The town of Houlton’s operating surplus is dangerously low, according to the most recent audit.
Ron Smith of RHR Smith and Company said the Shiretown is a frugal town, but revenue is not coming in as projected.
“Operations, general funds to run town government, is low,” he said. “You have about two weeks’ of operating expenses. That is just dangerously low for where we would like to see our municipalities. You cannot let it go any lower. You are not in the best position you could be to weather this financial storm in the state of Maine.”
With the state budget yet to be decided, Smith said revenue sharing could become a thing of the past and homestead exemptions may be eliminated, depending on action in the legislature.
Town Manager Eugene Conlogue said in his report, “Towns, in general, are not doing well with this [state] budget whatsoever. We do lose significant amounts of revenue sharing, although the good news is they have restored some of what the governor wanted to eliminate.”
Governor LePage had wanted to suspend revenue sharing for two years, which Conlogue noted probably would have led to its elimination.
The Appropriations Committee came to a compromise, but statewide the amount of revenue sharing the towns would have had this current year was just shy of $100 million, and further reductions take it to $65 million.
“If you look at Houlton as an example, under the way the law is on the books in Augusta, we are entitled to 5 percent of sales and income taxes as revenue sharing,” said Conlogue.
However, next year, the revenue sharing amount is projected to be $367,000 and the year after that, $353,000, which is a big drop from $575,000, noted Conlogue.
“This year, we have to cover $121,000 worth of loss in the remaining six months of the year,” he said. “Ninety-two thousand dollar increase for the last six months includes teacher retirement.”
Chairman Paul Cleary asked when town administrators went to Augusta if the legislators actually listened. Conlogue said, “They listened, but they didn’t act on what they heard.”
As much as the Board of Budget Review, town manager and town council scrutinize a budget, Cleary said the town could still be looking another 1-mill increase.
“They aren’t the ones who will be getting the phone calls when tax bills go out in July,” said Cleary. “Call Joyce Fitzpatrick. Call Roger Sherman. The town did its job. People in Augusta didn’t do their job.”
Cleary noted the Board of Budget Review, town manager and town council would have to come back and find $212,000 worth of cuts.
“And then what happens?” he asked. “Where do you cut? What services are lost? What happens with the town of Houlton?”
Cleary asked Conlogue to come back to the council with what a $212,000 cuts in services would look like.
“Not that we would do it,” Cleary said, “but just to show people what it would look like and how drastic it would be to this town.”
Conlogue said the state budget could go back and forth several times between the Appropriations Committee and Governor before there is an adopted state budget.
Back to the audit, the town had $1.8 million of assets at Dec. 31, 2012, with liability and obligations at about $1.4 million, leaving a surplus or equity of $387,000.
Houlton’s operating budget is $8.5 million. Smith would like to see a town the size of Houlton have at least 30, 60 or 90 days’ of expenses in its surplus account.
For Houlton, those figures would translate to $600,000 for 30 days of operating costs; $1.2 million for 60 days; and $1.8 million for 90 days.
When Smith broke down the audit report, he noted, revenue projections set by the town came in $244,000 less, creating the budget chasm, a big part is rescue fees were down. A year ago, numbers were looking promising for the town, as it held $473,000 in surplus up from the 2011 amount of $254,000.
However, this year, the town offset the budget with the surplus to prevent a tax increase.
“As a town you are not overspending,” Smith said. “What magnified the problem was [lack of] revenue collection.”
Smith doesn’t want to see the town move money from the TIF or capital reserve accounts to offset regular operating expenses through council actions.
RHR Smith and Company will revisit Houlton in six months with projections and updates by Dec. 31, 2013.
“We will be a little smarter to what the state is doing,” Smith said.
In other business:
• Council accepted a scoop backboard stretcher and head mobilizer for the Houlton Ambulance Service in memory of Maurice Blanchette, Jr. and his family. Blanchette was a paramedic who retired due to illness after working 24 years for the ambulance service. He passed away June 21, 2012.
• Council approved request from Cary Library Board of Trustees to allow wood pellet fired boiler to be added to existing heating system at the library.
• Council approved liquor license renewal for Taste of China.
• Council accepted bid of $66.29 per ton from Cargill for the town’s winter salt supply. Last year, it was $65.33 per ton.
• Council accepted to write off personal property taxes from 2007-2011 assessed to Steve Rogers doing business as Shiretown Video and Variety as uncollectible.
• Council heard the introduction on cemetery perpetual care costs. First reading will be June 24, with public hearing on July 8.
• Another economic workshop will be held next Monday, June 17, at council chambers at 6 p.m.