Pinehurst 2011: Deficit spending or not?


According to the website, the definition of deficit spending is: the amount by which a governmentcompany, 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.