Wind: 5 mph
By Lisa Loomis
As Duxbury residents prepare for a May 10 special Town Meeting to decide if the town needs to pay back $70,000 of debt over five years, the town's former auditor and current auditor offered their thoughts on the town's financial issues.
Duxbury Select Board chair Dick Charland asserts that the town needs to borrow $340,000 to cover the 2013 budget deficit of $110,000 and to cover $228,000 due on an unpaid line of credit associated with 2011 flooding. He previously explained that the $228,000 that should have gone to the line of credit went to general spending. While the 2013 audit shows a general fund deficit of $110,000, Charland says the town needs $340,000 to get on an even keel.
Former town auditor William Yacavoni disagrees, noting that the $110,000 deficit already includes the $228,000 due on the line of credit. He said that it is incorrect to add to the general fund deficit an amount, a number ($228,000) that is already included in that amount.
The town's current auditor, Bonnie Batchelder, said she gave the town several options. Via two phone calls, Batchelder said it was clear that the FEMA money for the flooding got put into the town's operating accounts and used for general expenses.
"They have a line of credit they need to pay and a deficit in their general fund balance. Both can be handled many ways. They can borrow and amortize the cost over time, repay it by the tax rate but spread it out over time, or they could borrow a portion and immediately raise the tax rate, or increase the tax rate to cover the whole thing," Batchelder said on April 24.
The first article on the warning for the special Town Meeting asks:
"Shall the voters of the town of Duxbury appropriate the sum of $70,000 to be applied to the outstanding debt of the town."
It does not specify the source of the appropriate (i.e., bank loan) or interest rates.
Yacavoni provided a copy of a September 2013 letter to Charland that followed up on meetings Charland and the select board had with the auditor earlier that month. In that letter Yacavoni notes that the unpaid balance on the line of credit is $228,000.
"Assuming the town collects its general fund taxes, $338,642, less estimate of $70,000 in taxes going delinquent ($268,642) and the general fund does not exceed the budgeted expenditures, I estimate the year end cash balance will be about $196,067. You will still have the loan to pay at the Merchant's Bank of about $228,000, leaving the general fund cash short by about $31,933," Yacavoni wrote in his September 28 letter.
"At the same time, after tax collections, the reserve accounts will have approximately $272,423 in cash, assuming the only other large expenditure is the $70,000 truck body. Therefore, overall the town will have sufficient resources of all funds to pay off that loan so we can put this 'event' behind us," he continued.
He offered up some other options including tightening up expenditures, making only mandatory payments and getting aggressive with delinquent tax collection.
Batchelder in an April 29 phone call said that the situation is confusing in terms of what people are trying to say.
"The bottom line is that the town absolutely has a general fund deficit of $110,000. The town absolutely owes the $228,000 line of credit and they absolutely don't have the ability to repay that right now. They owe the money and have a general fund deficit and have to take steps to correct that," Batchelder said.
Asked about a point that Charland made previously that the former town treasurer Ken Scott had opened a bank account to be used for FEMA payments and transactions and had then moved money into and out of the account, Batchelder reiterated that no fraudulent activity had occurred.
"The bottom line is this: There is no fraudulent activity which is just putting ideas in peoples' heads. That is inaccurate. They took out a line of credit because of the FEMA disaster. When the money came in, they were supposed to pay back the line of credit, regardless of the second account. It was not fraudulent, just sloppy, inaccurate reporting," she said.
Asked how the town would not have noticed that it was overspending its 2013 budget by such a large amount, Batchelder said, "Go back to sloppy financial reporting."
"The board makes decisions based on financial information that the treasurer gives them. The inaccurate information wasn't just last year or the year before. They hadn't had good information for several years. It was a combination of many things," she said.
Asked why annual audits would not have shown the many years of inaccurate reporting, Batchelder said, "I'm not going to speak to why it didn't show up before. My review of 2011, 2012 and 2013 is that there were consistently incorrect financial information and reporting to the board."
Duxbury's special meeting takes place at Harwood Union High School at 9 a.m. In addition to the article requesting $70,000, voters are also being asked to spend $20,000 from the capital reserve fund. Another article asks for approval for a seven-year lease/purchase of a 2014 Volvo wheeled excavator with a seven-year warranty, not to exceed $197,000, but actually cost an annual allotment of $28,141 for seven years. Article 4 asks voters to spend $40,000 from the capital reserve fund for culverts and repaving. Article 5 asks voters to shift to a July 1 through June 30 fiscal year in 2016. Voters are also asked to appropriate $85,000 for the capital reserve fund and $22,500 for the sand and gravel account.