Halfmoon relied too heavily in recent years on its rainy day funds to cover revenue gaps created by overly optimistic sales tax projections, according to an audit released Tuesday by the state Comptroller’s Office.
Read the complete audit on the Around Saratoga blog.
Between 2009 and 2011, the town projected $2 million more in sales tax revenue for its general and highway funds than it actually collected. Most notably, the 2009 projection was about $1.29 million too high. As a result, the audit said, Halfmoon tapped into its unreserved fund balance to make up the difference, using more money than was actually available at one point.
“The use of rainy day funds to regularly finance day-to-day operations is cause for concern,” state Comptroller Thomas DiNapoli said in a statement. “These reserves are meant to offset sudden economic difficulties, not to cover poor budget planning. Moving forward, town officials need a better handle on the town’s books and need to adopt budgets with realistic revenue estimates that are based on historical and current economic information.”
The town, in a response written in July, defended its budgeting, arguing the bad sales tax estimates were the product of an economic recession that couldn’t be predicted and said the decision to use the unreserved fund balance was born out of a desire to not raise taxes.
In response to the latter argument, the Comptroller’s Office noted the town used more of its rainy day funds than was actually available, which created a deficit.
“Our concern is not that town officials used fund balance as a financing source in the annual budget, but rather that they budgeted for the use of fund balance in excess of the amount that was actually available,” it said.
According to the audit, after the town appropriated some of its fund balance for 2012 operations, there was a $748,000 deficit in the general fund’s unreserved funds and a $837,000 deficit in the highway fund’s unreserved funds. Highlighting the town’s reliance on its unreserved funds, the audit says the general fund’s unreserved balance went from $4.58 million in 2007 to $247,184 in 2011. Over the same period, the audit says, the highway fund’s unreserved funds went from $440,391 to a deficit of $779,103.
Town officials noted the highway fund’s unreserved funds deficit was reduced by more than $300,000 last year.
When the audit was released Tuesday, Halfmoon town Supervisor Mindy Wormuth came out with an additional fiery defense of the town’s finances, describing the comptroller’s assessment as “utterly ridiculous.” She argued the town’s AA rating from Moody’s bond credit rating service last year was an indicator of its strong financial position.
“This information is in sharp contrast to the comptroller’s report, which attempts to portray the town as in a deficit situation,” she said. “All our budgets and borrowing are done in an open fashion, subject to town hearings and voted on in public. The entire board is involved in this process from beginning to end and are active participants.”
“This is obviously a partisan attempt to attack our town’s fiscal policies in an election year. We are truly disgusted by this blatant attempt at partisan hackery,” she added.
Wormuth and the rest of the Town Board are Republicans. DiNapoli is a Democrat.
Despite suggesting an election-year motive, Wormuth is not running for re-election and Republican candidate Kevin Tollisen has no opponent.
Responding to the audit’s criticism of a lack of long-term financial planning, town officials highlight the fact that the budget process for next year will include a multiyear financial plan.