Taxes and Fees
Wayne Drescher of Drescher & Malecki presented a 2010 budget audit review of the Town of Lancaster at their work session Monday evening. Drescher once again gave a favorable report and said the town was on sound financial footing.
Defining the difference between reserved and unreserved funds (designated for budget use and undesignated for future use), Drescher began his presentation by reviewing department fund balances.
Using the General fund as an example, Drescher declared that the General Fund has total fund balance of $1.47 million dollars. “To the normal resident, that sounds like a lot of money. In fact, your undesignated fund balance is $866,576. That is the fund balance you can use at any time for emergency or for next year’s budget. $866,576 is a little over 10% of your annual General Fund budget which was around $7.6 million. That’s a good solid, sound place to be. It’s not holding too much of your tax payer money and at the same time holding enough money for emergency need.”
The police fund has an undesignated fund balance of $861,001 with a budget of about $8 million; a little over 10% of the budget and sound and solid according to Drescher.
The Highway Fund balance is $170,625. The total 2010 budget was $3.5 million, so the fund balance is now about 5%. According to Drescher, highway funds are now struggling because they are people driven – salary increases and where retirement costs have increased by 50% and where oil/gas costs have increased significantly.
A board member asked what exactly was meant by reserves.
Drescher explained that reserve fund balances were monies set aside for specific purposes and cannot be undone – used for budget purposes. Designated reserves are those reserves intended to be spent that way - monies here set aside to be used in the 2011 budget where revenues received will not cover expenditures.
Whereas the town appropriated $1.59 million from the fund balance for the 2010 budget, it actually used only $1.22 million. $3.55 million remains in the undesignated portion of the fund balance to be used for the 2011 budget.
Drescher provided another page of stats and chart that showed that fund balance expenditures decreased from the previous year. He cautioned them not to look at this as savings but that the town had planned to use much more in fund balance and in reality the 2010 budget contained more in fund balance, but not a much as predicted.
Drescher declared that there was good news in that the sales tax receipt. “The distribution of sales tax for this year was based on population and the town continues to grow whereas some other locations have stayed stable or seen population decreases.
Revenues – Total governmental funds
The next sheet covered revenue receipts– what went up and what went down for the year of 2010.
Real property tax increased by $674,000.
Sales tax receipts increased by $115,000.
Licenses and permits decreased by $135,566. Building permit fees were down as the market continues to struggle.
State aid was down about 5% - $36,124.
In total, revenues increased from $26.5 million in 2009 to $27.1 million in 2010; $624,243 or 2.4%.
Expenditures – Total governmental funds
On the expense side:
The general government support portion decreased by $275,401.
Public safety went up by $359,702.
Transportation increased by $432,000 – reflective of a hard winter that started early and ended late.
Culture and recreation increased $126,321.
Employee benefits increased by $407,292.
Debt service did decrease as some debt came off the books.
In total, Expenditures increased from $26.71 million in 2009 to $27.79 million in 2010; a $1.07 million increase, a 4% increase in expenditures.
BANS and Bonds Outstanding Bond Anticipation Notes summary:
All at 1.5% interest rate.
Tall Hall Improvement - $2,170,000
Police Court Building - $2,500,000
Transit Road Water Improvements - $575,000
Townwide Water Improvements - $6,100,000
Siebert Road Improvements - $235,000
Steinfeldt Road Improvements - $110,000
Glendale/Parkdale Reconstruction - $110,000
Highway Truck Dump Bodies - $35,000
Highway Equipment - $650,000
Total BANS and Bonds Outstanding - $13,075,000
Retirement Cost Increases
“Retirement costs had a significant impact on the budget,” declared Drescher. “The same will be true for next year (2011).”
“Retirement costs increased from $363,021 in 2009 to $553,617 in 2010, almost a $200,000 increase in one year.
The rates went up by 50%.
Police and fire retirement costs increased from $862,509 in 2009 to $965,609 in 2010.
"Those two combined was over a $300,000 increase, In this year’s budget (2011) it (rates) went up another 30%. So for these two years it nears 100% when you compound the rates. It is almost impossible to budget for this."
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