HEY, BUDDY, CAN you spare a Bitcoin? That’s the “digital currency” used to transfer value from one place to another without a bank. It’s kind of like mailing cash to a relative except without the mail … or the cash.
Maybe someday we’ll abandon money, as in paper and metal with images of long-dead historical figures in our wallets. We’ll make payments and deposits based on our selfies. Until then, we’re stuck with the need to keep track of our old-fashioned dollars, and we don’t always do that job well.
Money goes missing in lots of ways and sometimes taxpayers are the victims, even when no crime is committed, like when public officials make bad calls or do something really dumb. A few years ago, the state found that the Germantown Board of Education had amassed much larger reserve funds than the district needed. In essence the board was hoarding taxpayers’ money. The following election some new people won seats on the school board. The excess funds were used to lower property taxes.
It’s easier to solve a problem if you have too much money rather than too little. Ask the Chatham Town Board. When the 2016 budget was being prepared last year the figures indicated the town had plenty of money. But last week officials announced town government doesn’t have enough to keep operating until the end of the year. There’s a deficit of $227,000 and even with fancy financial footwork and austerity, board members don’t yet know where the last $60,000 will come from to keep government afloat through December 31.
Chatham residents should give the current board credit (so to speak) for quickly hiring auditors to identify the problem and begin working on a solution. At the same time the board’s gasps of disbelief suggests more drama than the figures justify: $60,000 is roughly 2% of the annual budget. It might mean layoffs, which hurt innocent people, and probably some unpopular cuts in services, but we elect public officials to make these kinds of tough decisions on our behalf.
With hindsight you can imagine the magical thinking that led to Chatham’s problem. The board had available reserves of $227,000 in 2015 and used them to offset spending. When it came time to prepare the 2016 budget, the same number was added in again without any evidence to confirm the town had that much money in the bank.
How would you know to ask about those reserve funds? The Office of State Comptroller Tom DiNapoli publishes a booklet online called Citizens’ Guide to Local Budgets www.osc.state.ny.us/localgov/pubs/releases/LocalBudgetGuide2010.pdf.
The booklet says that it’s normal to use reserve funds for “unforeseeable shortfalls” but cautions that “the persistent use of fund balances to cover revenue shortfalls in a budget over a number of years may be indicative of a structural problem in the budget.” For at least the last three years the Town of Chatham has had revenue shortfalls covered by fund balances. That certainly sounds like a “structural problem.”
Town Supervisor Maria Lull and Councilman Bob Balcom, both of whom were on the board when the current flawed budget was prepared, said they asked for figures from the previous supervisor, Jesse DeGroodt, at the time but did not receive any.
Could Chatham’s current budget crisis have been prevented? Yes. Who’s to blame? The responsibility starts with Mr. DeGroodt, who oversaw the budget preparation. But assigning blame is not a solution and it won’t prevent something like this from happening again.
Ms. Lull and the Town Board have promised to change the budget process, making it more inclusive and transparent. Those are necessary goals and the first practical step toward achieving them would be for the board to put the forensic audit of town finances online for everyone to read.
The board also plans to end the harebrained way the town funded infrastructure projects –paying in cash. That could put money back in the pockets of taxpayers. But making these changes permanent requires new policies so that past mistakes won’t recur.
Chatham is the latest, not the last, local municipality to screw up its budget. The board would benefit from knowing how others have handled similar deficits.
Assuming this budget mess gets resolved, other towns would be wise to contact Chatham and learn from its experience about improving their own budget process. Be wary of board members anywhere who reject this opportunity. Those unwilling to profit from mistakes like the ones in Chatham are headed for trouble themselves.