Brown, Dougherty go at it over savings use

What seemed a simple question about budgeting — where does the money for each year’s “fund balance” come from — touched off a dust-up at the Town Board meeting Friday night.

The two battlers were Supervisor Jim Dougherty, a Democrat who is seeking re-election to a third two-year term and whose campaign ads tout his low annual tax increases compared to those of previous administrations, and Conservative Councilman Ed Brown, who is in the middle of a third four-year term.

Their fight was about who had been the biggest users of the unspent money carried over every year into the following year’s budget fund balance to soften tax hikes — Mr. Dougherty or Town Boards working with previous supervisors.

The balance currently stands at between $1.5 and $2 million, board members said, well above what several speakers said was the state-recommended minimum of 10 percent of the annual budget, which totals over $10 million.

The board’s only registered Conservative, Mr. Brown started the sparks flying when he offered figures to back up the argument that the Democratic supervisor had been tapping the fund balance hard during his two terms to keep tax hikes low.

He also chastised Mr. Dougherty for claiming credit in his re-election campaign for the budget work of the whole Town Board.

“It’s all about Jim,” Mr. Brown complained, adding that the supervisor’s style was to throw “as many people under the bus as you can.”

The supervisor countered that previous Town Boards had tapped the fund balance when the economy was good and when non-tax revenues were flowing. The money should be a “rainy day fund” to be used only in tough times, not in good times to hide spending increases, he argued.

Mr. Brown was wrong, said Mr. Dougherty, to assert that those previous boards had faced unusual expenses: a new highway barn and the town park at Bridge Street, among other things. Those projects, Mr. Dougherty said, had been funded by bonds. “I’ve been paying for them” in subsequent budgets: $125,000 a year in principal and interest, he said.

“You’re paying for it — all on your own,” remarked Mr. Brown. “Nice of you!”

According to Mr. Brown, the Town Boards over the six years from 2003 through 2008 used a total of about $945,00 from the fund balance to cushion their budgets. Over the three years since Mr. Dougherty took office in 2009, he said, $1.45 million has been tapped.

Mr. Dougherty defended that as appropriate for bad times when revenues plunge.

The fight prompted Town Board candidate Paul Shepherd to take pains to say, from the audience, that he hadn’t meant to start a political dust up for the Channel 22 camera and the Reporter.

“This wasn’t me setting you up,” he told Mr. Dougherty.

On another front, the revenue to be raised by taxes in the 2012 budget proposal — as revised by the Town Board over the last few weeks from Mr. Dougherty’s preliminary budget — totaled $7,271,424 as of Tuesday afternoon, up 9.1 percent from the amount raised in the current year, $6,664,345. But that’s before any fund balance is applied to the budget. The board is expected to apply enough from the reserves to lower that increase to 1.9 percent, which would require about $480,000 from the fund balance.

The board is expected to schedule a public hearing on the budget on November 10 at 3:30 p.m., before its regular meeting, and must adopt a budget by November 20 as required by state law.

A TOUCHED NERVE

It all started when Mr. Shepherd, at the end of Friday’s meeting, asked where the money comes from for the budget’s fund balance each year and whether or not transfers from the fund the board had made during the meeting would diminish the balance below state-recommended norms.

The board earlier in the meeting had voted 5-0 to approve a transfer of $108,900 from the 2011 budget’s “unexpended balance” to cover a number of expenses, including $65,800 for the rental of equipment at the landfill to process brush from tropical storm Irene, $20,000 for professional services, $10,000 for police overtime and $3,000 for building maintenance, as well as lesser amounts for the nutrition program and senior services and $700 for the supervisor’s office and miscellaneous account.

Councilman Peter Reich commented after the vote that it was the third time the Town Board had used the contingency fund in 2011 and the transfers totaled $177,100.

Answering Mr. Shepherd, Councilmen Mr. Brown and Mr. Reich explained that the fund balance is money set aside in individual budget lines that hasn’t been spent by the end of the year. It is rolled over into the next year’s fund balance to provide a cushion in case of unexpected expenses or drop in revenues. As Mr. Reich explained it, it’s like money in a checking account that it turns out isn’t needed to pay bills and is transferred into a savings account. Mr. Brown called it “spillage” and “backfill” from the previous year’s budget.

Mr. Dougherty said the town’s balance was well above the state-recommended minimum. Tempers began to flare after Mr. Brown brought up how much “we used” from the fund to balance the budget from 2003 to 2006 — nothing — while in 2007, $95,000 “I think” was used.

Mr. Dougherty corrected him, saying $390,000 had been used in 2007 even though mortgage tax receipts were “three-quarters of a million dollars” and there was “a 12 percent tax increase.”

With Mr. Shepherd exclaiming from the audience that he didn’t “have a dog in this fight,” Mr. Brown apologized and revised his numbers: from 2003 to 2005, he said, no fund balance was used; in 2006, $95,000 was used, “then the next couple of years we bought the highway department building” and there were other acquisitions such as the Bridge Street park and equipment payments “we were behind on.”

So for those six years, he said, “we used $945,000 approximately; the last three years,  we’ve used $1.45 million.”

Supervisor Dougherty said, “I didn’t know this was all going to happen here” and defended the use of the surplus, which he said was “a rainy day fund” to be tapped not “when the sun is out” but in hard times “and it has been pouring the last three years.” He said “when the sun is out” the fund shouldn’t be tapped but past Town Boards did “anyway and still came in with high tax increases.”

“It’s not true,” he added, that past boards had “bought” the highway barn. “Unfortunately I’m still paying for it … They built it and they did a good job … but they didn’t pay for it,” they borrowed to pay for it. The same was true, he said, of Bridge Street park.

Councilman Glenn Waddington, sounding conciliatory after further squabbling as Mr. Shepherd made his remark from the audience about not having intended to set up a political ambush, commented that the Town Board this year “hit the contingency pretty hard” to cover retroactive pay raises of 3 percent awarded through binding arbitration to the town’s PBA.

“We’ve been tapping it periodically,” he added, and “who knows how much we’ll hit it” to limit any tax hike as the board goes over Mr. Dougherty’s 2012 preliminary budget plan — which board members initially criticized as unrealistically low on the expense side and high on the revenue side — and finalizes a 2012 spending plan. To keep the tax rate at “something we can live with, we’ll probably have to draw on it,” Mr. Waddington said.

“We’d be irresponsible not to draw on it,” Mr. Dougherty commented, reiterating it’s for “a rainy day and believe me, it’s pouring.”

Mr. Brown acknowledged that the board had been tapping the fund but made the point that Mr. Dougherty’s “administration” is “totally benefitting” politically from the resulting low single-digit tax rate increases.

That brought a renewed charge from Mr. Dougherty that previous boards had “hit the reserves hard” even in “good economic times” when mortgage tax revenues were high and yet they still raised taxes 8 to 9 percent. Of this year’s depressed mortgage tax revenue stream, “I’ll be lucky to have $200,000,” he said.

Councilman Peter Reich tried to turn the discussion back to basic answers to Mr. Shepherd’s basic questions. He said it was important not to budget “too tight” so that all accounts are spent by the end of the year and there’s no money for the reserve fund.

Mr. Brown turned the topic back to Mr. Dougherty’s record as supervisor. He said that “Jim’s very good at working with the departments” but that the budget and the town’s financial status was the result of “shared board work.”

“It’s not Jim’s budget, it’s the Town Board’s budget,” Mr. Waddington said.

Mr. Brown agreed. “If you look in the paper and listen to him up here,” Mr. Brown said of Mr. Dougherty, “it’s all about Jim,” who he said “throws as many people under the bus as you can.”

The testy conversation continued for a while, with Councilwoman Chris Lewis defending the decision to erect a new highway barn as an urgent necessity and paying for it by borrowing because the town didn’t have the millions on hand needed to pay for it. Mr. Dougherty replied he had been trying only to rebut his colleagues. “It’s such a fundamental issue … They insist on perpetuating this misinformation,” he said.

It ended with a reference to Mr. Dougherty’s having called the board members at his side–—Mr. Reich and Mr. Waddington—“bobble heads” and telling one to “shut up” at a budget work session last week.

“I feel better about it,” Mr. Brown quipped as the brush fire faded. “I haven’t been told to shut up.”

“Careful, you might be called a bobble head, Ed,” both Councilmen Waddington and Reich warned as the fight ended with a round of laughter.