Wednesday, October 22, 2014

SIMPLE BUDGETING ------- by Larry Fillmore

At last night’s Town Council meeting, I witnessed yet another act of what I consider “Dumbing Down” of America.  It is disguised as Lease to Purchase method of acquiring equipment for the town but it is nothing more than borrowing money the town does not have.

Last year Mr. Dale Olmstead briefed the Council on the financial situation the town was facing and recommended a maintenance budget for last year.  Instead of listening to Mr. Olmstead, some Department Heads continue to budget unnecessary equipment.

On October 7, 2014, Runyon Kersteen Ouellette (RKO) briefed the Town Council on the results of the Fiscal Year 2014 annual audit.  These results contained the usual results and recommendations.  However, an interesting fact came out of this briefing and that is the town’s Undesignated Fund is at 7% instead of the 12.5% recommended by our Charter.  The Undesignated Fund is for emergency use and is suppose to keep the town from going bankrupt.   Remember prior to Eldridge coming to this town, there was over three million dollars in this account.

Being 5.5% below the recommend level for the Undesignated Fund has changed the approach by some Department Heads.  Now these Department Heads are using the Lease to Purchase program to fulfill their perceived needs.   Lease to Purchase means the town makes yearly payments instead of paying the purchasing price upfront.   Lease to Purchase means the taxpayers have to pay more for the equipment because the town is borrowing the money and making yearly payment.  Yes, the town gets the equipment now but every year the town has a contract to pay yearly payments with tax dollars.  This is one of the reasons our taxes continue to go up every year.

Think about it!  If the town continues to borrow money it does not have, how is the town ever going to get out of debt?  You do not have to be a rocket scientist or an accountant to figure this one out.  In what universe do you spend more than you make and think for a second that you are going to get out of debt?

These Department Heads, Town Manager, and this Town Council have got to immediately stop spending money the town does not have.  This means no more Lease to Purchase agreements.  If the town does not have the money to purchase the equipment outright, the town does not purchase it.  In cases of an emergency acquisition, the Town Manager should take an appropriate amount from each department until the town has the total purchasing price.  This practice of borrowing money with a Lease to Purchase is wrong for the town and needs to stop.  

Common sense tells you that spending more money than you have is a true sign of pending disaster.

Larry Fillmore