Town finances in good shape

By Joseph Cyr
Staff Writer
    HOULTON — The town is in relatively good financial shape, according to its most recent audit report.
    That was the news Houlton Town Councilors learned May 29, during a presentation of the audit by Ron Smith of RHR Smith and Company of Buxton.
    As of Dec. 31, 2011, the town had $1.9 million in assets against liabilities of $1,493,000, which leaves a surplus of $473,000.
    “This is an improvement over last year of about $254,000,” Smith said. “We still have some concerns regarding that number. We would like to see that number at 30, 60 or 90 days of your operating budget.”
    For Houlton, that figure would translate to $650,000 for 30 days of operating costs; $1.3 million for 60 days; and $2 million for 90 days. Smith added he did not recall Houlton ever having a fund balance equal to the 90-day amount during the town’s tenure with RHR Smith and Company.
    “You have spent some money and been the victim of a tough economy,” he said. “I would still like to see that $473,000 get back to the $650,000 mark.”
    He added that revenue projections, in the past, came in higher than what the town anticipated.
    “That hasn’t been the case in the past two years,” he said. “You were able to mitigate what you used from surplus to stabilize taxes through strong revenue projections. This is no different than a lot of your other brother and sister municipalities.
    Smith said revenue for the ambulance department was down. Last year, the town’s rescue department budget was overspent by about $40,000, due to overtime costs from increased runs. The revenue brought in by the department offset that figure.
    “That was not the case in 2011,” he said. “Your revenue was a little bit below projections. We hope that when we do your six-month audit, those figures are higher.”
    Smith also said there was a small issue with the calculation of Tax Increment Finance (TIF) funds twice during the past three years.
    “TIFs are a great tool that create valuable opportunities, but you have to understand it,” Smith said. “You have to make sure how you crunch those numbers are consistent with what you agreed to with the state of Maine.”
    Council Mike Jenkins said he was not aware of any problems with the town’s TIF account and asked when those problems arose.
    “We brought it to your attention two years ago and we’re bringing it to your attention today,” Smith said. “We brought it to your management last December.”
    As a state statute requirement, the council had to countersign the warrant for the SAD 29 budget validation referendum. Voters will be asked June 12 to vote on the $12.4 million school budget. Polls will be open from 7 a.m. to 8 p.m.
    One councilor expressed concerns with the school budget.
    “This budget represents a 3.4 percent increase over last year,” Sue Tortello said. “It is really important for the citizens of Houlton to know that despite infusing a substantial amount of dollars into the school account of our budget, if the budget passes, it will result in the town coming in over budget.
    “We have insufficient money in our undesignated fund balance to cover this shortfall,” she continued. “In short, to cover the cost of the school, we will be looking at a certain tax increase.”
    The council also held a public hearing on the proposed water/sewer extension project for the North Road. On June 12, voters will be asked if they wish to spend $1.6 million in TIF funds to extend water and sewer lines along the North Road. If approved by voters, it would mark the second time water and sewer has been extended on North Road.
    In March 2011, the Houlton Water Company funded the first phase of the North Road water sewer project, with town TIF funds placed into a reserve account. Much of that extension was to accommodate a parcel of land, now occupied by Tractor Supply Company, but it also created additional retail expansion opportunities in that area.
    The proposed expansion will bring public water and sewer from the Tractor Supply Company north to just south of the Currier Road. Undertaking such a major project has been on the town’s radar since at least 2007 when it crafted a comprehensive plan. That plan suggested expanding the water and sewer along the North Road, since that area was targeted as the spot most likely to expand in the future.
    Walter Goodrich, chairman of the town’s Board of Budget Review, spoke in favor of the project and encouraged residents to vote “yes” at the polls.
    “I’ve been a resident for 40 years now and we have always identified North Road as a possible development area,” Goodrich said. “It has been impossible to do any major development because of the lack of water and sewer.”
    He added by using the TIF funds, the town could finally finish extending the water and sewer line with no cost to the taxpayer, nor rate hike by Houlton Water Company.
    “This is a fabulous opportunity for the town and something that has been needed for a long time,” he said. 
    Jon McLaughlin, executive director for the Southern Aroostook Development Corporation, also spoke in favor of the project and explained that if this project were not approved, the TIF funds would remain in that specific account for future projects.
    “Now is the time to do it,” he said. “All of the contractors are hungry right now, so I think you will get exceptional pricing that you might not get in future years.”
    The next regular council meeting is slated for Monday, June 11 at 6:30 p.m.