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Friday, May 4, 2012

Why spend $475,000 in Charlestown taxpayer money for a junkyard?

There must be better uses for that money
By Will Collette

Gotta hand it to the CCA – while they had the town distracted with their “Kill Bill” and Ninigret Park campaigns, they are trying to slip another one of their crazy priority projects past Charlestown voters.

There is $475,000 in the proposed town budget – payable in CASH – to pay the Charlestown Land Trust so they can pay the Westerly YMCA for the over-priced, trashed out and abandoned YMCA Camp on Watchaug Pond so the non-resident vacation home owners in the Sonquipaug neighborhood can get extended backyards.

Yesterday, I wrote about the big question: whether or not Charlestown voters will be able to see this boondoggle on the ballot as a separate item and exercise their right to vote it up or down.

Today, I will focus on the troubling questions of “WHY” the CCA thinks we need to buy this land and whether there are better ways to spend the money.

Budget Commission chair Richard Sartor says we
should pay cash for crap
According to Budget Commission chair Richard Sartor, the Commission decided to take the $475,000 from the town’s budget surplus, rather than from the $2 million voter-approved Open Space/Recreation Bond fund is that paying cash avoids interest costs, which is certainly true.

It also triggers the Town Charter obligation to get specific voter approval for the expenditure.

But the Budget Commission has historically guarded the budget surplus with their lives. Some budget commission members would rather sacrifice a body part than spend down the surplus. I asked Sartor to comment on that point. He did so in a lengthy e-mail which I have reproduced in its entirety at the end of this article.

Sartor wrote that the Budget Commission likes to keep the surplus at 20% of operating costs (essentially a 2-3 month cushion in case all town revenues stopped coming in). However, amounts over that 20% are available to be spent in a “conservative manner to benefit the community.”

Sartor says the Budget Commission “recommends [the excess surplus] use be limited to Capital and non-recurring expenses to insure against creating future deficits requiring tax increases.”

How buying a worthless easement on an over-priced abandoned campground qualifies as a “conservative” expenditure, I don’t know, and he doesn't say. 

I also don’t know why tax relief isn’t another preferred use of excess surplus funds, although maybe it is. Sartor did make a companion proposal that the town use $150,000 from the surplus to fund a game show-like, doomed-to-fail program oftax relief for distressed homeowners.But perhaps Sartor was willing to front the RHOTAP idea knowing no one is likely to apply, or if they do apply, they are unlikely to qualify, so no money will be spent. But that's another issue.

I’m just thinking that $475,000 could have been used to give every resident homeowner in Charlestownroughly 2600 households – a Homestead Tax Credit of just under $200 this upcoming year without having to raise taxes on anybody!

Last December, the Town Council majority rejected a town Democratic proposal for a $1000 Homestead Tax Credit after protests that it would increase taxes on millionaire and non-resident homeowners. 

Well, here’s a chance to grant a $200 tax credit to all permanent residents – and according to Sartor, we have enough money in petty cash to pay for it without raising taxes on anyone!

But let’s look at other ways $475,000 in excess surplus funds could be spent. Sartor says the Budget Commission prefers applying excess surplus funds to non-recurring and capital expenses.

The town’s Capital Improvement Plan (and yes, Deputy Dan, we actually have one), lists $1,556,113 in capital improvement needs for the upcoming fiscal year.

Instead of using the $475,000 on the Y-Gate debacle, we could pick from these very important capital needs:
  • $300,000 to deal with storm water discharges
  • $55,000 to buy new police cars
  • $12,400 to fix and upgrade the police computer system
  • $109,260 to do road repairs
These items add up to $476,660 in necessary, worthy and eminently conservative capital investments. And let the money that frees up go toward other important town needs or toward a tax reduction.

We also are going to be borrowing money on bonds over this next year to do some long overdue road reconstruction. Why not use the $475,000 instead? The same logic Sartor applies to the Y Camp applies to these projects. Unlike the Y Camp, Charlestown needs those road projects and they provide a general benefit to all, and not the select few out-of-state residents drooling over the idea of tax dollars buying the Y Camp.

Why should town taxpayers have to make a half-million dollar gift to the Westerly YMCA, the Charlestown Land Trust and Sonquipaugia when we have much better ways to use the money.

Come to Monday night’s Special Budget Public Hearing – that’s May 7, at 7 PM at Town Hall.

Here is the link to the complete, proposed Fiscal Year 2013 Charlestown budget.

Here is Richard Sartor’s response to my question about why the Budget Commission decided to raid the town surplus to pay cash for the trashed-out Y-Camp:

E-mail from Richard Sartor to Will Collette, April 30, 2012:
Undesignated Fund balance is carefully guarded by the Town. The stated  policy  is to maintain the Undesignated Fund Balance at a level equal to 20% of the audited annual budget. Undesignated fund balance is the towns emergency fund , cash flow protection and also critical to our financial and bond ratings. It is important to our well being and conservatively utilized only under limited circumstances.
Undesignated fund balance in excess of the 20% requirement, is potentially available for use, however, the commission recommends its use be limited to Capital and non-recurring expenses to insure against creating  future deficits requiring tax increases. The Undesignated fund balance can change significantly year to year due to unforeseen or unforeseeable actions , examples include;  increases or decreases in state or federal grants to the town, projects which cannot go forward or which exceeded their anticipated expenses,  natural disasters and other emergencies.
The Fund Balance of the town is not known until the current fiscal year budget is closed, financial reporting statements  prepared ,and the Towns annual fiscal audit completed by the Accountants. It is not a predictable financial resource which can be planned as the funding source for Capital projects or other such expenses. A positive result, in excess of the minimum requirement, may , as in this case, provide savings for our residents and reduce or eliminate future payments or debt.
The Budget Commission recommended utilizing available UFB monies to fund the Conservation Easement Y property for $475,000 (an action to acquire previously approved the Town Council ), and funding of Phase I of Klondike Rd  reconstruction in the amount of $650,000. (A Capital project requested in the Town Budget process). The Budget Commission recommended these financial actions because they result in savings to the Town and taken together will not adversely affect the UFB required status.
This recommendation is not without precedent, it is similar to past recommendations to pay for both the Buckeye Brook Road  Phase 1 &2, and the Old Coach Road rehabilitations, resulting in savings and reduced future debt service charges to the budget and therefore to our taxes.
It is extremely important to our well being to maintain an appropriate Fund Balance, but also if funds exceed the requirement, that they be utilized  in a conservative manner to benefit the community. The Budget Commission makes such recommendations, after careful deliberation regarding our  Towns financial status. It is not assured that positive outcomes will  consistently occur in the future,  in Rhode Island , such reliance by many towns and cities has been to their detriment.
Dick Sartor