HOULTON, Maine — The town’s 2007 budget received rave reviews from the town’s auditor, coming in just $41,000 below spending projections.
RHR Smith and Company representative Ron Smith made the presentation to town councilors on Monday, June 9 and in that he reported some good news and some bad news.
“I’m pleased to say that as of Dec. 31, 2007, the town of Houlton is in great financial shape,” said Smith. “The town of Houlton, had $2,257,000 of assets against liability of $1,021,000, which leaves you with a fund balance of $2,036,000. Where you were at the beginning of the year was $2,051,000, so you actually went down $20,000.
“The good news is you expected it to go down $432,000 because last year you used approximately $432,000 to balance your budget,” he added.
Smith credits the savings on a number of strong revenues, which the town acquired during the fiscal year. Those extra dollars come from revenue-sharing through consumer sales, gasoline and other goods purchased. However, Smith said looking into the future, he advised the town to brace themselves for a decrease in those revenues.
“The revenue projections are certainly going to be slower as the year comes to municipalities — that’s the trend we’re seeing now,” he explained. “Clearly, if we were in southern Maine, that’s a trend that is already here.”
Town Manager Doug Hazlett said he felt the town’s budget was as tight as it could be and was pleased with Smith’s review of their finances.
“As a town, we really don’t carry that much debt,” he explained. “We have one outstanding bond and it’s being paid off this year. We have nothing but short-term debt — rescue truck, street sweeper.”
The bond that the town is paying off this year will put an extra $120,000 into the budget, which is good because as Smith had explained, revenues coming into the town will take a hit due to the slowing economy.
“We had an excess revenue of $100,000 — excise tax and revenue sharing,” said Hazlett. “That was revenue sharing and excise tax that has been growing. Driven by people buying new cars, and by the state sharing revenues for municipalities. Obviously, in 2008, the economy has been difficult, people are not buying as many new cars, and they aren’t shopping because the cost of fuel, food and gasoline all bring that down.
“So, we can’t anticipate that we’re going to have a strong revenue in 2008,” he said.
Hazlett said a key point for people to focus on is that the total cost of running the town is $8.1 million, but only $4.1 million comes from the taxpayer. The rest of it comes from people that use the services in the town and without that, the tax burden would be much higher.
Hazlett said the rising cost of fuel has impacted the town in several ways, consumption being one of them. He said that although they managed to use less to heat town offices because of the new furnaces that were installed, the cost rose dramatically, which was a serious hit.
“The number of gallons that we used have steadily decreased over the years, but the cost of it is going through the roof,” he explained.
Another impact came from the number of storms incurred throughout the winter. Hazlett said the budget for snow removal increased at an “astronomical” rate.
“If we have another winter like we did last year, we’re going to chew through a lot of diesel fuel,” he explained. “The problem we’re having with the diesel fuel is we had a high frequency of storms last year. It happened every couple of days, so we did a greater amount of plowing compared to prior years.
“That may repeat itself, that may not,” he added. “That’s the challenge when you do the budget.”
The cost of hot top is another challenge. Three years ago, the average cost per ton was $61.50. Today, that has increased to as much as $89 per ton.
“Anything that is petroleum based is going out of sight in cost,” he noted. “That really is a problem when you try to do road repair. You spend more money and you do less work.”
Hazlett said he planned to follow Smith’s recommendations on keeping a strict budget for next year, which in itself creates a number of issues.
“Typically, what this council has done over the last couple of years is they have used the fund balance to hold the mill rate down and we’re going to do it again this year,” he said. “Now we’re going to have more demands this year because of the fact that heating fuel is up, and those are much greater than we had anticipated when we first did the budget. We’re going to have to increase the fuel oil and diesel budget.
“That point becomes — can that increase be offset with a decrease someplace else?” he remarked. “Ideally, there’s always going to be an inflation factor that goes into the budget.”
Having to make cuts to ensure the mill rate remains the same, as well as assuring that there is enough in the fund balance is going to be tough.
“Houlton does a very good job of establishing conservative budgets and staying within those budgets when you run the town,” said Hazlett. “The net result of that is that you continue to have enough money to run the town and hold for emergency purposes.”
Hazlett said the fund balance is extremely important because it acts as an operating reserve account for the town. In the event of a disaster, such as what happened to Fort Kent this spring with the flood, the town would need those funds in order to ensure that their bills continued to be paid.
Highlights from the 2007 audit includes a $256,000 increase in net assets due to the purchase of new equipment and repairs and upgrades made to town property; liabilities decreased by $21,997; the total cost of government activities was $8.64 million compared to $8.63 million the year before; of the $8.64 million, $4.41 million came from taxes from residents while the remaining balance was a direct result of governmental agencies and organizations that subsidize certain programs and contributions; $120,000 of town debt is scheduled to be eliminated in 2008; and the undesignated fund balance at the end of 2007 was $1.24 million.
The town’s mill rate is currently set at 18.25. The town used $400,000 from fund balance in last year’s budget to bring that rate down a quarter of a mill.
RHR Smith and Company representative Ron Smith made the presentation to town councilors on Monday, June 9 and in that he reported some good news and some bad news.
“I’m pleased to say that as of Dec. 31, 2007, the town of Houlton is in great financial shape,” said Smith. “The town of Houlton, had $2,257,000 of assets against liability of $1,021,000, which leaves you with a fund balance of $2,036,000. Where you were at the beginning of the year was $2,051,000, so you actually went down $20,000.
“The good news is you expected it to go down $432,000 because last year you used approximately $432,000 to balance your budget,” he added.
Smith credits the savings on a number of strong revenues, which the town acquired during the fiscal year. Those extra dollars come from revenue-sharing through consumer sales, gasoline and other goods purchased. However, Smith said looking into the future, he advised the town to brace themselves for a decrease in those revenues.
“The revenue projections are certainly going to be slower as the year comes to municipalities — that’s the trend we’re seeing now,” he explained. “Clearly, if we were in southern Maine, that’s a trend that is already here.”
Town Manager Doug Hazlett said he felt the town’s budget was as tight as it could be and was pleased with Smith’s review of their finances.
“As a town, we really don’t carry that much debt,” he explained. “We have one outstanding bond and it’s being paid off this year. We have nothing but short-term debt — rescue truck, street sweeper.”
The bond that the town is paying off this year will put an extra $120,000 into the budget, which is good because as Smith had explained, revenues coming into the town will take a hit due to the slowing economy.
“We had an excess revenue of $100,000 — excise tax and revenue sharing,” said Hazlett. “That was revenue sharing and excise tax that has been growing. Driven by people buying new cars, and by the state sharing revenues for municipalities. Obviously, in 2008, the economy has been difficult, people are not buying as many new cars, and they aren’t shopping because the cost of fuel, food and gasoline all bring that down.
“So, we can’t anticipate that we’re going to have a strong revenue in 2008,” he said.
Hazlett said a key point for people to focus on is that the total cost of running the town is $8.1 million, but only $4.1 million comes from the taxpayer. The rest of it comes from people that use the services in the town and without that, the tax burden would be much higher.
Hazlett said the rising cost of fuel has impacted the town in several ways, consumption being one of them. He said that although they managed to use less to heat town offices because of the new furnaces that were installed, the cost rose dramatically, which was a serious hit.
“The number of gallons that we used have steadily decreased over the years, but the cost of it is going through the roof,” he explained.
Another impact came from the number of storms incurred throughout the winter. Hazlett said the budget for snow removal increased at an “astronomical” rate.
“If we have another winter like we did last year, we’re going to chew through a lot of diesel fuel,” he explained. “The problem we’re having with the diesel fuel is we had a high frequency of storms last year. It happened every couple of days, so we did a greater amount of plowing compared to prior years.
“That may repeat itself, that may not,” he added. “That’s the challenge when you do the budget.”
The cost of hot top is another challenge. Three years ago, the average cost per ton was $61.50. Today, that has increased to as much as $89 per ton.
“Anything that is petroleum based is going out of sight in cost,” he noted. “That really is a problem when you try to do road repair. You spend more money and you do less work.”
Hazlett said he planned to follow Smith’s recommendations on keeping a strict budget for next year, which in itself creates a number of issues.
“Typically, what this council has done over the last couple of years is they have used the fund balance to hold the mill rate down and we’re going to do it again this year,” he said. “Now we’re going to have more demands this year because of the fact that heating fuel is up, and those are much greater than we had anticipated when we first did the budget. We’re going to have to increase the fuel oil and diesel budget.
“That point becomes — can that increase be offset with a decrease someplace else?” he remarked. “Ideally, there’s always going to be an inflation factor that goes into the budget.”
Having to make cuts to ensure the mill rate remains the same, as well as assuring that there is enough in the fund balance is going to be tough.
“Houlton does a very good job of establishing conservative budgets and staying within those budgets when you run the town,” said Hazlett. “The net result of that is that you continue to have enough money to run the town and hold for emergency purposes.”
Hazlett said the fund balance is extremely important because it acts as an operating reserve account for the town. In the event of a disaster, such as what happened to Fort Kent this spring with the flood, the town would need those funds in order to ensure that their bills continued to be paid.
Highlights from the 2007 audit includes a $256,000 increase in net assets due to the purchase of new equipment and repairs and upgrades made to town property; liabilities decreased by $21,997; the total cost of government activities was $8.64 million compared to $8.63 million the year before; of the $8.64 million, $4.41 million came from taxes from residents while the remaining balance was a direct result of governmental agencies and organizations that subsidize certain programs and contributions; $120,000 of town debt is scheduled to be eliminated in 2008; and the undesignated fund balance at the end of 2007 was $1.24 million.
The town’s mill rate is currently set at 18.25. The town used $400,000 from fund balance in last year’s budget to bring that rate down a quarter of a mill.
