Auditor confirms most of Lincoln budget errors

Posted Oct. 12, 2012, at 7:10 p.m.

LINCOLN, Maine — A brief report from the town’s auditor released Friday substantiates most but not all of Town Manager Bill Reed’s earlier report that the town faces a $1.58 million shortfall for the last two fiscal years.

The one-page memo from Maine Municipal Auditor Services’ Mindy J. Cyr to the Town Council, Reed and Treasurer Gilberte Mayo dated Tuesday confirms a $200,000 double-booking of revenues from the state Business Equipment Tax Exemption and the Maine Homestead Exemption program accounts in the 2011-2012 budget and an $809,000 underestimation of projected expenses in the town’s Tax Increment Financing accounts in the 2011-12 budget.

“It appears that for the year under audit (FY12) the way the TIF budget items were presented in the budget document was changed from the prior years,” Cyr wrote. “However, when the commitment [of taxes to the state] was done the change was not reflected and the old process of calculating the municipal appropriation was used.”

Cyr said the impact of the errors was a $258,000 decrease in the town’s unassigned fund balance, or rainy day fund, in that year’s budget. The undesignated fund balance was $1.87 million as of June 30, 2012, she said.

Cyr’s report did not disclose a $575,000 overestimation of projected revenues discovered in the town’s four TIF accounts in the 2012-13 fiscal budget, which ends June 30, 2013. The town has not yet committed its state tax for this year’s budget, though that usually happens this month. Cyr’s audit focuses only on the 2011-12 fiscal year.

A memo from Reed to the council on Oct. 2 was the first public disclosure of the errors. Cyr cautioned that the estimates were tentative.

According to the agenda for its meeting this coming Monday, the Town Council will discuss the auditor’s and a special consultant’s reports on the budgeting errors and tackle revising the town budget for the 2012-13 fiscal year, which began July 1. An executive session to discuss personnel matters is also listed. The meeting starts at 7 p.m.

“Right now, our primary focus is fixing the path forward,” Reed said Friday, adding that there might be additions to the agenda.

Eaton Peabody consultants John Holden, who specializes in TIFs, and Richard Metirier, a former finance director for the city of Lewiston, are working to review the town’s TIF and budgeting procedures, confirm the errors, devise safeguards against their repetition and find the best way to minimize the errors’ effect. Their final report was being drafted Friday and is expected on Monday night, Reed said.

Exactly who is responsible for the errors remains unclear, Reed said.

Council Chairman Steve Clay declined to comment.

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