Town Without Pity

In my last post I went through the township budgets for 2008-2011, to demonstrate that the budget numbers proposed have been outlandish, and that actual expenses have never really been cut.

In this post I want to go back to November and December of 2009, when the preliminary 2010 budget was presented, and the one mil tax increase was proposed and passed.

At that point in time the board consisted of Dan Rattigan (chair), Bud Baldwin, Dave Kulig, Bob West, and Dan Worden, and it was clearly a divided board.  West and Worden opposed a tax increase; the others, not so much.

On November 4, 2009, the preliminary 2010 budget was presented.  There was a lot of talk about falling revenues, increased expenses, cost-cutting actions taken.  By then the supervisors had cottoned to the fact that the year-end deficit was not going to be the $2.779 million dollars originally anticipated (including the Gateway grant), but it would instead be closer to $850,000.  There was a chart showing how cash reserves had been used to balance the budget for years.

Here I just want to insert a note about the cash reserves.  There must be other things hitting those reserves, things not shown in the budget.  During this presentation the 2009 beginning year fund balance was shown as $2.581 million.  The 2009 outside auditor’s report dated July of 2010, available here, shows a 2009 beginning fund balance of $3.127 million.  That’s nearly a half-million dollar difference.

The tax increase was proposed to make up an anticipated shortfall in the reserves.  The point was made that at the beginning of any year, money is needed to carry the township for some months until new tax receipts start coming in.  The recommended reserve balance was about $600,000, and based on the projection for the remainder of 2009 and the proposed 2010 budget, the cash reserves would fall to about $50,000 by the start of 2011.

(That’s according to the township presentation.  My numbers don’t show that, but that slippery cash reserve balance won’t stay put!)

I have a problem with this “save the cash reserves and we’re okay” approach.  While the claim was made that a “scalpel” was used on the preliminary 2010 budget, “again and again and again”, budgeted 2010 expenses were $6.045 million, or $445,000 more than actual 2009 expenses of $5.6 million (adjusted for the Gateway grant).  The scalpel looks more like a spoon, adding to the dish rather than cutting away.

At the same time, the 2010 anticipated revenue total without the tax increase would have been about $4.534 million, up only $134,000 from the 2009 actual revenues of about $4.4 million (adjusted again for the Gateway grant).

The time when a tax increase was proposed would have been an excellent time to point out that deficit budgeting, which had already drawn down cash reserves, would only continue to do so in the future.

And we know exactly what happened.  Because, like “deja vu all over again”, on November 3, 2010, the board announced that the cash reserve fund would be in jeopardy at the start of 2012, and another tax increase – this time a 3 mil one – was proposed.

You might argue that you take things a year at a time.  The economy could get better, revenues could go up.  But you play the hand you’re dealt, not the wishful thinking in your mind.  If revenues have been going down for 3 straight years, and all national economic indicators suggest that a rebound is not on the immediate horizon, when do you get serious about real cuts to expenses?

That 2010 “scalpel” wasn’t applied to expenses at all.  Dollars out the door stayed the same in 2008, 2009, and 2010.  The 2010 “scalpel” was applied to whatever budget was originally suggested in September/October of 2009, and result was “only” a $445,000 budgeted increase in expenses over 2009.  The 2009 kabuki replays in 2010.  Actual expenses in 2010 were about $5.661 million, and budgeted 2011 expenses at that time were about $5.986 million, “only” a $325,000 dollar increase, an amount larger than the prior year’s tax increase.  And that proposed 2011 budget, with an assumed 3 mil tax increase, wasn’t balanced.

Even with multiple tax increases on the table, the deficits march on.

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2 responses to this post.

  1. Thank you for your comment, delta, and welcome. I apologize for the delay in my response to you!

    Reply

  2. Posted by delta on August 27, 2011 at 10:06 pm

    Good post.

    Reply

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