GREENVILLE, Maine — For years, town officials have dipped into the surplus account to fund unanticipated expenses and to reduce taxes, and that, along with overestimating revenues, has left Greenville with a fund balance deficit of about $135,000 that could increase as much as $190,000 by year’s end.
Selectmen will hold a special meeting at 4 p.m. Wednesday, Jan. 14, to review each of the municipal accounts in an effort to curb spending before the fiscal year ends on June 30.
“What has happened is we’ve spent more of the fund balance on the townspeople to lower the mill rate than we should have,” Greenville Town Manager John Simko said Friday.
Simko, who last week gave selectmen a history of the fund balance since 1989, said there are basically two problems. There has been an overreliance on the fund balance, also known as the surplus account, and more revenues have been projected than received.
A projected loss of revenue is expected this year that ends June 30, Simko said. “We are identifying about $80,000 in shortfall in revenue,” he said, but that’s an educated guess. He said the town wouldn’t know for sure until year’s end. What is known is that excise taxes are down, and so are building permits because of the economy.
It isn’t the first time the town has been in the hole, according to Simko, who said the town had a deficit fund balance the year before. The fund is meant to be the shock absorber or cushion for the town, he said. For example, surplus should help a community if it budgets $900,000 in revenue to help offset the budget but receives only $800,000.
The fund balance is affected by revenue and expenses, Simko said.
“If you keep cutting your expense budgets right to the bone and you have things that cost more than you anticipated, you’ll likely run over,” Simko said. An example of that is sand and salt. Town officials typically base the budget on the previous year’s cost because they didn’t anticipate the continued rise in price, he said.
Despite the deficit in the fund balance, the town’s checks don’t bounce because the municipal funds are commingled with school funds and that latter fund balance amounts to about $1 million, according to the town manager.
Simko said the town builds a budget but looks in the end at the mill rate. If selectmen say the projected mill rate is not acceptable, more is cut from the municipal side. The amount budgeted but not used for the school, however, continues to grow. Toward that end, Simko said, the school has significant capital needs and those funds might prevent a huge mill rate increase if school subsidy is changed.
On the town side, Simko said, all discretionary spending has been frozen. He said town officials want to make sure every department ends in the black and leaves as much on the table as possible at year’s end.
If it appears the deficit will continue after the departmental review, then a deeper level of cuts will be required, Simko said. That could mean the curtailment of some operations, such as a reduction in the days of operation for the landfill and recycling center.
“We’re going to operate as lean as we possibly can between now and June 30.” Simko said. “I honestly feel that despite the shortfall in revenue, I’m confident that with the help of the department heads that we can come in the black by the end of the year.”