Lincoln must cut $1.2 million to keep budget errors from raising mill rate

By Nick Sambides Jr., BDN Staff
Posted Oct. 16, 2012, at 9:19 p.m.

LINCOLN, Maine — Town leaders will have to save or cut $1.2 million from the town’s $6.6 million budget by June 30 to keep a series of recently discovered errors from increasing the town’s 19.86 mill rate, officials said Tuesday.

The Town Council reviewed the errors and their effect on the budget with town staff, attorneys and hired consultants on Monday night. One consultant, attorney P. Andrew Hamilton, warned that the errors will make a tax increase more likely in the 2013-14 fiscal year, which begins July 1.

“We will make it through this year. I think everybody should use this as an example of how to move through a dynamic and get through this year because next year will be tougher,” Hamilton said Monday. “It can be managed so long as people put their shoulder to the wheel the way they have been as I have seen in the last week.”

Councilors have set an executive session meeting on Thursday in which they might discuss probationary Town Manager Bill Reed’s performance. Councilors specified, at Reed’s request, that they would not discuss his performance during another executive session at Monday night’s meeting, Reed said.

Reed, council Chairman Steve Clay and Councilor Curt Ring declined to discuss Thursday’s executive session, which Ring requested at the end of Monday’s meeting. Thursday’s meeting will start at 7 p.m. The meeting’s agenda wasn’t written as of Tuesday afternoon, Reed said.

Reed said he would wait until Thursday to comment. He referred comment on his job performance or any councilors’ opinion of it to Clay. Reed said he looked forward to seeing the agenda.

“I think it is better to receive written documentation [of what will happen] because some people say things in haste,” Reed said Tuesday.

His six-month probation ends in late November, Reed said, and the council can dismiss him during the probation largely at its pleasure.

“If a council is ever unhappy with the management style [of its town manager], it is pretty much built into most contracts that they have discretion on resolving that,” Reed said. “Discretion is whatever they determine discretion to be.”

“There are a variety of things you can do,” he added.

In a memo to town leaders dated Oct. 9, Maine Municipal Auditor Services’ Mindy J. Cyr confirmed 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.

A memo from Reed to the council on Oct. 2 was the first public disclosure of the errors. Under questioning from Councilor Rod Carr, Cyr said she was the first person to discover an error, the $200,000 double-booking.

Cyr’s report did not disclose a $575,000 overestimation of projected revenues that town workers discovered in the town’s four TIF accounts in the 2012-13 fiscal budget. 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.

Acting on Hamilton’s advice, councilors elected Tuesday to restart the budget process they followed last spring. They will hold a public hearing on the budget at 6 p.m. Oct. 24 and work to adopt a budget on Nov. 5.

Councilors will commit taxes to the state on Nov. 6, but allow prepayment this month. Under their tentative schedule, new tax bills will be issued Nov. 8-9 and will come due on Dec. 15 and May 15, the schedule states.

Among the things councilors will consider is a list of $501,433 in budget cuts that Treasurer Gilberte Mayo outlined to Reed in a memo. Officials believe the cuts would have minimal effect on town services while almost halving the $1.2 million shortfall.

Another $366,882 in expenditures could be saved by expending Tax Increment Finance money instead of tax funds, though Reed said that as much as 20 percent of the proposed savings might not qualify as acceptable under TIF fund-use regulations.

Ring and Hamilton praised town workers’ performance during the last two weeks, saying that Assessor Ruth Birtz, Treasurer Gilberte Mayo and Reed had performed diligently and with great integrity in finding the errors and devising solutions.

“You have a community with a low mill rate,” Hamilton said. “Arguably, there should have been a year earlier than now that you should have collected more from taxpayers. The flip side of that is that taxpayers actually got a break in terms of the amount of tax they paid so this is not a bad situation and it has also been subject to the light of day early on.”

“This process resulted in the community knowing that this was an issue to be addressed early on, so it could have been addressed,” Hamilton said.

Hamilton said he had no doubt that the errors resulted simply from human fallibility. There is no indication, he said, of incompetence, corruption or the violation of any laws arising from the errors.

Clay agreed with Hamilton, saying that Lincoln’s financial position, and personnel, are very good.

“The auditor caught the mistake at the only time the auditor could catch the mistake — after the fiscal year was done. That’s why you have an audit,” said Clay.

http://bangordailynews.com/2012/10/16/news/penobscot/lincoln-must-cut-1-2-million-to-keep-budget-errors-from-raising-mill-rate/ printed on July 23, 2014