Democratic town councilor John Sullivan, who is not usually known as a heretic, recently suggested that more precise budgeting and use of reserves could keep taxes lower. He said, “We are building a huge resource of taxpayer money above and beyond what we need. The mayor continues to raise taxes and we don’t dip into that fund.”
Those are bold and irreverent statements. How could Mr. Sullivan possibly imply that Wallingford, allegedly famous for tight budgets, has actually been guilty of “imprecise” budgeting all these years?
The councilor, however, has substantial evidence on his side. The most obvious clues are in the end-of-year financial results, which year after year, show gobs of money left over in department budgets. Okay, maybe “gobs” is a bit too strong, but leftover cash represents unneeded and unused taxes that were levied because of imprecise budgeting. Additionally, the year-end audits show that budgeted revenues, year-after-year, have been under-estimated, as well. Tax levies, therefore, have raised more money than was intended when budgets were adopted. These combined miscalculations in 2013 alone amounted to about $7.5 million, an amount that Wallingford quaintly calls a “budget balance.”
Forecasting errors, therefore, have been incorporated in every budget, but they go unrecognized at the time. They are revealed only after the fiscal year closes and an audit is issued in late December. At that point, the imprecise budgeting is laid bare. Lots of money is left over in budgets and extra money has been collected. But it’s too late for the taxpayers. Then the cycle then starts over again a few months later in April, and no one seems to look back and learn lessons from the past. In that way, the extra cash slowly builds, and we accumulate a big surplus. Mr. Sullivan, to his credit, is speaking out about that.
This year, the accumulated surpluses were so large that the mayor this week called for the town to “burn off” some of the cash in one-time expenditures charged against the rainy day fund balance. Okay, “burn off” is a little over the top. These ad hoc recommendations are, nevertheless, the result of imprecise budgets.
Another tip that this proposed budget is imprecise, is the level of funding for general government, as compared to the actual spending in the fiscal year ending June 2013, the most recent period audited. Proposed funding for general government in 2015 is 12 percent higher that the actual spending in 2013. That increase, 6 percent per year, is too steep to go unquestioned.
A final point: The proposed budget takes $4.3 million from reserves and appropriates it. That money, taken from savings, is put into the departments’ budgets. No one can seriously believe, however, that the mayor or the council would intend the general fund to run a $4.3 million deficit in one year. Yet, that’s what would happen if this budget reflected reality.
Forecasting errors of the sort Mr. Sullivan is talking about got the attention of even the town’s auditor in 2004. After reviewing the town’s financial statements, he wrote that improvements should be made to the budget development process to improve the accuracy of budgetary estimates. He said that more accurate projection of budgeted revenues and expenditures would ultimately improve the planning and reporting of the town’s operations. Councilor Sullivan is remaking that point now, 10 years later.
When budgets are not slim and trim, is government as concerned with containing costs? If town departments have wiggle room in their budgets, do they use maximum effort to find new ways to stretch their money? Maybe. But another approach might be to adopt tight budgets, not loose budgets, in an effort to be more efficient in the long run. Maybe one way to contain costs, is to actually contain costs with more precise budgets, or is that too radical a thought?
Mr. Sullivan raises some complex and worthy issues. Will he have allies?
Mike Brodinsky is a former town councilor, chairman of the School Roof Building Committee and host of public access show “Citizen Mike.”