La Plata council split about handling FY2017 budget deficit
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.