Does city budget overstate expenses?
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Last updated 7/23/1996 at Noon
This money, which is listed in the budget as a "carryforward cash" revenue, is like a revolving savings account the city uses to pay bills between July 1, the beginning of the fiscal year, and November, when tax revenues replenish city coffers.
By telling citizens that the city plans to spend the money, as opposed to putting it aside for next year's bills, the city preserves the option of spending more than would otherwise be in the budget.
It has also allowed the city to transfer thousands of dollars into a fund to build a new city hall without going to the voters for a bond issue.
City Administrator Barbara Warren defends the practice which she says she inherited from previous administrators. Warren says city auditors have given their approval.
Actually, John Gregor, president of Gregor Professional Corporation, which audits the City of Sisters as well as a number of school districts and other municipalities, says that the system used by the city is a matter decided by the city council.
Gregor could not say if the city was intentionally misleading the citizens by overestimating the amount it planned to spend in any budget year. That information was not in the minutes of the budget committee meetings, Gregor said.
He did point out that it is not uncommon for a city or school district not to spend all of its budget each year.
Gregor said that if the city did spend all its revenues, both current income and the cash "savings account," it might then have to borrow at the beginning of the next fiscal year until the November tax collection. This would incur an interest expense.
Or the city might have to lay people off if an emerg- ency, such as unexpected replacement of a well or garbage truck, forced a sudden expenditure of more money than was available in the budget, Gregor said.
But the city is not just keeping the money in an account to pay bills or meet emergencies.
The city hall remodel fund is budgeted at $501,500 in the current fiscal year.
Of that, $75,000 is a transfer this year from water and garbage funds, $95,000 is from a transfer last year from support services, $80,000 is from voluntary community contributions, $250,000 is what City Administrator Warren hopes to get from the sale of the current city hall (appraised at $190,000) and $1,500 is interest earned.
John Phillips, property tax analyst with the State of Oregon Department of Revenue, said that the city is probably conforming with local budget law, a section of Oregon State Statutes.
But Phillips also said the budget really should be "a good faith estimate" of what the city actually plans to spend.
While not directly familiar with Sisters, Phillips said that if the city really anticipated not spending a certain amount of money in a particular fiscal year, the extra cash probably should be budgeted in an "unappropriated ending fund balance."
The city could allow for emergencies by budgeting adequate contingency funds.
City administrator Barbara Warren worries that this would restrict the city if, in an emergency, the city needed access to a large amount cash.
Phillips said this was not so, that the city could have any amount of money in a contingency fund "that is reasonable," and could spend the money by filing a "supplemental budget," which primarily requires adequate public notice.
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