Budget scrutiny is a good thing; hostility is not

As we work our way toward St. Patrick’s Day, the onset of spring (at least by the calendar), and Easter, the first significant day in March is today: March 15. According to the Town of Winchester charter, March 15 is the latest day by which the town manager is to provide a budget to the Board of Selectmen. Also in accordance with the charter, the chairman of the Board of Education is required to submit a detailed departmental estimate of expenditures and revenues to the town manager.

The proposed budget for the next fiscal year, which begins on July 1 and runs through the following June 30, has been a challenge to develop, perhaps even more so than previous budgets. The historic skepticism with which previous budgets have been received is well-known throughout town. Public scrutiny of the budget should be part of the entire budget process; closed-mindedness and hostility should not.

The preparation of this year’s budget has been much more detailed by every member of the town staff. For previous budgets, including last year’s, many revenues and expenditures were simply accepted at face value, primarily because of staff experience. This year, we sought to determine the “science” behind each revenue and expenditure in order to develop a more thorough, transparent and complete budget.

We determined the foundation of each projected revenue, such as property taxes and state funding, both of which comprise the bulk of revenues for the town. The state revenues are based upon reports from state agencies as to what the projected revenue will be. These revenues, admittedly, are based upon the governor’s own proposed budget, which may be subject to change as the General Assembly performs its own budget tasks. For now, though, we will use the numbers from the state, but, if needed, those revenues (and related expenditures) can be subsequently amended.

Several “new” revenues will be included in the budget. These revenues were previously included in budgets, but they were not, in my opinion, sufficiently documented. For example, several employees have a portion of their wages paid by revenues from the water and sewer funds. Those revenues were “masked” in the water and sewer funds, which had the effect of understating the wages of those employees. In the proposed budget, these revenues will be shown as administrative revenues from the water and sewer funds and employees’ entire wages will be indicated.

Similarly, the cost of medical benefits was understated by combining the employee contributions and the premium cost on one budget line. In the proposed budget, employee contributions will be shown as a revenue and the actual premium cost will be shown for each department.

Water and sewer debt service costs will be included for the first time in the general fund (those costs had been previously included within the water and sewer funds). Corresponding revenues to the general fund from the water and sewer funds will offset those “new” expenditures. Again, these changes will significantly increase the budget “bottom line,” but the changes are mostly related to a more detailed accounting than has been previously demonstrated in the budget. This should provide greater transparency in the budget for the community.

One component that will not appear as a revenue is the elimination of a portion of the “receivables” due to the town from the water and sewer funds. As indicated in the report presented by Mr. Chris King of King, King & Associates, these receivables amount to approximately $3 million. Right now, this amount is incorporated into the town’s “fund balance,” but it is unexpendable — it is nothing more than a giant IOU. The payment over the next several years on the receivables will simply convert the IOUs to cash.

Accordingly, what will appear in the budget as expenditures will be the subsequent payment to other funds or accounts to which the town itself has incurred similar IOUs. Over the past several years, these IOUs, both “incoming” and “outgoing,” have unaccountably proliferated. Beginning to address these issues is a significant focus of next year’s proposed budget.

In general, the proposed budget will hold overall expenditures to a similar level to this year, including funding the Board of Education at the Minimum Budget Requirement level.

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Finally, I wish to thank Ms. Jane Wall, who has served admirably as the interim finance director over the past few months. Most of you have little idea of how little she had to start with in her effort to rebuild the accounting procedures and policies. She has garnered the respect of everyone at Town Hall for her ability, her candor and her dedication. Her efforts to restructure the town’s financial system and records simply cannot be underestimated. Best wishes, Jane. I will miss you.

Dale Martin is the town manager of Winchester.