Mount Pleasant has routinely relied on surplus funds as a financing source for operations in recent years, which depleted the fund until it became a deficit in 2011, state Comptroller Thomas DiNapoli said in an audit of the town’s financial condition between Jan. 1, 2012 and Aug. 13, 2013.
The town’s fund balance decreased by about $2.4 million in the past five years, auditors found. In 2011, the deficit was $263,797 higher than planned, largely due to an increase in uncollected taxes. The town comptroller said Mount Pleasant has been appropriating fund balance in order to keep property taxes low, the audit said.
“While a low tax levy benefits taxpayers in the short term, fund balance should not be depleted to the point that there is insufficient cash available for managing unforeseen events,” the audit said.
A local government is in good financial health “when it can consistently generate sufficient revenues to finance anticipated expenditures, and can maintain sufficient cash flow to pay bills and other obligations when due, without relying on unexpended surplus fund balances or short-term borrowings,” the report said.
The comptroller criticized the town board for not adopting a policy or procedures governing the level of fund balance that should be maintained. Its estimates of unspent surplus funds exceeded the amounts available in 2010, 2011 and 2012. In 2012, however, the appropriated surplus funds weren’t needed due to an operating surplus.
The town has experienced an increase in uncollected taxes and a decrease in revenues (mortgage taxes), Supervisor Joan Maybury said in a letter response to the audit. That required “strong corrective action,” she said, which “included the Town relying on fund balance as a financing source for operations, a reduction in expenses by elimination of personnel (total of 12 layoffs or reductions to part time) an an increase in tax collections by instituting new procedures.
“As a result of these actions, the Town is on solid financial ground today,” Maybury wrote.