Auditor urges Houlton to rebuild its surplus fund

Posted Sept. 13, 2012, at 2:44 p.m.

HOULTON, Maine — Back in 2007, the town’s auditor praised municipal officials for keeping $1.2 million in its surplus account.

Ron Smith, managing partner for the town’s auditing firm, RHR Smith & Co. of Buxton, has advised councilors in the past that having approximately $1 million in surplus makes good fiscal sense.

So he was not as happy during a Town Council meeting earlier this week, when he walked the group through its annual midyear review of town finances.

During the meeting, Smith told councilors that some of the revenues for ambulance billing, excise tax and revenue sharing were slow to come in, but he said that it was not something to be concerned about.

What Smith was concerned about was the $473,780 that was in the municipal surplus account at the end of December.

The town has not dipped into the surplus account for two years straight, but had used the account previously to offset taxation and hold or lower the tax rate. The result of refraining from such action this year was a mill rate that increased by $1 in July over the previous tax rate of $18.95.

Smith has always advised the council to keep enough money in the surplus fund to run the town in an emergency, such as when revenues are not coming in and bills still need to be paid. He pointed out during the meeting that the town had enough in surplus to run the town in that situation for only about a month.

When the surplus fund was higher, the town did not need to borrow money to get through the summer until taxes came in.

For the past two years, the town has turned to borrowing until tax season.

Councilor Sue Tortello asked Smith what he thought about the town requesting a midyear audit instead of just an annual one.

He called the midyear report “a waste” of its $1,700 cost.

He recommended the town pay for just an annual review.

The council will host a budget hearing with the municipal department heads and the SAD 29 school board at 6:30 p.m. Sept. 17.

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