For the 2003-04 Village Budget, then-Fourth Ward Trustee Diana Smith prepared and made a PowerPoint presentation at a public meeting explaining the details of the budget proposal by then-Mayor Costantino. One of Smith's biggest criticisms of Costantino's budgets during his term of office was that they included collecting taxes for services that were not provided. Smith's presentation called it "Feeding the Fund Balance": collecting taxes for items listed in the budget but then not providing the services; filling positions; or making purchases, thereby adding money to the annual surplus. This would allow the Board to build up enough surplus to use to hold the line on taxes in the next year's budget.It was right to criticize such a deceptive practice. It was right to shine a light on the habit of turning the village budget into an unencumbered "savings account" that could be used to promote the notion that taxpayers were being well served while dipping into a padded surplus to lower the next year's tax rate.
Smith suggested back then that collecting taxes for services you have no intention of providing; positions you have no intention of filling; and goods you have no intention of buying was a serious deception being perpetrated on the public.
But, has this practice changed under Diana Smith's administration?
In 2005-06, Smith budgeted $60,000 for the purpose of paving a street owned by a private developer. She called this amount "reimburseable." This was put in her budget despite the fact that she had been advised that providing funds to pave a street not owned by Village taxpayers was an illegal gift of public funds. Village Attorney Seld and other Village officials had advised Smith that the Board could not do such a project, regardless of any kind of expected future "reimbursement" from the private developer. But she went ahead and put it in her budget, it was approved by the Board and taxes were collected for it.
No subdivision paving project ever happened - because it could not legally happen. What then happened to these funds? Were they used for another paving job that was legal? Or were the funds just rolled over into the surplus?
In 2004-05, Smith and the Board approved a budget with $25,000 to be added to the Heritage Area Visitor Center Improvements Capital Reserve Fund. In February of 2005 Smith announced at a meeting of the Heritage Area Commission, with members of the public and press in attendance, that this money would not be deposited as budgeted (her decision) but would be deposited in the General Fund Surplus.
In 2006 when Diana Smith announced that the position of Village Planner was being eliminated, she claimed that it was necessary to do so in the middle of the fiscal year because the Board needed to utilize the remainder of the Planner's salary to pay for the Village's contribution to the salary of a joint Town/Village Economic Development Director. This amounted to approximately $24,000. The new position was to be filled no later than December 31, 2006. However, this new position was not filled until August of 2007, three months into the next fiscal year. This means that the portion of the former Planner salary that was not paid out because the position was eliminated could be rolled over into the surplus.So far under Diana Smith's fiscal plans we can point to at least $109,000 budgeted for public services not provided that later could be redirected to the surplus. Not having scoured through each Smith budget it is unknown how many other line items may have been budgeted, taxes collected, and then not provided so that the Board could "Feed the Fund Balance."
And now that Smith has altered the way budgets are presented - by lumping together subaccounts to veil individual line items - it is almost impossible to tell what is being spent on what. At the end of the year there is no announcement of what are called "encumbrances" - which is money not yet spent on a particular budgeted item by the end of the fiscal year, but is expected to be spent. The money is then encumbered by the Board for that specific use in the next year. If you don't "encumber" funds for a specific use the money rolls over into the surplus, to be used for whatever.
This allows the use of unencumbered funds to artificially reduce the tax rate, and make elected officials look as though they are doing
us a huge favor by giving us back the money they didn't have to collect in the first place! Instead of budgeting for needs they are for budgeting for reelection.Now that her name is on Village budgets, Mayor Smith has abandoned the use of PowerPoint presentations to provide in-depth analysis of Village spending. Publicly, the current Village Board merely glosses over the budget with little discussion. As Smith stated in 2004, "Our Taxes Should Not Be Based On Public Relations." Are we still feeding the fund balance, and should we reward elected officials who play this deceptive game of budget padding?
Seneca Falls taxpayers should closely scrutinize the upcoming 2008-09 budget; pay attention to which positions are included in the salary schedule. Then watch to see which positions are actually filled, or if a vacancy occurs in a position during the year whether it gets filled. Pay attention to scheduled projects, then watch to see if the projects get done. If the answer is "no" then ask yourself, are we just "Feeding The Fund Balance?"
The images in this post are actual slides from the 2003-04 PowerPoint presentation prepared and given by Diana Smith and Phil Dressing.
