State raps town for oversize fund balance

RED HOOK, N.Y. >> The town has been urged by the state to reduce a fund balance that has grown by 213 percent, to more than $917,000, over a five-year period.

A “Financial Condition” report for Red Hook, newly issued by the state Comptroller’s Office, covers the period Jan. 1, 2013, to Dec. 31, 2017.

“The [Town] Board did not effectively manage unrestricted fund balance,” the report states, though it mistakenly said the fiveyear increase was 313 percent, rather than 213. (A Comptroller’s Office representative acknowledged the math error on Monday.)

Comptroller’s Office auditors said the fund balance is likely to be another $10,000 higher at the end of 2018 if the board does not take action.

The Comptroller’s Office recommended the town:

• Use excess money as a financing source in a manner that benefits taxpayers.

• Revise the fund balance policy to ensure reasonable levels in the balance and define the timing and means of replenishment. • Formalize and adopt comprehensive multiyear financial and capital plans.

“Towns should not exceed a reasonable amount of unrestricted fund balance consistent with prudent budgeting practices to ensure sufficient cash flow,” the report stated. “New York state Town Law allows a town to establish a contingency account of up to 10 percent of appropriations to provide for town operations when available fund balance is insufficient.”

Red Hook’s fund balance at the end of 2017 equaled more than 53 percent of the town’s budget

Red Hook Supervisor Robert McKeon said Monday that the town will file a corrective action plan that follows the state’s recommendations.

“The state Comptroller’s Office has requested that we assign some of our fund balance toward anticipated capital projects,” he said. “We’ve been reticent to do that until we’re aware of the true cost by going out to bid for these projects.”

McKeon also said the fund balance reflects “the financial health of the town. We’re in a strong position.”