Officials disagree over deficit amount
Published on July 23rd, 2003
STONEHAM, MA - Town officials scrambled yesterday to address a potential $400,000 deficit for fiscal year 2004, which officially began this July 1.
And while a tidal wave of uncertainty looms over the exact amount of the shortfalls, the Town will definitely lose at least $150,000, according to Finance and Advisory Board Chairman John Warren.
Late last week, Town Administrator David Berry and Town Accountant Ron Florino recognized an approximate $300,000 discrepancy between the State Aid totals on a current Department of Revenue (DOR) cherry sheet for the Town of Stoneham and the state funding Town officials planned on receiving at May's Annual Town Meeting.
Further noticing an additional charge of $48,000 for three Stoneham students attending the Minuteman Vocational School and $50,000 in State Assessment fees, funds paid by cities and towns for state-run services such as the MBTA, that deficit quickly climbed to over $400,000.
Meeting early yesterday morning at Town Hall to address those concerns, Town Administrator David Berry and representatives from the Finance and Advisory Board, Board of Selectmen, and School Committee struggled with several conflicting cherry sheets provided by the state as they attempted to outline the specifics of the deficit.
"These are still estimates but what you can see here is that Stoneham is $300,000 short of what we had projected for. There are things on the cherry sheet that were never there before, and there are also things they took away...This is only preliminary. The game isn't over yet. But at this point, we might feel like we're losing," announced Warren to the gathering.
"The other thing is the state charges are $50,000 higher than they're supposed to be...The Finance Board would also like to recognize a $48,000 (for the Minuteman Vocational School) for 2004," Warren added, citing total loses of approximately $400,000.
Almost immediately after Warren presented his figures, Selectman Tony Kennedy questioned the reliability of the spreadsheets being used, claiming that the numbers differed from figures posted July 9 on the DOR website. According to Kennedy's estimates, the Town would receive $8,817,113 while Warren claimed the Town should receive approximately $9.1 million from the state.
Although both estimates differed significantly, oddly both Warren and Kennedy were in agreement that the Town stood to lose $400,000 total for fiscal year 2004.
Increasing the chaos and confusion surrounding the correct figures, nearly eight hours after the meeting ended, both Kennedy and Warren flip-flopped and claimed the Town only stood to definitively lose $150,000, not the $400,000 discussed during the summit meeting.
According to Warren, after closer examination of the numbers involved, the Town will lose $50,000 from previously anticipated State funding, and will face nearly $100,000 in increases from the Minuteman Vocational School and State Assessment fees. What the Town can't determine for certain is whether it will receive $254,712 in Special Education Circuit revenues. Although the state has committed to doling out $120 million in funds to various cities and towns for the program, the exact monetary figures cities and towns will receive is up for grabs, said Michael Lindstrom, a spokesperson for Senator Tisei.
In a post-meeting interview, Warren offered assurances that the malestrom of confusion swirling around the deficit figures would quickly clear up.
"It's often difficult when we have these meetings because we disagree on the figures. But we're trying to sort it out. That's why the Finance Board calls the summit so we can get together and hash it all out," explained Warren.
Saying that solutions to the new deficit figures depend on the final amount of losses the Town actually realizes, some municipal officials offered a plethora of possibilities.
"There's a possibility we might want to tell the Town Administrator to process some layoffs before October Town Meeting," suggested Kennedy, who thought the Town stood to lose at least $300,000 at the time of his comments.
While Town Administrator David Berry refused to speculate on the possibility of layoffs or further department cuts before a final dollar amount was determined, he claimed that finding additional savings could close the gap.
"You can try to make savings whenever possible, either by not filling positions or leaving them open. We have free cash but you want to save as much as possible for 2005," Berry said, also suggested that the Town could drop Warrant Article Five, a potential $25,000 increase in spending to restore three traffic directors in Town and reinstitute Sunday hours at the library.
The Town has also seen an approximate $5000 increase in state reimbursement for school construction projects and could possibly receive more than the $60,000 the Town anticipated on receiving for leasing the Stoneham Arena.
However, both those increases could be offset by a lower than anticipated $163,000 selling price for a Town owned Atwood Avenue lot. Because neighbors in the area want to place a bid on the lot to eliminate any chance the property will be developed, the lot could sell for $13,000 less than anticipated, claimed Warren.
Regardless of the exact deficit numbers, Kennedy claims that faulty legislative figures given to the Town are responsible for the loss.
"We did our best estimate for Town Meeting based on information from our State representatives. We thought it was a reliable number," commented Kennedy.
Berry agrees with Kennedy, claiming that throughout the budget process, Town officials paid close attention to the legislature's projected deficits for 2004.
"I think everybody's comfortable with what they did...These numbers that are here now are brand new in the cherry sheet. The numbers we used at Town Meeting were the only numbers we had, knowing that there could be some changes," claimed Berry.
Yet according to State Senator Richard Tisei, the newest reductions in Stoneham's 2004 budget should come as no surprise to Stoneham officials.
"It's because they relied on the House One budgets," said Tisei, referring to the spreadsheets Warren used at the summit meeting. "In March, I sent a memo telling all selectmen and mayors in my district not to rely on House One numbers because they were likely to change, especially this budget year," the Senator explained, adding that he sent the numbers after Therese Murray, the Chairwoman of the Senate Ways and Means Committee forecasted a darker picture for the budget.
Specifically, the memo reads that, "City, town and school officials should be aware that a worst case scenario would include 15-20 percent reductions in Lottery local aid, additional assistance and chapter 70 for fiscal year 2004."
"In recent years, some cities and towns built local budgets on the assumption that House 1 local aid figures, at a minimum, would be adopted in the final state budget. To make such an assumption in these times would be very imprudent..." the memo continued.
While Town officials acknowledge receiving the correspondence from Tisei, some refuse to acknowledge that the Town erred in not following the letter's advice.
"Those numbers didn't get cut. If they got cut, they got cut subsequent to the budget. It was his (Tisei's) assumption. An assumption is just that, an assumption. We chose to do it that way because we thought it was a false assumption," said Berry.
Asked whether he thought that the Town made a mistake, Kennedy responded by saying he thought the Town took "the wrong guess".
"It's hard to answer that because these (the figures in the letter) were only estimates. At the joint meetings, it was a decision that was made by the Town leadership. I think we chose 10 percent as our reduction. I wouldn't say we made a wrong decision, we just took our best guess. So I guess I would say we made a wrong guess. It wasn't cut and dry. We just did what we were supposed to do," Kennedy commented.
According to Warren, the Town leadership did not ignore Tisei's remarks. Claiming that the Town relied on a State revenue figure of $9,120,614 for fiscal year 2004 instead of $9,380,256, the House One budget figures, the Finance and Advisory Board chairman believes the Town made an appropriate compromise between the two.
Despite Senator Tisei's letter, surrounding communities such as Wilmington, Wakefield, and Lynnfield find themselves in similar situations, as they built their budgets based on House One estimates.
Because Ron Florino and David Berry will alternately be away on vacation for the next couple of weeks, the Town will not be able to nail down the exact deficit projections until sometime in August.
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