Selectmen/Finance Board finally nail deficit amount
Published on March 3rd, 2004
STONEHAM, MA - After weeks of lingering rumors that the town's FY05 deficit could swell to as much as $5.9 million, the town's Finance and Advisory Board and Board of Selectmen hammered out a solid working shortfall figure to insert into the budget Tuesday night.
In the end, the determination that the shortfall totalled $4.3 million mirrored estimates presented to citizens at a public forum on Jan. 12.
"Tonight was a huge waste of time. I think this whole thing is a farce and we've wasted a month and a half now on the budget," remarked a disgusted Charlie Smith following Tuesday's Selectmen meeting.
"We just spent over three weeks rehashing all the same information that was presented in January," added Smith, who has appealed to board members to start making cuts immediately.
While Selectman Tony Kennedy agreed that the $4.3 million deficit figure decided upon last night in effect meant that the Selectmen were on track all along, he thought the joint meeting between the two boards was necessary to eliminate any doubts that the deficit might swell by millions.
"Coincidentally, the number is very close to what we decided on Jan. 12, so we just wasted three weeks spinning our wheels. But we needed to make sure. That's why I spent the entire weekend with various members of the Finance Board to work out these numbers," Kennedy commented.
Now that the deficit is finally agreed upon, the Selectmen plan on instituting department cuts next Wednesday at 7:30 pm. While the Selectmen didn't publicly state that an override amount could also be decided at that juncture, board members didn't rule out the possibility.
Despite the fact that the decided upon $4.3 million deficit was already considered in January, the figure is nearly $400,000 higher than the $3.9 million deficit estimates provided in Town Administrator David Berry's budget.
While that budget in reality assumed that the town was facing a $5 million deficit, Berry lowered that number by utilizing $500,000 from the stabilization fund and $200,000 from the overlay reserve. Bringing the deficit down to $4.3 million, the town administrator further reduced the shortfall to $3.9 million by cutting a $100,000 cushion built into the budget and assuming that the town would collect nearly $288,000 from increased department fees.
However, according to Finance and Advisory Board member Richard Gregorio, the town has assumed an additional $200,000 increase in health insurance costs, swelling Berry's deficit projections to $4.1 million.
Gregorio also expressed skepticism with withdrawing funds from the stabilization account when the budget was dependent upon special revenues that have yet to materialize.
Claiming that the town used the same approach last year and found itself in a dilemma when Town Meeting rejected the sale of Atwood Avenue and Emerald Court lots, the former Finance Board Chairman characterized the double dip as a poor business practice.
"I'm not comfortable with using portions of the stabilization account and counting on new revenues. If you add those in there and they don't materialize, you'll find yourself in a situation where you've overhit the stabilization account," Gregorio cautioned.
Heeding the advice, the Board of Selectmen then agreed to reject Berry's proposal to collect $194,000 to keep the town's recycling program intact.
"By initiating a rubbish fee or a recycling fee, you can't claim it on your income tax. Now you're hitting families two times. I'm voting against it," said Ciccarello, who's motion resulted in a unanimous vote to remove the funds from the budget.
However, because instituting the fees included nearly $100,000 in overhead costs, Berry told the Selectmen that the net loss from the rejected fees would amount to $94,000.
In addition to that $94,000, the Selectmen also heeded the Finance Board's request to fund the reserve and capital budgets, two accounts Berry zero funded. In the end, the Selectmen decided that in total, those two budgets should be funded for a combined $100,000.
Adding the reserve and capital funding as well as the $94,000 loss from the recycling fees, town officials came to their official determination that the budget deficit totalled $4.3 million.
However, that figure also presupposes that Town Meeting will approve the use of $600,000 in funds from the stabilization account and $200,000 from the overlay reserve. Without a favorable vote by Town Meeting for those uses, the deficit totals $5.1 million -- $100,000 more than the $5 million estimate provided by Berry.
While Pecoraro argued that removing $600,000 from the stabilization account was too much, she was overruled by the other four board members in a 4-1 vote.
Commenting on the final estimates that the deficit equals $4.3 million, Finance and Advisory Board Chairman John Warren, who last week suggested the shortfall was closer to $5.9 million, claimed that he was happy with the outcome of the meeting.
"I think we're at least at a starting point that we can work with," commented Warren, whose board had advocated placing as much as $600,000 into the capital budget.
While the Selectmen in turn only decided on funding capital accounts by $30,000, Warren stressed that his board served its function by notifying the Selectmen of the consequences of including such a low amount.
"The Selectmen decided to use less capital, more stabilization, and less reserve monies. So they had a discussion and they're aware of the consequences. We told them what we thought but it's their budget," said Warren.
"I think part of this process is getting together and hammering things out...So you're right, if it was our job to present the budget, our numbers might not agree with theirs. But the fact is that's not our job," the Finance Board Chairman added.
Subscribe and get Home Delivery of The Independent
Save 36% off the newstand price — that's like 18 FREE issues!