Pinehurst 2011: Deficit spending or not?
According to the website Investorwords.com, the definition of deficit spending is: the amount by which a government, company, or individual’s spending exceeds its income over a particular period of time.
Mayoral candidate John Marcum has accused village government of “deficit spending” by an average of $1 million for the last three years — a charge which has been vehemently denied by village staff, the mayor, and council incumbents. So, what’s going on here? Is this just typical election time nonsense, or is there a point in here somewhere?
Let’s look at the latest village government financials (dated 6/30/11, click here and scroll to page 2). According to page 2, the actual amount of revenue (income) for village government for FY 2010 was $13,436,915. The actual amount of government expenses for that same time period (operating expenses plus capital outlays) totaled $13,796,558. So, total actual expenses for FY 2010 were greater than total revenue (income) for FY 2010 to the tune of $359,643. That doesn’t match Marcum’s rhetoric, but it does seem to match the generally accepted definition for deficit spending.
(In FY 2011, actual revenues increased above what was budgeted, while total actual expenses came in significantly below what was expected.)
Village government says they need to underestimate revenue and overestimate expenses in order to account for unexpected changes. They also report $6.77 million in the general fund, which government sources describe as a “rainy day fund.” Sources at village hall claim that funds are typically shifted into the budget from the general fund to protect the village government from violating state laws requiring balanced budgets.
I can’t find anything to support Marcum’s claims of three years of deficit spending at $1 million a year. But the information in village documents for FY 2010 clearly indicates local government actual spending to be in excess of actual revenues.
I understand that government budgeting and accounting is different from standard practices in the private sector. In the business world, a year-end record like the one turned in by the village in 2010 would result in repercussions from the corporate board or some kind of management shakeup.
It sounds like we are having a quarrel over semantics here — bureaucratese vs. real world, common sense English. Instead of accepting wild claims and name-calling by bureaucrats and politicians at election time, do some research on your own. Check out the documents for yourself. Go to the polls armed with real-world facts.
Why don’t you quote the figures for fiscal year 6/30/11 where revenue was $15,246,058 and expenses were $14,411,793 for a surplus of $834,265. You obviously have those figures since they were on the same sheet as the fiscal year 6/30/10 figures.
Dan,
you’re looking at the numbers for the beginning of FY 2011, instead of the actual spending that took place during the year. Even those numbers, however, include both the first full Pinewild contribution of $1.5 million and a borrowing from the fund balance of a little more than one million. This is shown at the bottom of P. 2 and at the bottom of the revenue column on p. 20. They’re a little different but show essentially the same thing–Pinewild money gone, and over one million borrowed. Page 20 also shows the actual numbers as the year progressed and an additional $147K had to borrowed at year end (not yet audited).
Brant, I think you need to go to page 3 of the same report – that’s where the 838,913 excess is found.
Brant, Glad you saw the sudited overspending in FY10. If you’ll look at p. 20, you’ll see the borrowing $1.066 million from the general fund, then track it across the page as money is shuffled back and forth between revenue accounts in each quarter. At the end, the “actual” numbers (not yet audited) show more money had to be borrowed for a total of $1.213 M. Of course in addition, the first full year of Pinewild receipts were squandered on a huge surge in operating expenditures of 17% from Fy 10 to FY 11–over two million bucks!!! Hell of a way to run a railroad and this chronic overspending is now built in.
This year, FY 12, once again starts off a million in the hole and will get worse unless the new Council to be sworn in next month can reduce expenditures. Also unless you dig in to the numbers, you don’t see the $700 thousand in unfunded liabilities and the one million in installment debt, since virtually all buildings and lots are mortgage. We’ll never get a windfall again like the Pinewild money and its a disgrace for it to be wasted, instead of paying off these items and preparing for a sustainable future.
John: I think this falls in the category of “we agree to disagree”. I don’t think any amount of additional dialogue will cause either of us to change the other’s mind.
Dan, It really shouldn’t. Budgets are supposed to be transparent and followed as approved. Just read the roadmap carefully that I sent you and focus on the borrowed amounts both beginning year and end year FY 10 & 11 on PPs 2 and 20 and you’ll see the borrowing and use of the PW funds. Also look at the current budget which starts off the same way with a million dollars in excess spending. Otherwise, send me the cocumented analysis you’re relying on and I’ll be happy to review it for you.
Look carefully. You will see it is “Don”, not “Dan”.
Mr. Schneider,Apologies re misspelling your first name, fast typing tends to do that. I recommend you try to focus on the substance of the issue at hand. If you still don’t “see” the overspending, send me the materials that are confusing you and I’ll be happy to review them for you.
Mr. Marcum: See my reply on the other string for Village finances.