Belhaven mayor: New budgeting formula won’t add up

Published 2:01 am Thursday, May 17, 2007

By Staff
Council to review proposed budget on Monday night
Staff Writer
BELHAVEN — A formula this town uses to balance its operations spending plan is being revamped, but the mayor doesn’t think a new study will be accurate.
Belhaven officials use a cost-allocation study to determine the cost borne by the town’s general fund to support separate, other funds. Those separate funds are then assessed transfer charges to reimburse the general fund.
The reimbursement method has been under fire since the current budget was passed last summer. Mayor Adam O’Neal has led the charge that the cost-allocation study was reverse-engineered to match the current fiscal year’s budget numbers.
The Local Government Commission, which must approve town audits and budgets, has asked Belhaven to conduct a new study to support the amount of reimbursements from one fund to another.
On Monday, the Belhaven Town Council approved — by a majority vote — an amendment to the current fiscal year’s budget that would pay for a Virginia accountant to conduct the study.
Councilman Steve Carawan was the lone voter to oppose the amendment. O’Neal, who only gets a vote to split a tie, strongly objected.
He said the town manager had already contracted out the work and the process wasn’t handled as it should have been.
He also said the study being done would fall short of the LGC’s standard for an empirically based study.
Councilman Charles Boyette said Town Manager Tim Johnson is doing his job.
He made the motion to approve the budget amendment, which passed 4-1.
This coming Monday during a budget workshop, the council will review Johnson’s proposed budget for the upcoming fiscal year.
Johnson submitted the $7.4 million spending plan to the council Monday. The council must adopt a budget no later than June 30.
The town operates a general-fund budget and three enterprise funds — a water-and-sewer fund, an electric fund and a cemetery fund.
Enterprise funds are intended to be self-sustaining, separate entities from the general fund.
According to Johnson’s plan for 2007-2008, the town will budget a little more than $2 million for its general fund, which pays for the town’s day-to-day operations.
The electric fund has a proposed budget of $3.4 million; the water-and-sewer fund has an operating budget just shy of $1.9 million; and the town’s cemetery budget comes in at $5,250.
Johnson told the council the proposed budget calls for no tax-rate increase or fee increases.
The budget uses the same percentages the disputed cost-allocation study deems appropriate in reimbursing the general fund for enterprise-fund expenses.
O’Neal has repeatedly addressed his concerns with the allocation method and has involved the LGC in his demand an independent study.
Johnson said once a new cost-allocation study is completed, the new percentages can be plugged in and the budget can be replicated.
The budget proposal for 2007-2008 shows a transfer of $115,140 from the electric fund to the general fund is needed to balance the general-fund budget, a decrease of about 5 percent over the current year’s electric-fund transfer.
The proposed budget also calls for $336,488 of the town’s “rainy-day” fund to balance the budget. That amount is $48,697 less than what was required to balance the current year’s budget.