Facing down the debt

WINSTED – With the town struggling to pay nearly $1.9 million in accumulated debt, Town Manager Dale Martin said Tuesday night, March 19, that he believes some bills can be deferred and adjustments can be made in the 2013-14 budget to put the town back in the black.Martin and newly hired town Finance Director Robin Manuele told selectmen that the town is currently approximately $1.9 million in debt and that the red ink has accumulated through repeated shifting of money between accounts. Martin offered two different scenarios for the proposed 2013-14 budget — one in which taxes would remain essentially flat and another in which a mill-rate increase would allow the town to add needed money to its fund balance.Under the first scenario, Martin said, the budget would come in at a total of $32,989,520. While the mill rate would increase by 4.77 mills to 30.2 mills ($30.20 per $1,000 of assessed property), overall tax collections would remain flat, since the town’s most recent revaluation reflected a 16-percent decline in property values.Martin presented selectmen with a list of selected streets in Winchester and how residents would be affected under the 30.2-mill proposal. Streets such as Cherry Street and Colony Drive would see tax decreases, while more affluent areas like Lake Drive and parts of East Wakefield Boulevard would see increases.“We’re trying to keep town revenues flat from a property tax standpoint,” Martin said. “That’s the basic foundation for the budget.”Under a second scenario, another mill would be added to the mill-rate increase to begin to deal with the town’s $1.9 million shortfall in funds.“That one additional mill is approximately $689,000,” Martin noted. When adding that to $114,000 already going into the fund balance under the first proposal, it would increase the town’s fund balance to nearly $1 million and offer the flexibility to pay overdue bills. “If we do that for two years we will have our shortfall corrected,” he added.With the optional additional 1 mill in the budget, Martin said, property taxes would slightly increase in some neighborhoods but there would still be a net decrease in taxes on streets with lower property values. The average effect of a 1-mill increase to properties sampled throughout town ranges from slightly less than $100 per year to more than $200 per year.“If people are interested I have a spreadsheet that has every single parcel in town,” Martin said. “We are working on putting this online. I will be able to tell you what your tax burden will be under any mill rate.”Martin said an increase in revenues for the town, along with spending cuts, will be necessary to contend with Winchester’s current financial situation, which has been brought on by accounting problems. Under former Finance Director Henry Centrella, who was fired amid accounting irregularities, the town had numerous unrecognized and unauthorized transfers of funds, Martin said. This came in addition to unrealistic revenue estimates that were “grossly inflated” to help balance the books.Martin also said the town had 44 different bank accounts under Cenrella’s tenure, of which about 20 have already been closed in recent weeks. Still, there is about $4.6 million in accounts payable and receivable — aka “due tos and due froms” — that have not been reconciled. Potential corrective actions at Town Hall could include furloughs or even layoffs for Town Hall staff and Public Works employees, Martin said, though he noted that the town’s savings would be minimal in the event of layoffs, so that scenario is discouraged. Early retirement has been offered to eligible employees and two newly vacant positions are not being refilled at Town Hall and in the Public Works Department. Martin thanked Interim Finance Director Jane Wall for her work in helping to identify overdue accounts and helping to sort through the financial mess and said Manuele would be continuing the work to reconcile accounts. Having spent only two days in her new position, Manuele said she was learning the ropes and researching accounting procedures used by towns of a similar size to Winchester. Though she said she was having some difficulty with the town’s accounting software, she said, “Everyone’s been wonderful. There has been a lot of support. There’s a lot of room for improvement with modernization and efficiencies, and I plan to start tackling those as soon as I can. It’s going to be fun.”Selectmen voted to schedule two required public hearings on the budget for Tuesday, March 26, and Thursday, April 4, both at 6 p.m. The first hearing will cover the Board of Education budget while the second will cover the municipal side. The annual town budget meeting will take place Monday, May 6, 7 p.m., at The Gilbert School, at which time a referendum will be scheduled.