Town reports budget deficit, but bouncing back after BMS loss

Town reports budget deficit, but bouncing back after BMS loss



reporter photo

WALLINGFORD — The town finished last fiscal year in the red, according to a recent financial audit.

The deficit, however, is significantly less than the ones reported in the two previous years, suggesting the town is bouncing back after the loss of its largest taxpayer.

The Comprehensive Annual Financial Report (CAFR) was prepared by the Blum Shapiro accounting firm of West Hartford and completed in late December.

It shows that the town's general fund balance, often called the "rainy day fund," decreased by $140,000 — from $26.281 million to $26.141 million — during fiscal year 2018-19.

That’s a much lower amount than the reduction to the general fund reported in the two previous years.

The 2017-18 audit showed a $1.6 million reduction, and in 2016-17 the audit showed a $1.4 million reduction.

Town officials have pointed to the departure of Bristol-Myers Squibb — formerly the town's largest taxpayer — for the past drop in revenue, since the company had paid roughly $1.5 million annually in property taxes.

The biomedical pharmaceutical company announced in 2015 that it planned to leave Wallingford, and wrapped up operations in 2018. The company’s tax payment was phased out through a stipulated agreement, and the current fiscal year saw the last of the money.

 

Demolition of the former Bristol Myers-Squibb building on Research Parkway in Wallingford continues in this Sept. 12, 2019 file photo. | David Zajac, Record-Journal

Town Comptroller Jim Bowes said Tuesday that it was a combination of the loss of BMS and the reduction of state educational cost sharing funds after the budget was adopted.

Accounting standards

The audit contains two sets of financial reports: the generally accepted accounting principals, or GAAP, results and the general fund budgetary actual results.

The two accounting standards provide different analyses of the town’s financial health.

GAAP measures revenues and expenses, or operational results. It looks at the total assets of the town, including reserves.

According to a summary by Bowes, as of June 30, 2018, the general fund had $189,000 as a non-spendable fund balance, which is made up of prepaid amounts that are waiting to be spent; $2.496 million as a committed fund balance, which is made up of amounts approved in prior budget years that carry forward into 2018-19; $6 million as an assigned fund balance, which is the amount approved to balance the 2018-19 budget; $671,000 also in the assigned fund balance for both government and education purchase orders that were not completed as of June 30, 2018; and $16.785 million in the unassigned fund balance, which is retained for credit rating purposes.

The GAAP method found town expenditures exceeded revenues by $140,000 in the fiscal year that ended June 30, 2019, with actual revenues at $162.185 million and actual expenditures at $162.155 million.

To cover the deficit, the town dips into the general fund.

’Pretty close’

According to the general fund budgetary actual results, the actual revenues received were $162.185 million, but the $162.155 million was calculated by subtracting $343,000 for appropriations-in-force expenditures from $162.498 million of actual expenditures, resulting in a budgetary surplus of $30,000 on the originally adopted budget, Bowes’ summary states.

Appropriations-in-force expenditures are items that were budgeted in previous fiscal years to be spent in future years, often to spread out funding a large item — like revaluation costs or a fire truck — over time rather than asking for the money all at once.

"If the budget were becoming less costly. I wouldn’t be concerned. But the costs of all the goods and services the town provides is going up."

-Mayor William W. Dickinson Jr.

Although the general fund budgetary actual results showed a surplus of $30,000 and the GAAP method found a deficit in the general fund of $140,000, Bowes said that with a budget as large as Wallingford’s — $169.1 million for the current fiscal year — “we finished this year pretty close between the actual revenues and the actual expenditures, no matter which way you look at it.”

“There’s not much of a difference,” he said. “That’s a very small variance versus the total budget.”

Mayor William W. Dickinson Jr. said Tuesday that he thinks the town is in good financial condition, but is concerned that the lack of new revenue that would sustain town reserves is going to be made up by a tax increase.

“If the budget were becoming less costly,” he said, “I wouldn’t be concerned. But the costs of all the goods and services the town provides is going up … We will be addressing the budget with great caution.”

LTakores@record-journal.com

203-317-2212

Twitter: @LCTakores


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