State Audit Criticizes Mt. Pleasant Budgeting Practices
A municipal audit by the office of state Comptroller Thomas DiNapoli is calling on the Town of Mount Pleasant to reform its budgetary practices, including curtailing the town board’s heavy reliance on fund balance.
The report, which covered the period from Jan. 1, 2012, through Aug. 13, 2013, cited particular concern about officials’ dependency on the reserve funds during the past few years. As a result of the town’s use of fund balance, in part to help keep property taxes low, the town failed to adopt structurally balanced budgets, according to the audit.
“Over the last five years, the Board has routinely relied on fund balance as a financing source for operations,” the comptroller’s report stated. “By continuously appropriating fund balance each year, the Board gradually depleted the unexpended surplus fund balance until it became (a) deficit in 2011.”
Mount Pleasant’s town-wide fund balance fell by about $2.4 million over the past five years, plummeting from $3.1 million at the close of 2008 to $743,890 at the end of last year. While the fund balance at the end of 2012 was down close to 75 percent from four years earlier, it did show an improvement over 2011, when there was just $19,000 in reserve, the comptroller’s report noted.
In its critique, the report pointed out that town officials failed to adopt a policy or to ensure that procedures were in place to help regulate the level of fund balance that should be maintained.
Representatives of the comptroller’s office have spoken with town officials about the report and called on the board to revamp its budgeting procedures. A written corrective action plan should be submitted to the comptroller’s office within 90 days. The state is also asking the town to make the corrective action plan available for public review.
Supervisor Joan Maybury responded that the town board needed to use fund balance in the previous few years to help balance the budget in difficult economic times. Last week she said the town’s 2014 budget, which the board is currently working on, will hold down taxes while providing necessary services and feature healthy reserves of more than $1.5 million.
She said the town’s financial situation “right now is very good.”
The comptroller’s office provided a series of recommendations to the town, including creating written policies and procedures that define reasonable amounts of unexpended surplus funds that the town should maintain; taking necessary action to hold fund balance at appropriate levels; and to identify other funding sources that can be used if these moneys are no longer available.
Also, officials should only use available fund balance to finance operations in succeeding years’ budgets, the comptroller recommended.
In her response to the state last month, Maybury noted there had been an increase in uncollected taxes and a decrease in mortgage tax revenues, which required action by the town.
“The strong corrective action included the town relying on fund balance as a funding source for operation, a reduction in expenses by elimination of personnel (a total of 12 layoffs or reduction to part-time) and an increase in tax collection by instituting new procedures,” Maybury’s letter stated.
The town’s 2014 spending plan has fund balance estimates of $1,550,715 in the town-wide general budget, $1,973,974 in the town outside the villages budget and $569,951 for the highway department.
“The town board will certainly take the recommendations cited in your report under consideration,” Maybury stated in her letter to the state. “We certainly expect with the economy improving and some of the unfunded mandates levied against local governments under tighter control, our financial future will continue to be bright.”
