La Plata coun­cil split about han­dling FY2017 bud­get deficit

Maryland Independent - - News - By TIF­FANY WAT­SON twat­son@somd­news.com Twit­ter: Tif­fIndyNews

The La Plata Town Coun­cil is still de­vel­op­ing ar­eas of the pro­posed Fis­cal Year 2017 bud­get and met on Tues­day to make an ad­just­ment due to a sur­plus in the san­i­ta­tion en­ter­prise funds.

The coun­cil had sev­eral work ses­sions in April for bud­get re­view and at the last busi­ness meet­ing it re­viewed items in the town’s bud­geted gen­eral funds and en­ter­prise funds.

At Tues­day evening’s coun­cil meet­ing, the town’s fi­nan­cial de­part­ment staff came back to the coun­cil with an ex­pec­ta­tion that they will be mak­ing changes to the struc­ture of the bud­get and vari­ables that are af­fect­ing pro­jec­tions.

“We are show­ing a deficit in the op­er­at­ing bud­get,” said Town Trea­surer Robert Oliphant. “We had talked about things that the town coun­cil wanted to do to make the fis­cal sit­u­a­tion bet­ter such as pay­ing off a debt that we have with the de­part­ment of hous­ing and community devel­op­ment, tu­ition re­im­burse­ment for the po­lice de­part­ment, new park­ing at Wills Park, and the bud­get orig­i­nally had a place holder for new projects in pub­lic works, san­i­ta­tion and wa­ter and sewer. It did end up mean­ing that we would spend more money out of the ve­hi­cle re­serve funds ac­count.”

Oliphant be­lieves the FY2017 bud­get is pick­ing up the full de­pre­ci­a­tion in the san­i­ta­tion en­ter­prise funds.

“We are propos­ing to uti­lize [funds] for things that are one time kind of ex­pen­di­tures, like the pub­lic works fa­cil­i­ties as­sess­ment and in some of the town’s ve­hi­cles, which we have enough to cover. But when we do that we still end up in a sit­u­a­tion where we’re pro­ject­ing a deficit and we need to have a bal­anced bud­get and have that money in the ve­hi­cle re­serve fund if some­thing does hap­pen,” Oliphant said.

“The rea­son we set this up years ago was to make sure it is al­ways there and we wouldn’t have th­ese one-time ex­pen­di­tures that shock ev­ery­body,” Coun­cil­man Keith C. Back said.

Town Man­ager Daniel Mears said the coun­cil has been very con­ser­va­tive over the last few years in re­gards to bud­geted funds and the coun­cil would like to have funds avail­able for con­struct­ing the town’s own trans­fer sta­tion in fu­ture years. In the town’s san­i­ta­tion en­ter­prise fund, the bud­get re­flects funds to con­duct a fa­cil­ity study to look at how the town could best use the pub­lic works fa­cil­ity for fu­ture needs, specif­i­cally by adding a trans­fer sta­tion at the fa­cil­ity.

But Back asked why the town has an in­crease in the bud­get if it is above and be­yond how much will be used for the pub­lic works study and other en­ter­prise san­i­ta­tion funds.

“We’ve been very con­ser­va­tive be­cause I rec­om­mend to you ev­ery year that we should in­crease based on CPI [Con­sumer Price In­dex] to stay up and keep our bud­get,” said Robert F. Stahl, the town’s di­rec­tor of op­er­a­tions. “The money is go­ing to­ward a trans­fer sta­tion that we know we want to do in the fu­ture. Yes, it’s go­ing into the fund bal­ance but if we had to turn around and bor­row money later I think you’re tak­ing from Peter to pay Paul. In this sit­u­a­tion you know you’re go­ing to ask for cap­i­tal ex­pen­di­ture in the fu­ture to build a trans­fer sta­tion which we’re try­ing to save for in ad­vance be­cause the trans­fer sta­tion will cost as much as $750,000 or close to a mil­lion dol­lars.”

Stahl said re­cy­cling has changed and a lot of ju­ris­dic­tions re­ceive ma­jor in­creases be­cause of the way they struc­ture their re­cy­cling but the town has not had that is­sue.

Back asked, “So why are we adding to it?”

“You’ve got more than you need and the whole idea of the trans­fer sta­tion was the fact that they can take it some­where where it was cheaper and that would off­set some of the op­er­at­ing dif­fer­ence,” Back said. “Es­pe­cially if we have a ma­jor sur­plus in a fund that we cur­rently have three quar­ters of a use for. The econ­omy is not that good still for a lot of peo­ple so why drive a num­ber up just to drive a num­ber up. We can put CPI in if there’s not a rea­son.”

Coun­cil­man Wayne Win­kler dis­agreed and sug­gested that the ve­hi­cle re­serve funds need to be kept as is be­cause the town never knows what’s go­ing to hap­pen with things chang­ing con­stantly.

“Three of us agreed that we didn’t want to drive down to zero be­fore we do any­thing and keep what’s in the re­serve es­pe­cially if there’s a pur­pose for it,” Mayor Roy G. Hale said. “We’ve had prob­lems in the past where we if we waited with­out do­ing that, then we’ve had to make a ma­jor in­crease in the fund rather than smaller in­creases as you go along.”

“Pre­vi­ously the coun­cil had agreed to a small in­crease in this fund to cover in­creased costs due to in­fla­tion. Be­cause this fund has a fund bal­ance be­fore add- ing the pro­posed in­crease, the ma­jor­ity of the coun­cil opted to not add the small in­crease and keep the quar­terly charges the same as the cur­rent year. Some of the coun­cil mem­bers were a lit­tle more con­ser­va­tive and wanted to add the in­fla­tion ad­just­ment,” Hale said.

In the end, af­ter a 3-2 con­sen­sus, the coun­cil asked that the bud­get be pre­sented with no in­crease to san­i­ta­tion rates for the next fis­cal year.

The coun­cil also dis­cussed eval­u­at­ing meth­ods to gain cost ef­fi­ciency in ve­hi­cle pur­chases. While it is still be­ing ex­plored, the bud­get will con­tinue with the cur­rent ve­hi­cle re­serve fund­ing process.

Mears said the pro­posed FY2017 bud­get will be fi­nal­ized for pub­lic pre­sen­ta­tion next Tues­day. Af­ter Tues­day’s pub­lic hear­ing, the coun­cil will have a work ses­sion to re­view the pub­lic com­ment re­ceived and the bud­get or­di­nance will be con­sid­ered the fol­low­ing Tues­day.

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