HOULTON, Maine — A decrease in revenue from the town’s ambulance department, coupled with a large increase in fuel costs, has the town seeing red.
Houlton Town Manager Eugene Conlogue informed the town council Monday evening that the municipality could be facing a shortfall in its 2012 budget based on staff estimates.
“As 2012 progressed, we started seeing some very glaring issues,” Conlogue said. “Some of our revenues were underperforming and some expenses were tracking higher. It looks like, for the end of the year (2012), there will be a deficit.”
The overlay account is additional money set aside when the budget is made to give the town a financial cushion to fall back on if revenues are lower or expenses are higher than anticipated. If it is not used in a fiscal year, the money goes into the town’s fund balance and can be used to help lower the tax burden.
“The overlay is there to cover whatever shortfalls we have,” Conlogue explained.
The town is short about $204,000 in revenue, with the biggest shortage found in the town’s ambulance revenues account ($151,732). The ambulance department is typically one of the largest money-makers for the town, making income by transporting patients to other medical or mental health facilities.
State revenue sharing was also decreased by nearly $71,000.
Fuel costs, which are primarily No. 2 heating oil, were over budget by about $70,000, but because some of the other expense lines were under budget, the net increase in expenses was estimated at $22,000. The net effect for the town is a deficit of $226,000, based on the estimates made by his staff, Conlogue said. The final audit figures were expected to arrive in the coming weeks.
Council chairman Paul Cleary asked if the expenses and revenues had been modified for the 2013 budget since the town now has a better idea of where their projections should be.
“Have we adjusted most of our fuel accounts?” he asked.
Conlogue said the town has modified its fuel lines to factor in additional money, but the amounts put in for 2013 would not be sufficient if the current trend of high fuel prices continues.
“We still have not budgeted at the same level of what we spent,” he said. “If the prices stay the same as last year, we would be about $40,000 short next year.”
Clearly said missing the fuel line by $70,000 was difficult to swallow.
Councilor John White said the council should start taking hard looks at whether purchases to be made were necessary, even if the money was in the budget.
Conlogue said by using the $120,000 in the overlay account, the town was still facing a net deficit of about $106,000. To balance the budget, the town will have to take money from its fund balance to cover the shortage. As of Dec. 31, the fund balance was about $473,000.
“I do anticipate having a net deficit for the year and it will be made up from the fund balance,” Conlogue said. “We’ve all talked about how we need to build that (fund balance) up and not take it down, but last year was not a good year.”
He added the fund balance was “dangerously low” and the council may want to consider an unpopular alternative in the future.
“Nobody wants to raise taxes, but sometimes it is prudent to consider,” Conlogue said.