The recent analysis by Steve Grenadir, who reportedly has a professional background in finance and serves on the town’s Economic Development Task Force, points out that Woodstock’s expenditures have exceeded its income by nearly $700,000 over the last two years, largely as a result of transferring unexpended funds from an expiring annual budget to the income side of the following year’s ledger. By employing that maneuver during a period of rising expenses and falling revenues, the town managed to avoid unpalatably large tax increases.
The 2011 town budget contained an overall property tax increase of 6.8 percent, which took into account tax hikes of 11.2 percent for the general fund, which is the budget’s biggest spending line, and 1.7 percent for the highway fund, the next biggest line.
In March, however, an e-mail exchange between the town’s consulting accountant and the town bookkeeper revealed that the current budget had a total deficit of approximately $350,000 — $220,000 in the general fund and $130,000 in the highway fund — because town officials had mistakenly transferred unexpended funds that did not exist from the 2010 budget to reserves in the 2011 spending plan and approved appropriations that exceeded actual revenue.
The erroneous transfer involved a total of about $450,000, while only $230,000 was actually available for such an action. As far as can be determined, the error was discovered by the accountant, Mary Kimball, of the Kingston firm Kimball and O’Brien. The town supervisor annually prepares a proposed budget, which is subsequently reviewed by the Town Board, other officials, and the public before its ultimate adoption, invariably in modified form, by the board.
Grenadir’s analysis, which he disseminated to board members, warns that Woodstock faces a “gigantic” tax increase for 2012. According to Grenadir, an increase of more than 14 percent in the general fund alone would be required merely to maintain the fiscal status quo, based on the assumption that both revenue and expenses will remain unchanged from the current year and no unexpended fund balance will be available to cushion the tax blow. (Repeated attempts to reach Grenadir for comment were unsuccessful.)
The current gap in the highway fund is viewed as a somewhat less serious problem than the general fund shortfall. The town this year avoided a half-million-dollar withdrawal from the highway fund to the repair of a town-owned bridge by using funds from a dedicated reserve account instead. In addition, savings were achieved by assigning the repair work to Highway Department employees rather than an outside contractor.
The Grenadir analysis states that the 2012 tax hike could even exceed 20 percent if revenues remain flat while routine expenses, such as employee salaries and benefits and fuel costs, increase. A decision by the town to incur additional debt by renovating Town Hall could also contribute to a steep rise in the tax levy. The annual interest and debt service on $1.45 million in bonding, toward an estimated $1.6 million total cost for the project, could amount to more than $90,000.
In a June 7 interview Woodstock supervisor Jeff Moran articulated a somewhat more optimistic view of the town’s prospects. While Grenadir’s assessment “aligns” with his own, he said, the town had achieved significant savings in recent months, such that the $220,000 shortfall in the general fund had nearly been eliminated. Moran said that he anticipated a single-digit increase in the overall tax rate for 2010, although the general fund might require a double-digit hike in order to keep pace with chronically rising expenses such as state-mandated pension outlays and appropriations for highway-related materials like blacktop and fuel. The Town Board is expected to begin work on the 2012 budget in August.
Meanwhile, said the supervisor, substantial savings have been realized in various budgetary areas. Nearly $50,000 that had been erroneously withdrawn from the general fund in order to cover benefits for retired employees including former police chief Harry Baldwin, has been restored to that account. Moran credited the current police chief, Clayton Keefe, with saving “tens of thousands of dollars” by assigning overtime work preferentially to part-time officers. The Police Department comprises ten full-time and nine part-time officers. The department’s budget, which includes that of the Emergency Dispatch Department (four full-time and four part-time employees), amounts to approximately $1 million, or about a quarter of the $4.5 million general fund.
Other savings include “well over” $20,000 in unanticipated state aid; a reduction of nearly $9,000 in insurance costs, with a payment to the town from its insurer expected to amount to about $8,000; and county sales tax revenue that exceeds expectations.
The cost of services
Despite the reported savings, the town faces a squeeze in certain sectors of the budget for the remainder of the current year. Funds designated for attorney and other consultant fees are nearly depleted. Roughly $40,000 had been budgeted for legal fees. Thus far in 2011, the town has paid Steven Barshov, its special counsel for matters related to the Comeau easement, approximately $13,500, mainly for Barshov’s work on a draft stewardship plan for the Comeau property.
“A very big chunk (of the budgeted funds) went to Steve Barshov’s firm because the draft stewardship plan prepared by the town’s land use subcommittee was found to be deficient by very vocal members of the public,” said Moran. “In deference to such sentiment, and because the language of the Comeau easement was found (by Barshov) to be flawed in various ways, it was virtually impossible for a layperson to craft an airtight stewardship management plan.” The land use subcommittee consisted solely of councilwoman Terrie Rosenblum, who created the draft to which Moran referred.
The supervisor added that the town had saved about $5,000 in legal expenses by hiring a special prosecutor for selected cases, but acknowledged that the budget would not permit significant future outlays to Barshov or other attorneys.
In general, Moran observed, Woodstock’s taxpayers must determine the level of municipal services that they require and what they are willing to pay for such services. “The Town Board tries to intuit the public’s views, but only about 20 people regularly make their views known,” he said. “Those people hardly speak for the rest of the town’s residents, who presumably are content with the levels of services and taxation.”
“Trimming town services as a means of balancing the budget and minimizing tax increases is problematic. At this point the town is staffed as leanly as can be,” said the supervisor. “To reduce the budget significantly, we would have to reduce services.” For many municipal departments — highway, maintenance, police and dispatch, water and wastewater, and the offices of the town clerk and the assessor, for example — a significant reduction in the level of service is either undesirable in the eyes of the public or, as in the case of the two-person Water/Wastewater Department, both undesirable and impractical. Reductions in highway or maintenance services would entail a reconfiguration of those departments.
“People in a community have to decide which services they want and which they don’t — more police or less, a 24-hour dispatch department or a shared dispatch service with the county, for instance,” said Moran.
As noted in the Grenadir analysis, the town’s decision on the fate of Town Hall is likely to affect the 2012 budget. While a renovation of the building would presumably increase taxes, the building’s sale to a private party could have the opposite effect, generating new tax revenue for the municipal coffers. The Town Board is currently pursuing both options: on the one hand, weighing an offer from local businessman Neal Smoller to buy the building for approximately $800,000; on the other, developing bidding specifications for a possible renovation.
(Legally, the town cannot simply sell the building to Smoller, the first bidder. Rather, the Town Board must pass a resolution, subject to permissive referendum, to offer Town Hall for sale to the public, at a price no lower than $800,000, which is the building’s current appraised value. A successful permissive referendum petition by residents opposed to a sale would put the question before the public, in the form of a townwide vote.)
Taking responsibility, blame
Meanwhile, Town Board members acknowledged varying degrees of responsibility for the misguided transfer of unexpended funds from the 2010 budget to the 2011 spending plan.
“All of us, as elected officials, have to accept whatever happens,” said Rosenblum, who is running for town supervisor in the upcoming fall election. (Moran is not running for reelection.) “It is also important for people to understand that we were not part of Jeff’s process in the preparation of the budget and moving money from one place to another. Jeff does not seek our advice (in that process). If I were in his shoes I would have done it differently, but we are different people.”
Added Rosenblum, whose first term on the Town Board expires at the end of the year: “When I become supervisor there are a few different things that I will do. From day one, whenever a transfer is made from one account to another, or something similar is done, automatically the entire Town Board will know in advance. Also, we need to reach out to members of the public to review quarterly (financial) results and possibly catch errors. We have enough CPAs in Woodstock to probably fill the Great Room (at the town offices).We would have more eyes involved in the process, which would also create a friendlier way of handling our money.”
Councilman Jay Wenk, who is seeking election in the fall to a second consecutive term on the Town Board (he also served on the board in the 1990s), said that he “absolutely” accepted responsibility for the budgetary oversight, even though he abstained in the vote to adopt the budget. His abstention, he explained, was a protest against the federal government’s pursuit of foreign wars using tax revenue that could be applied to improving domestic economic conditions at the state, county, and municipal levels.
“Nevertheless, I’m part of the (Town Board) gang and have to accept responsibility,” he said. “I give (councilman) Bill McKenna great credit and hosannas for catching the error.” [Note: McKenna, upon learning of the mistake and its ramifications, informed Woodstock Times, which reported the disclosure in its May 19 issue.]
Previously, Moran, in his capacity as the town’s chief fiscal officer, accepted full responsibility for the miscalculation that led to the shortfall. If the supervisor sincerely considered himself responsible for the mistake and its consequences, said Wenk, he should “cough up the money” out of his own pocket to “fill the hole.”
Wenk stood by his decision to abstain from the vote on the budget, although Moran and others at the time deplored the action as an abrogation of what some view as a council member’s most important responsibility. “I have thought about it, am glad I did it, and still believe it was the right thing to do,” said Wenk. “If the Town Board was truly interested in our well-being, it would demand that those (tax) dollars come home instead of funding wars based on lies.”
McKenna, who is midway through his first four-year term on the board and is this not up for reelection this year, claimed a share of responsibility for the problem at hand. “The supervisor proposes the budget. He also proposed the (transfer) line. But we all had an obligation and a responsibility to look over and question the budget, and none of us questioned that line.” In the meantime, said McKenna, he would strive to achieve even greater savings in the remaining months of 2011 and to find ways to leaven any fiscal burdens that imperil the 2012 budget. “We have got to do better than just cover this $220,000 (general fund) deficit,” he said.
Councilwoman Cathy Magarelli, who, like McKenna, is halfway through her first term, in a May 8 interview offered her account of the budgetary episode. “Some issues happened prior to Bill McKenna and I getting on the Town Board,” she said. “The amount of unexpended funds transfers had been incorrect before and carried through to the current year. Of course we all bear some responsibility. I will be 100 percent more cautious and questioning about the next budget. It’s generous of Jeff to assume responsibility, but I also feel pretty responsible. In the future I will be watching much more closely when it comes to spending in all of the individual town departments.++