Surplus low for town

By Joseph Cyr
Staff Writer
    HOULTON — Concerns over the amount of money in the town’s reserve account were voiced at a June 13 Houlton Town Council meeting.
    Town Manager Doug Hazlett said the town recently completed its 2010 audit, and while that audit showed no irregularities, it did reveal growing trepidation about just how much the town’s surplus account has dwindled in recent years.
    “In essence, our audit was fine,” Hazlett said. “It uncovered no irregularities and nothing to be worried about, other than one observation. Our undesignated fund balance has fallen precariously low.”
    The audit was performed by RHR Smith and Company. Smith was unable to attend the council meeting.
    According to Hazlett, the town’s undesignated fund balance now sits at $256,000, which is significantly lower than what the auditor recommends for a town the size of Houlton.
    “To be an acceptable number, our fund balance should be between 30 and 90 days of operating capital,” Hazlett said. “That would equate to about $660,000 to $2 million.”
    Hazlett added the auditor was concerned that the $256,000 was less than 30 days worth of operating capital. The fund has dwindled due to the “continued loss of revenue sharing,” the town manager said. Ambulance revenue was also down significantly last year, he added.
    At one time, the town had more than $1 million in its surplus account.
    “The good news is a lot of the ambulance revenues are driven by continuing resolutions in Washington,” Hazlett said. “Not recognizing the new Medicare ambulance fee schedules created a shortfall in our revenue. Some of that is going to come back this year and we are already seeing signs of retroactive payments that are starting to hit the books.”
    Hazlett is also developing a strategic plan to grow the town’s fund balance over the next few years.
    “I believe we can do that, but it is going to require a couple of actions,” he said. “One, we are going to have to be very conservative on our spending this year. We have to under-perform the budget and we have to maximize every opportunity we have for revenue.”
    He added when the time comes to put together next year’s budget, the council will have to take a “very conservative posture.”
    “We are not going to have the luxury of having an undesignated fund balance that we can use at tax commitment time,” he said.
    Hazlett said he plans to report back to the council on a monthly basis to give them an update on the surplus situation.
    One interesting sidenote of the audit revealed that the town has a financial connection to SAD 29 loans.
    “Any financial liability of the school appears as a potential unfunded liability on the town’s balance sheet,” Hazlett said. “The reason for that is they [SAD 29] have no tax collecting authority. Only a municipality does. Should they [the district] default on the $2 million bond they took out, they wouldn’t have the ability to raise tax money to pay it. So the potential risk for default has to appear on our balance sheet.”
    Hazlett added it was “highly unlikely” that the district would ever default on its loan because the costs are built into the school’s operating budget.
    “It was a little bit of a surprise for me,” he said. “I see the logic in it. We could potentially be liable for any unfunded debt that the school could have.”
Rest area discussion
    The council also agreed to move forward with discussions with the state’s Board of Tourism to take over the rest area property located near the Interstate 95 southbound ramp. The council was advised by MDOT in 2009 that it was looking to turn ownership of the property over to the town, or risk closing the rest area.
    “At that time, the council took the viewpoint that they didn’t want that [closure] to happen,” Hazlett said. “A boarded up, overgrown rest area as you enter our town is not advantageous to marketing Houlton. It is also one of the busiest tourism bureaus in the state. The council sent a letter to the commissioner of the Department of Transportation appealing the decision [to close the rest area]. As a result, we have been in negotiation with them for alternatives.”
    Hazlett said the state is willing to turn the property over to the town and could continue operating the tourist information area. If the town deemed it wanted to close the rest area, it would then have to buy the property at fair market value.
    “I think it’s a very reasonable offer to the town,” Hazlett said. “The first real big issue, is are they going to close it? If you talk to them [the state] they would like to not maintain it.”
    Hazlett said the state’s position for not wanting to maintain the rest area is that it is located next to several business that have rest room facilities.
    “It isn’t vitally needed as a rest stop,” he said. “They [the state] also feel the tourist information center could be moved somewhere else in town.”
    Hazlett said he felt it was in the town’s best interest to take ownership of the property, even if it meant they would have to maintain it. He estimated the cost to maintain would be about $6,000 to $8,000 a year.
    “It benefits tourism throughout the County, so we will open a dialogue [with other Chambers of Commerce] to see if we can get some help to maintain it.”
    One of the reasons the issue has taken so long to resolve, according to the town manager, is that there are federal issues involved with the transaction since Interstate 95 is a federal highway. The building was also constructed with federal money.
    “I’m enthusiastically in favor of moving forward on this,” councilor Sue Tortello said. “I think this is a vital key to tourism in Aroostook County and the state. It is a really popular meeting spot and recreational area here in town. It’s one of the best places to walk in the winter because it’s lighted and plowed.”
    In other agenda items, the council:
    • Approved a bid of $6,039 from The Light House of Houlton for a Gravely Pro Turn 100 XDZ mower for the airport department.
    •  Authorized a victualer’s license to Tammy Tompkins, doing business as BBQ-Shack, a mobile lunch wagon to be located at Riverfront Park.
    • Granted a Beano/Bingo/Games of Chance license to Linneus Sno-Sports Inc. to operate at the Houlton Community Park from July 1-4 during the Houlton Agricultural Fair.
    • Renewed a liquor license for Tang’s Chinese Cuisine at 60 North St.
    • Accepted a grant of $450 from the Healthy Aroostook Program for the “Let’s Go 5210” program.
    • Approved a special amusement permit for dancing and entertainment for the Houlton Band of Maliseet Indians on 494 North St. (Rollerama).