CHATHAM–At a special board meeting last week, the board announced that the town is $227,000 short in this year’s budget and cuts will have to be made.
Councilman and Citizen Finance and Planning Committee member Bob Balcom told the July 7 session that the shortfall was discovered during a financial review of the town’s $3.2-million annual spending plan conducted by the town’s new accounting firm.
Mr. Balcom said that after meeting with fellow members of the finance committee he believes steps could be taken to make up for some of the shortfall, but even under the most optimistic circumstances the town will still be about $60,000 shy of the funds it needs to meet expenses this year.
The town’s available reserve funds in the general budget are gone.
In her statement at the beginning of the meeting, town Supervisor Maria Lull said that after reviewing the budget with the accountants from Pattison, Koskey, Howe & Bucci (PKH&B), she found that “the town is hemorrhaging.” She also said that the Town Board is “still digesting the information” and that Mike Bucci from PKH&B would attend a special board meeting July 14 at 7 p.m. to discuss the audit further.
She said that PKH&B reconstructed the 2015 budget and then looked at 2016 budget. The board has presented town department heads with new budget forms to fill out.
“We have to come up with some more funds,” said Mr. Balcom, who added that members of the finance committee will work with department heads on the new budget forms.
“We need to know what is mandated first,” he said of the budgets.
Mr. Balcom said that one of issues that drained the budget was that the town has paid cash for “everything.” He said that in the future the town would borrow the money for large municipal projects, saying, “All infrastructure needs to be bonded for.”
Mr. Balcom said that in addition to addressing the current shortfall, the Town Board will start to work earlier than usual to prepare the 2017 budget, due to be adopted late this fall.
A press release from the Town Board on the situation said in part that “fund balances should be kept at approximately 10% to 20% of a town’s expenditure. Less than 5% is considered financial stress, and leaves the town financially vulnerable. We have been advised to try to restore the town’s fund balance to 5% of expenditures, which is $120,000.”
At the meeting last week, David Levow, a community member who sits on the town’s Citizen Finance and Planning Committee, told the audience, “If we don’t come up with $60,000, we will be short $60,000 to pay our bills. It’s not some accounting fiction.” He and Mr. Balcom stressed that the town needs $60,000 minimum, but that if cuts are not made, the shortfall number stays at $227,000.
Another member of committee, Aven Kerr, explained that the town had been borrowing money from a reserve funds for years to make up budget shortfalls. And now those reserves have run out.
“It’s not confusing, it’s just troubling,” said resident Adelle Kleiman-Levine of the information at the meeting. She also said that town officials needed to take responsibility for mistakes, “and this is a big mistake.”
Other residents asked about how this had happened. Councilmen John Wapner said the town had not been audited by the state since 2012.
Highway Superintendent Joe Rickert worried that his ability to maintain town roads would suffer due to cuts. “I already got cut $47,000 in last year’s budget,” he told the board.
He expressed his frustration, saying that he had asked past boards for financial information. He pointed out that Mr. Balcom and Ms. Lull had been on the board in previous years. Ms. Lull said that she also asked for better financial information in the past.
“We never were given the numbers,” Mr. Rickert said.
Board members John Wapner and Landra Haber, who were at the meeting, were elected last November. The other incumbent, Councilman Henry Swartz, was not at last week’s meeting.
Ms. Lull said that she was angry when she heard the news about the budget shortfall after PKH&B finished its forensic audit of the budgets for the last three years and the review of this year’s budget. She asked residents for their patience and help as town officials look for ways to resolve budget shortfalls.
Mr. Wapner said the situation presented “an opportunity” for the town to look at the budget in a new way.
Mr. Balcom said that going forward the process would be much more transparent and that department heads would be more involved. Besides Mr. Rickert from Highway Department, Town Judge James Borgia-Forster, Budget Officer Tammy Shaw, Town Clerk Beth Ann Rippel, and Planning Board Chair Marilyn Cohen attended the meeting. The board will also be looking at the budgets of the Recreation and Building departments.
The new Town Board hired PKH&B last winter, shortly after being sworn in. For several years before that, town finances were handled by an appointed comptroller hired by the board, but when the last comptroller died suddenly during the administration of the previous supervisor, Jesse DeGroodt, the board hired an accounting firm. After Ms. Lull defeated Mr. DeGroodt in last fall’s election and succeeded him as supervisor the board switched to PKH&B for accounting services.
A representative of PKH&B attended a board meeting last spring and warned the board that there might be budget issues ahead. According to the press release issued last week by the Town Board, the firm’s findings are worse than the board expected.
That led Mr. Balcom to predict at last week’s meeting that “2017 will be a tough year.” He added that that PKH&B has worked had helped several other towns resolve even worse situations.
The next Town Board meeting will be Thursday, July 21 at 7 p.m. in the town hall on Route 295.
To contact reporter Emilia Teasdale email .