Since Supervisor Earle Reed took office nearly 3˝ years ago, the town’s main
rainy day fund has been depleted by more than 90 percent, documents supplied by
the town show.
The account, known as the general fund balance, went from
$2.8 million in the beginning of 2006 to $250,000 at the end of 2008, annual
financial reports showed.
Neither Reed nor town board members could give
specific reasons for the drop — $1 million last year alone — but cited
increasing costs and difficult financial times.
Reed, who took office in
2006. said he had known the fund balance had gone down, but hadn’t realized
things were that bad.
“In my years in the private sector, I always had a
strong (chief financial officer),” he said. “My forte is not accounting.”
Former town Councilman Don Backman, who served from 1996 to 2005, called
the fund “dangerously low,” and said if an emergency came up, the town might
have to borrow.
“We left them in good shape, and they spent it faster
than a drunken sailor on shore leave,” he said.
Town officials are
working to address the financial issues, Reed said.
“We are distressed
about the situation, but we are on top of it,” he said. “I don’t think anyone
visualized the meltdown of the economy. It’s affected us, but we still have to
maintain basic services.”
A look at the 2008 annual financial report
showed the account’s revenue increased 3 percent last year over 2007 — from
$6,711,949 to $6,948,344.
Expenditures, however, went up by 9 percent —
from $7,363,382 in 2007 to $8,034,708 in 2008.
A
CFO?
Reed said the situation highlighted the need for the town
to hire a chief financial officer or town administrator with a strong accounting
background.
But former town Supervisor Ralph Humphreys, who held the
office from 2002 to 2005, said he didn’t think hiring someone to oversee
accounting was necessary.
“It’s my contention that I was hired by the
town to run the budget,” Humphreys said. “I thought that was my job, and I
didn’t need someone else doing it.”
Councilwoman Christine Krupa said
she had been working with bookkeeper Carol Fairbrother since the beginning of
the year to get a handle on the town’s finances.
“We are trying to
determine if we need a CFO in there full time, half time or part time,” she
said. “Obviously, we are going to need someone who can be active on a day-to-day
basis.”
Fairbrother said she only works with town finances after
expenditures have been made.
“The voucher and purchase orders go to the
clerk for processing, they go up to the board and they approve them at the
meeting, and that is the process,” she said.
Fairbrother said she
provides the board with monthly statements that track town finances.
The spending
General fund expenditures went up
significantly in several areas last year:
- Fairbrother was given $71,000 as compensation for back overtime pay.
- Outside accountant Frank Basile was paid about $122,000 in 2008.
- Legal expenses for the town increased by more than $41,000 between 2007 and 2008.
- Public safety costs paid out of the account went up by about $81,000.
The account doesn’t reflect all revenues and expenditures in the town’s $13.3
million budget for 2008. But the report doesn’t include a summary that
incorporates all the cost centers, so it was impossible to determine the town’s
total bottom line.
Figures for what’s in main general fund now, more than
five months after the end of 2008, also were not immediately
available.
Other accounts exist that deal with transactions for specific
cost centers, such as the highway department.
The town also has other
assets, including accounts with cash. A second general fund for the parts of the
town outside the village of New Hartford contained $672,000 at the end of 2008.
Krupa said she had been aware the main fund balance was going down but
had not known the specifics.
“I can’t comment until I have a chance to
analyze it,” she said.
Councilmember Rich Woodland said he hadn’t
received any formal notice about the general fund. Council members Robert Payne
and David Reynolds did not return calls.
A spokesman for the New York
State Comptroller’s Office declined to comment on New Hartford’s fund balance,
citing lack of information.
