Woodstock supervisor Jeff Moran dropped a bombshell near the end of the Town Board’s October 18 meeting, disclosing a major mistake in the tentative 2012 municipal budget he unveiled two weeks earlier and warning that the town faced dire consequences unless it eliminated the local emergency dispatch department from next year’s final spending plan.
If the Town Board adopted the tentative budget with the error intact, the result would be a 2012 town budget that apparently complied with a state-mandated 2 percent cap on property tax increases, but left the town with a dangerously low “rainy day” fund balance.
In order to bolster the fund balance and still meet the terms of the tax cap, Moran recommended that the board replace the town’s nine-member dispatch department with the county’s dispatch service, thereby achieving a minimum of $120,000 in annual savings.
Reading from a prepared statement, the supervisor said, “The economy remains troubled, we can expect no relief in the short term, and our fund balance can be reduced no further. If we do not take the drastic but necessary step of eliminating Police Dispatch, the town risks insolvency in the near future.”
According to Moran, a conversion to the county’s dispatch service would cost the town nothing because the service is funded by county tax levies. The supervisor said that he had also explored the possibility of consolidating Woodstock’s dispatch service with those of the towns of Saugerties and Ulster, but concluded that the process would be lengthy and difficult.
The error in the tentative budget — a grossly inflated estimate of 2011 year-end unexpended funds that would be applied to the 2012 budget — was discovered by the town’s outside accountant, the Kingston firm Kimball & O’Brien. Only six months ago, in April, Moran announced that the accounting firm had detected a similar mistake, amounting to a $350,000 shortfall, in the current year’s budget. The supervisor attributed the current error to the town’s use of “antiquated” accounting software, but took full responsibility for it.
Moran’s tentative 2012 budget included a proposed transfer, or appropriation, of $162,700 in anticipated unexpended funds from the current year. In his accompanying message on October 4, the supervisor reported that the transfer would leave the town with a “rainy day” fund balance equivalent to 6 percent to 8 percent of estimated expenditures from the general fund. The accountant’s recent discovery reveals, however, that the transfer would result in a fund balance of only 3.8 percent — far below the level of 10 percent to 20 percent that the state recommends for municipalities.
“We can compare this fund balance to a household operating on an annual budget of $100,000 with only $3,800 in savings,” said Moran, reading from a prepared statement. “This slim margin would be insufficient to cover unexpected costs or emergency expenditures.”
The tentative budget, reflecting a $6.87 million overall spending plan, proposes a 2.47 percent increase in the townwide levy and a 2.76 percent tax hike for the general fund. Although the tax increases exceed 2 percent, the plan reportedly meets the terms of the cap because expenses such as mandatory pension contributions can be deducted from the calculation of the cap.