BUDGET WORKSHOP
OCTOBER 13, 2008
The Clermont Town Board held a budget workshop on Monday, October 13, 2008 at 7:00 P.M. at the Town Hall. Those present were Supervisor Staats, Councilwoman O'Neal, Councilman Jones, Councilwoman Lent and Councilman Nolan. Others present were Judy Neary, Elizabeth Mahar, Charles Larsen, Muriel Hempel, Brian Hempel, Wendy Hempel, Natalie Carnese, Robert Desmond and our accountant Brian Fitzgerald.
The meeting was opened with a salute to the flag. Our accountant, Brian Fitzgerald, is here tonight to clarify some questions. Supervisor Staats is having this workshop videotaped because Brian Fitzgerald cannot be here at the November meeting, and this way the public will know the outcome.
Supervisor Staats made a statement about two things, which were brought up at the last meeting. One was the conversion rate on the tax rate per thousand from .37 to .66. Councilwoman Lent does see how it was done and that was her mistake. The other was the mortgage tax, which was supposed to be $70,000 and was actually $80,000. The accountant did not make the error. Councilwoman Lent has questions about the interest income and how was it accounted for, and broken down, and the unexpended balance.
Brian Fitzgerald - The interest income has been pooled into one money market account which gives us a higher interest rate and is allocated every month between the Con Ed Reserve, Building Capital Reserve, Highway and General funds.
Supervisor Staats - the questions comes from last year's budget where the interest was increased from $7000 to $20,000 and why there is such a difference. Brian said it appears that the interest was taken from the bank statement and all of it put in the general fund. Councilwoman Lent looked into this and in 2007 budget the budgeted interest in the General fund was $20,000 and Highway $5,000. The actual was $14,838 for General and $11,878 for Highway. We actually took in $26,716 which was an increase over the budgeted amount by 6.42%. In 2006 the budget for General $5,000 and Highway was $3500. We budgeted $8,500 but the actual was for General $17,309 and Highway $6,435.00 an increase of 35.8%. That is why in 2007 the interest was increased and also for 2008.
Supervisor Staats asked if it is correct that the earnings in the Con Ed fund cannot be counted in the General Fund. Councilwoman Lent checked the 2007 annual report, which was done by Brian, and it appears that it is included. She also checked the 2006 annual report done by Karp, Ackerman for these figures. Supervisor Staats only concern is that it is impossible to get that kind of return now because of interest rates. Councilwoman Lent sees the unappropriated funds on page 4 of the annual report is $377,075.00 and the cash balance is $768,771.00. Brian said no that is not correct that this is equity. It breaks down to General fund cash is $413,000, $310,000 Capital reserve funds, $149,522.00 is Con Ed, and Capital Reserve $161,024.00, there is receivables of $30,900 which is sales tax revenue, and due from other funds of $13,000.00. So our reserve cash is $310,546.00. Then there is an unreserved fund balance of $80,550.00. That comes from the budget. Councilwoman Lent would like to understand what the unappropriated or unallocated balance that the town has in General and Highway. Brian said that it is the amount, which is in the annual report. Councilwoman Lent does not see the fund balances as of the present. Brian repeated that they are the same as in the 2007 annual report, it stays the same until the books are closed.
In the Highway, Councilwoman Lent pointed out differences between the annual report for 2007 and the actual in the 2009 Preliminary budget for 2008 in account number DA5130.2 of $13,550.00. In comparing she found that the amount of Capital Projects in Highway is not correct. This will affect the bottom line when you talk about a Highway Garage. This went into a general expense and not a Capital Project. Councilman Nolan asked why Councilwoman Lent is being rude to the accountant. She does not feel that she is being rude but being factual. Supervisor Staats would like to have Brian go over the way the budget works because Councilwoman Lent does not understand. Councilwoman Lent heard that there is $22,000 left in the unexpended balances in 2008, so what is the unexpended balance. Brian said that he had answered that already and he is not going to sit here and be grilled. Councilwoman Lent stated that Brian works for the town and she would like to get an answer. Brian Fitzgerald left the meeting.
Supervisor Staats stated that you have the appropriations and revenues, you either raise tax or use funds from the bank (Correction: add ‘to make up the difference') We will raise $113,000.00 in taxes and we will still have to use $132,000 from the bank account. Councilwoman Lent has concerns that there will be more left in the unexpended balance than the $22,000.00. She asked how much was collected in total taxes for the town. She recommended checking the state website because we collect $.37 for every thousand of assessed value. We did not only collect for Highway and Fire. Supervisor Staats stated that is all that went towards the budget, the remaining collected went to the County for county tax. There was further discussion about how much will be used from the bank balance.
There was also discussion on the assessed value and our assessor doing some preliminary work to help get our assessed value raised without doing data collection. Councilman Nolan agrees that the assessed values are incorrect, but it could be arbitrary to choose certain properties and raise the assessed values. Councilwoman Lent did not say to choose certain properties. In every town the assessor updates the property cards. She believes he could do this. Supervisor Staats said that we could talk to him about this.
Councilwoman Lent said that in previous years there was no depletion in the bank account because they kept the spending low and the revenues were high, so they did not deplete the balances. This year will be different because the revenues are not as high. Councilman Nolan said that this year we are projecting lower revenues and he asked how much have we cut the budget overall. Supervisor Staats responded that we are taking cuts everywhere possible. We will have to start increasing the taxes over the next few years or we will deplete all our funds. The percentage increase sounds terrible but we have the lowest tax rate in the County, most in the County are $1.00 or more per thousand. Councilwoman Lent is against raising taxes and she feels that Henry Greenhouse will have to get out, and do a re-evaluation on properties. Councilman Nolan said even a re-assessment will not help this year, we either draw from the bank account or where will the money come from. Councilman Jones agrees that you cannot take everything out of the bank or you will use all your reserve.
Bob Desmond commented that the previous board did state what the balances were. In regards to the re-assessment, it would lower the tax rate but will not lower what is paid by the individual taxpayers, because you would be paying on a higher assessment. He does believe that there is still a need for the town garage and he understands why it is being put on hold. Councilwoman Lent asked about assessments and if they are low, sometimes peoples taxes do go down, however, some do go up. If their assessment is raised, but overall the average will not go up by reassessment. If the assessments go up, the tax rate goes down. If the assessments are down, the tax rate is up but the amount collected is the same. Councilman Nolan said the amount to be raised is determined by your budget.
Brian Hempel asked if the amount that is being talked about, as the annual negative is $130,000 based on the tax rate. It would increase from .37 per thousand to .66 per thousand. He asked, if we stayed at $130,000.00, we would have another four years if nothing else changed. A five-year surplus is quite big. His school tax (Red Hook) has increased significantly over the years. You are going to make it so that he can't live here. His children cannot buy a house, even with a good job. Raise the taxes incrementally over the next few years and not all at once. This will be easier on the taxpayer.
Councilman Nolan suggested taking more out of the bank account and raise taxes less. Councilman Jones thinks it is a good ratio as is now.
Judy Neary - Do we need to take all that money out of the bank immediately or can the money be put into a high interest raising CD and see if we can add to the revenues. Councilwoman O'Neal stated that the prime rate was just lowered to 1.5%. Supervisor Staats will be looking into this to see if it can be invested into higher yield short term CD's or bonds because now the highway garage is on hold. She asked if this is because of the economy this year and Supervisor Staats said it is because of the decline in sales tax and mortgage tax. That is the concern, because of the shortfall this year and it may be the same next year. If the economy goes up and revenues improve, we have a surplus. It would go back into our fund balance, the bank account would go up and it would be reevaluated next year. We are trying to be as conservative as possible. Judy is still concerned about how things changed from the beginning of the year when things looked so good and now they are not. Councilman Jones stated that when we came in January and it wasn't until September that we had a good idea as to what the expenses and revenues would be.
Elizabeth Mahar asked how much money did we earn in interest this year? Supervisor Staats stated that it averages out to about 2%. We can invest it now that we know we are not tying up funds for the highway garage. Elizabeth stated that the school taxes went up 20% because the market value is high, and the assessed value is low. There was discussion on the possible reasons why the taxes went up drastically in the Red Hook School district.There was discussion on data collection and using students to do this. They do have to be certified by the state. Data collection would not show up until the 2010.
Bob Desmond spoke about sales vs. assessed value. The sale prices are still higher even though there are not as many sales. The state sets the equalization rate based on the sales ratio vs. the assessed value. He also spoke about the percentage of increase per thousand if you take the same percentage on school tax; it would result in paying more money. With what has to be done in this town in the future, it is necessary to watch those reserve funds. He would be in favor of taking less from the reserve funds because in the long run you will be bonding more which will increase the tax rate. Town tax is almost insignificant compared to school tax and county portion of tax bill. Councilman Nolan asked if he could estimate the percentage of town tax. Bob would estimate 10% or 15%.
Bob also talked about interest rates in banks in Red Hook. They have been paying a high interest rate. It would be worth checking into these rates.
Judy Neary asked if people came into Grievance day would they then go to 100%. No, Bob said that three years ago when we did have a revaluation and the equalization rate went to 100%, his assessed value was raised more than the average, but his taxes did not go up very much. There was further explanation about assessed values. Supervisor Staats thanked Bob for this information.
Judy asked what would happen if you decide to raise taxes, if 50% of the people don't pay their taxes. The reply was that the County would pay the taxes and take over the property.
Elizabeth Mahar thinks that the Board should not raise taxes and wait for the economy to improve. She questioned why the highway employees are getting a 5% pay raise and no one else is getting a raise. The Supervisor explained that he has taken cuts in the budget to his account and is doing everything that he can.
Councilman Jones asked what the shortfall is on this years budget. We are short $75,000.00 and we are going to make that, not by tax increase, but by taking money out of the bank. Of the $140,000 that was estimated to come out of the bank, we are taking $210,000 out of the bank to balance the budget. There has been a trend to taking more and more out of the bank. Elizabeth asked how much was gained in interest. There was probably a surplus from 2005 and 2006. There was interest earned of approximately $25,000 but was counted as revenue. There was still a deficit beyond that.
Brian Hempel asked that the board try to curtail a tax increase because the taxes will not go down. The Supervisor and the Board will do everything they can to keep the increase down.
Councilwoman Lent asked the Supervisor if the State Comptroller's office would come down and verify our balances? He has spoken to them and they do not come down unless there is a problem. They had told the Supervisor that they do not come down for a change in administration, only if there is an issue or if you think there is a problem. He can make a request but he doesn't know if they will come. Councilman Nolan asked if they come down and go over everything or evaluate the procedures in place. Do they verify the accountant's report? Supervisor Staats said they verify the accountant's report.
Councilwoman Lent said they have been down in 1994, 1997 and in 2006 under special circumstances.
A motion was made to adjourn at 8:40 P.M. by Councilman Jones, seconded by Councilwoman O'Neal. All in favor. So carried.
Respectfully submitted,
Mary Helen Shannon, RMC
Town ClerkOCTOBER 13, 2008
The Clermont Town Board held a budget workshop on Monday, October 13, 2008 at 7:00 P.M. at the Town Hall. Those present were Supervisor Staats, Councilwoman O'Neal, Councilman Jones, Councilwoman Lent and Councilman Nolan. Others present were Judy Neary, Elizabeth Mahar, Charles Larsen, Muriel Hempel, Brian Hempel, Wendy Hempel, Natalie Carnese, Robert Desmond and our accountant Brian Fitzgerald.
The meeting was opened with a salute to the flag. Our accountant, Brian Fitzgerald, is here tonight to clarify some questions. Supervisor Staats is having this workshop videotaped because Brian Fitzgerald cannot be here at the November meeting, and this way the public will know the outcome.
Supervisor Staats made a statement about two things, which were brought up at the last meeting. One was the conversion rate on the tax rate per thousand from .37 to .66. Councilwoman Lent does see how it was done and that was her mistake. The other was the mortgage tax, which was supposed to be $70,000 and was actually $80,000. The accountant did not make the error. Councilwoman Lent has questions about the interest income and how was it accounted for, and broken down, and the unexpended balance.
Brian Fitzgerald - The interest income has been pooled into one money market account which gives us a higher interest rate and is allocated every month between the Con Ed Reserve, Building Capital Reserve, Highway and General funds.
Supervisor Staats - the questions comes from last year's budget where the interest was increased from $7000 to $20,000 and why there is such a difference. Brian said it appears that the interest was taken from the bank statement and all of it put in the general fund. Councilwoman Lent looked into this and in 2007 budget the budgeted interest in the General fund was $20,000 and Highway $5,000. The actual was $14,838 for General and $11,878 for Highway. We actually took in $26,716 which was an increase over the budgeted amount by 6.42%. In 2006 the budget for General $5,000 and Highway was $3500. We budgeted $8,500 but the actual was for General $17,309 and Highway $6,435.00 an increase of 35.8%. That is why in 2007 the interest was increased and also for 2008.
Supervisor Staats asked if it is correct that the earnings in the Con Ed fund cannot be counted in the General Fund. Councilwoman Lent checked the 2007 annual report, which was done by Brian, and it appears that it is included. She also checked the 2006 annual report done by Karp, Ackerman for these figures. Supervisor Staats only concern is that it is impossible to get that kind of return now because of interest rates. Councilwoman Lent sees the unappropriated funds on page 4 of the annual report is $377,075.00 and the cash balance is $768,771.00. Brian said no that is not correct that this is equity. It breaks down to General fund cash is $413,000, $310,000 Capital reserve funds, $149,522.00 is Con Ed, and Capital Reserve $161,024.00, there is receivables of $30,900 which is sales tax revenue, and due from other funds of $13,000.00. So our reserve cash is $310,546.00. Then there is an unreserved fund balance of $80,550.00. That comes from the budget. Councilwoman Lent would like to understand what the unappropriated or unallocated balance that the town has in General and Highway. Brian said that it is the amount, which is in the annual report. Councilwoman Lent does not see the fund balances as of the present. Brian repeated that they are the same as in the 2007 annual report, it stays the same until the books are closed.
In the Highway, Councilwoman Lent pointed out differences between the annual report for 2007 and the actual in the 2009 Preliminary budget for 2008 in account number DA5130.2 of $13,550.00. In comparing she found that the amount of Capital Projects in Highway is not correct. This will affect the bottom line when you talk about a Highway Garage. This went into a general expense and not a Capital Project. Councilman Nolan asked why Councilwoman Lent is being rude to the accountant. She does not feel that she is being rude but being factual. Supervisor Staats would like to have Brian go over the way the budget works because Councilwoman Lent does not understand. Councilwoman Lent heard that there is $22,000 left in the unexpended balances in 2008, so what is the unexpended balance. Brian said that he had answered that already and he is not going to sit here and be grilled. Councilwoman Lent stated that Brian works for the town and she would like to get an answer. Brian Fitzgerald left the meeting.
Supervisor Staats stated that you have the appropriations and revenues, you either raise tax or use funds from the bank (Correction: add ‘to make up the difference') We will raise $113,000.00 in taxes and we will still have to use $132,000 from the bank account. Councilwoman Lent has concerns that there will be more left in the unexpended balance than the $22,000.00. She asked how much was collected in total taxes for the town. She recommended checking the state website because we collect $.37 for every thousand of assessed value. We did not only collect for Highway and Fire. Supervisor Staats stated that is all that went towards the budget, the remaining collected went to the County for county tax. There was further discussion about how much will be used from the bank balance.
There was also discussion on the assessed value and our assessor doing some preliminary work to help get our assessed value raised without doing data collection. Councilman Nolan agrees that the assessed values are incorrect, but it could be arbitrary to choose certain properties and raise the assessed values. Councilwoman Lent did not say to choose certain properties. In every town the assessor updates the property cards. She believes he could do this. Supervisor Staats said that we could talk to him about this.
Councilwoman Lent said that in previous years there was no depletion in the bank account because they kept the spending low and the revenues were high, so they did not deplete the balances. This year will be different because the revenues are not as high. Councilman Nolan said that this year we are projecting lower revenues and he asked how much have we cut the budget overall. Supervisor Staats responded that we are taking cuts everywhere possible. We will have to start increasing the taxes over the next few years or we will deplete all our funds. The percentage increase sounds terrible but we have the lowest tax rate in the County, most in the County are $1.00 or more per thousand. Councilwoman Lent is against raising taxes and she feels that Henry Greenhouse will have to get out, and do a re-evaluation on properties. Councilman Nolan said even a re-assessment will not help this year, we either draw from the bank account or where will the money come from. Councilman Jones agrees that you cannot take everything out of the bank or you will use all your reserve.
Bob Desmond commented that the previous board did state what the balances were. In regards to the re-assessment, it would lower the tax rate but will not lower what is paid by the individual taxpayers, because you would be paying on a higher assessment. He does believe that there is still a need for the town garage and he understands why it is being put on hold. Councilwoman Lent asked about assessments and if they are low, sometimes peoples taxes do go down, however, some do go up. If their assessment is raised, but overall the average will not go up by reassessment. If the assessments go up, the tax rate goes down. If the assessments are down, the tax rate is up but the amount collected is the same. Councilman Nolan said the amount to be raised is determined by your budget.
Brian Hempel asked if the amount that is being talked about, as the annual negative is $130,000 based on the tax rate. It would increase from .37 per thousand to .66 per thousand. He asked, if we stayed at $130,000.00, we would have another four years if nothing else changed. A five-year surplus is quite big. His school tax (Red Hook) has increased significantly over the years. You are going to make it so that he can't live here. His children cannot buy a house, even with a good job. Raise the taxes incrementally over the next few years and not all at once. This will be easier on the taxpayer.
Councilman Nolan suggested taking more out of the bank account and raise taxes less. Councilman Jones thinks it is a good ratio as is now.
Judy Neary - Do we need to take all that money out of the bank immediately or can the money be put into a high interest raising CD and see if we can add to the revenues. Councilwoman O'Neal stated that the prime rate was just lowered to 1.5%. Supervisor Staats will be looking into this to see if it can be invested into higher yield short term CD's or bonds because now the highway garage is on hold. She asked if this is because of the economy this year and Supervisor Staats said it is because of the decline in sales tax and mortgage tax. That is the concern, because of the shortfall this year and it may be the same next year. If the economy goes up and revenues improve, we have a surplus. It would go back into our fund balance, the bank account would go up and it would be reevaluated next year. We are trying to be as conservative as possible. Judy is still concerned about how things changed from the beginning of the year when things looked so good and now they are not. Councilman Jones stated that when we came in January and it wasn't until September that we had a good idea as to what the expenses and revenues would be.
Elizabeth Mahar asked how much money did we earn in interest this year? Supervisor Staats stated that it averages out to about 2%. We can invest it now that we know we are not tying up funds for the highway garage. Elizabeth stated that the school taxes went up 20% because the market value is high, and the assessed value is low. There was discussion on the possible reasons why the taxes went up drastically in the Red Hook School district.There was discussion on data collection and using students to do this. They do have to be certified by the state. Data collection would not show up until the 2010.
Bob Desmond spoke about sales vs. assessed value. The sale prices are still higher even though there are not as many sales. The state sets the equalization rate based on the sales ratio vs. the assessed value. He also spoke about the percentage of increase per thousand if you take the same percentage on school tax; it would result in paying more money. With what has to be done in this town in the future, it is necessary to watch those reserve funds. He would be in favor of taking less from the reserve funds because in the long run you will be bonding more which will increase the tax rate. Town tax is almost insignificant compared to school tax and county portion of tax bill. Councilman Nolan asked if he could estimate the percentage of town tax. Bob would estimate 10% or 15%.
Bob also talked about interest rates in banks in Red Hook. They have been paying a high interest rate. It would be worth checking into these rates.
Judy Neary asked if people came into Grievance day would they then go to 100%. No, Bob said that three years ago when we did have a revaluation and the equalization rate went to 100%, his assessed value was raised more than the average, but his taxes did not go up very much. There was further explanation about assessed values. Supervisor Staats thanked Bob for this information.
Judy asked what would happen if you decide to raise taxes, if 50% of the people don't pay their taxes. The reply was that the County would pay the taxes and take over the property.
Elizabeth Mahar thinks that the Board should not raise taxes and wait for the economy to improve. She questioned why the highway employees are getting a 5% pay raise and no one else is getting a raise. The Supervisor explained that he has taken cuts in the budget to his account and is doing everything that he can.
Councilman Jones asked what the shortfall is on this years budget. We are short $75,000.00 and we are going to make that, not by tax increase, but by taking money out of the bank. Of the $140,000 that was estimated to come out of the bank, we are taking $210,000 out of the bank to balance the budget. There has been a trend to taking more and more out of the bank. Elizabeth asked how much was gained in interest. There was probably a surplus from 2005 and 2006. There was interest earned of approximately $25,000 but was counted as revenue. There was still a deficit beyond that.
Brian Hempel asked that the board try to curtail a tax increase because the taxes will not go down. The Supervisor and the Board will do everything they can to keep the increase down.
Councilwoman Lent asked the Supervisor if the State Comptroller's office would come down and verify our balances? He has spoken to them and they do not come down unless there is a problem. They had told the Supervisor that they do not come down for a change in administration, only if there is an issue or if you think there is a problem. He can make a request but he doesn't know if they will come. Councilman Nolan asked if they come down and go over everything or evaluate the procedures in place. Do they verify the accountant's report? Supervisor Staats said they verify the accountant's report.
Councilwoman Lent said they have been down in 1994, 1997 and in 2006 under special circumstances.
A motion was made to adjourn at 8:40 P.M. by Councilman Jones, seconded by Councilwoman O'Neal. All in favor. So carried.
Respectfully submitted,
Mary Helen Shannon, RMC
Meeting: