sincerely,
Gretchen Straub
Bravo Gretchen, that was very well put.
Wow, Gretchen’s take on the town budget is really worth reading and thinking about! I’m not great at figures, but recommend her letter to all blog readers, and hope all will attend Monday night’s hearing at 6:30 in town hall.
In the past month, town councilors and staff have made an admirable start to trimming the budget. A feared 26% tax increase is now down to 18%. As a taxpayer, I don’t want to demand that we be at 0%, considering that we have had an easy ride the past few years. But can we take Gretchen’s approach and go further? It will take more hard work on department heads’ part, and presumably a loss of some services citizens now enjoy. In other words, belt tightening for all of us. But why not try?
I congratulate our leaders on their efforts during a difficult time. They’re showing they can work together and get results.
Gretchen, do you have any idea where some of the 700,000+ dollars might have gone?
Town expenses. It lowered taxes. But it’s like thinking you have a higher salary when you draw from savings. It’s false.
The combinationof that drawdown fom savings over the last 3 years with the astonishing 16% proposed increase in town expenses by the former Town manager is what has us in this pickle.
For this past year, I know of two items.
$100,000 for the snow removal overdraft.
Numerous expenses for legal fees to get the town manager removed.
Not saying if that was right or wrong, just that some of the money went there.
Gretchen, very thought out and well put. I totally agree that the Town has been spending beyond it’s means for several years now and is in a tight spot because it no longer has any rainey day fund to fall back on. Having reviewed the proposed budget (inital 26% version) I found numerious areas that I questioned. Why do we need to replace three pieces of capital equipment within the public works department in the 08/09 time frame? Why do we need to replace the glass crusher and buy a new roll off container for the transfer station? Is all of this equipment beyond where it is no longer cost effective to repair it now and replace it one piece a year?
This just addresses a couple of areas just in the Capital project plan that came to my attention and does not address all of the areas of concern that I have. This does not to me seem to be a well thought out proposal based on todays economy. I am under no conditions throwing stones at the Town Council as I feel that they have been thrown into a no win situation. But I do believe that each and every one of the Department Heads need to go back and figure out what they really need and what would be nice to have. Which is exactly what me and my family are going to have to do as I have been notified that the company I work for (which has offices world wide) will not be doing any cost of living adjustments this year due to the economy.
As a taxpayer, I begrudgingly understand that there may be a cost of living adjustment that is required to offset SOME of the lack of income. But I believe that even 18% is unacceptable. I truely believe that with some well thought out reductions in the Capital Plan and possibly some consolidations of services and departments (to include SAD 35) that a more reasonable increase can be proposed.
To Ex-Councilor David Webster –
Where did the $700,000 go?
Below is the first thought that comes to my mind when asked how the Town of South Berwick used its savings.
The town lost $204,000 of property tax revenue because of a simple math error. A math error was made on the Municipal Tax Rate Calculation form in the fiscal year 04/05 and then in again in fiscal year 05/06.
In both those years when the needed “Municipal Appropriations” figure was added into the property tax rate calculation, the figure was understated by a substantial amount. In 04/05 the understatement was worth $99,000 in property tax revenue and in 05/06 it was worth $105,000 in property tax revenue. So, with these two mistakes the town lost the opportunity to collect $204,000 that it thought was included in the tax rate calculation.
I note that the town auditors had written in their management report to the town that this error had been made but, for who knows what reason, the town repeated the mistake the following year. Finally in fiscal year 06/07 the town started calculating correctly again.
As far as the rest of the savings being used, nobody can allocate a particular expenditure as “the one” that drew from savings. The savings was treated as a revenue source to pay for budgeted expenditures just like property tax revenue is levied to pay for budgeted expenditures.
We know that every year the Town people vote to draw from the Undesignated Funds to offset a lot of budgeted expenditures but that is with the understanding that the fund will be replenished by cash receipts collected in the future.
Once again I want to note that the auditors management reports have offered advice to the Town of South Berwick, more than once, in the recent years to establish a policy on the level that the “Undesignated Fund Balance” (savings) be kept.
If there aren’t enough cash receipts to replenish the savings account then that means the Town has been living beyond its means.
Bottom line the Town of South Berwick has been spending more than it has been receiving.
Thank you, Gretchen!!!
“Thank you” to everyone who has written thus far on this important subject… I think that all of us here in S. B. need to be concerned and enlightened….. and encouraged to help out in any way(s) we can….
These messages by you are very thought-provoking and I sincerely hope that everyone in town will read them!!!
It sounds like our councilors are working together … That is great news!!!!
Hats off to you all!!!
We definitely ALL need to tighten our belts and save wherever possible…..and spend Wisely!!
Starting today!!!!