Manager: Stop surplus spending

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PARIS – Town Manager Sharon Jackson said she will recommend that surplus money remaining at year’s end be put into the town’s unreserved general fund.

Because the town’s surplus fund had shrunk substantially from 2002 to 2005, rating agency Standard & Poor’s recently lowered the town’s rating one notch, from A-minus to B-triple plus.

In 2001, the unreserved general fund was $1.3 million. By 2005, it was a mere $434,000.

It has grown since then to $789,000 because the town has not spent any of it.

While the lower rating doesn’t affect interest rates on the $2.4 million bond used to pay for the fire station in 2003, it could affect interest rates if the town chooses to bond future projects. There are no such plans right now, Jackson said.

Jackson said she plans to keep the surplus fund stable, or preferably to grow it, by recommending not using any end-of-the-year surplus funds to finance the budget. Voters decide what to do with surplus money at town meeting, and for four consecutive years, from 2002 to 2005, decided to use surplus to offset budget shortfalls rather than raise property taxes, she said.

They pulled $300,000 or more each time. In 2006, $78,300 was spent to buy a small house and pull it down near the town office for more parking.

Part of the reason the budget had shortfalls was because of a decrease in excise taxes and state homestead exemption revenue, according to Standard & Poor’s. Jackson said the excise taxes have been restored because C.N. Brown Co. is registering its trucks in Paris, and the state homestead exemption has also been restored after correcting a past error in the budget sheets.

“I am making sure we build our fund balance and not use our surplus to offset the budget,” Jackson said. “They vote on the budget, but in preparing the budget I can make a recommendation to use the surplus, and I didn’t do that in my first or second budget. We built the budget without using surplus funds.”

Jackson was hired as town manager in January 2005.

Municipal experts say towns should keep enough money on hand to pay for expenses for a few months for emergencies.

Henry Henderson and Karl Jacob, analysts for Standard & Poor’s state and local government office, said the company will look at Paris’ 2006 audited information when it becomes available.

The company could change the bond rating after a committee review of the town’s updated financial statements. But Henderson said the company generally looks at figures over an extended period of time. It does a regular review of the town every four years.

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