Selectmen Revise Personnel Policy

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The Peru Selectmen voted on Monday evening to adopt a revised personnel policy. The major changes are a new section on "social media" and a provision for paid sick leave for Town employees. Full-time employees are eligible for up to five sick days annually; unused sick days can be carried over to subsequent years and may accumulate to a maximum of 30 days. The policy states clearly that sick leave is intended only for illness or disability suffered by the employee or a member of the employee's family and is not to be otherwise used for "personal" days at the employee's discretion.

The entire six-page policy can be viewed here.

Later in the same meeting the Selectmen reviewed the cost of health insurance for Town employees. It is expected that for Fiscal Year 2012 five employees will be getting health coverage, compared to just two as recently as two years ago. Peru Concerned Citizens has suggested that, in the face of sky-rocketing premiums (of which the Town pays 100%--see Article XIV), the Selectmen look at downgrading from the "Cadillac" coverage now offered to a slightly less robust plan that would save the Town almost $1,200 per employee per year. Since the renewal date is January 1, the Selectmen need to act soon if they wish to change plans.

Peru Concerned Citizens has also asked that the costs of health coverage, which are now embedded in the budget line "Miscellaneous," be properly allocated to the departments in which the expenses are incurred. The recently purchased accounting software approved by the voters on November 2 will facilitate this change in the Chart of Accounts.

The Fine Print

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The Peru Selectmen last night reviewed the Purchase Agreement offered by Harris Computer Systems for the provision of accounting and assessing software for the Town Office. The new package will cost about $22,000 for the first year. The Town must pay 50% down to get started with the installation (Page 2, Payment Terms).

Prior to signing the agreement, the Selectmen will be relaying to the vendor two questions from Peru Concerned Citizens:

1. Is it possible to add a guarantee that the annual maintenance fee will stay level for Year 2 and possibly also for Year 3? (Currently the agreement allows the vendor "the right to change maintenance and support fees from time to time," i.e. at any time.)
2. Will the Town be able to withhold final payment (5 or 10 percent?) until it can be demonstrated that the system is fully operational?

It is likely that the Selectmen will sign this agreement, with our without changes. Absent a bid process, there are no other vendors lined up to compete for the Town's business. The Selectmen and Town Clerk hope to have the new system in place for the FY2012 tax commitment in late June.

The purchase was approved by the voters on November 2, with funds to be drawn from the Capital Reserve Account. The Town's auditor, Keel Hood, met with the Selectmen last Thursday and voiced some misgivings (shared by Peru Concerned Citizens) about how that account is managed. His opinion is that funds should be reserved only for specific projects. The way things work now, the Undesignated Fund Balance is skimmed annually to grow the Capital Reserve Account, which acts as a slush fund that the Selectmen can tap at their discretion. It was proposed last night that funds in the Capital Reserve Account be re-directed to a Plow-Truck Reserve Account and an Office Software Reserve Account, with any residual balance going back to surplus.

Selectmen Struggle With Town Audit

Four months into the new fiscal year, Peru's Selectmen are still scrutinizing the accounting for the old one, which closed June 30. The recently released audit revealed that the Town was cash-flow negative for FY2010, spending $38,663 more than it received in revenues. A cut in Municipal Revenue Sharing distributions from the State (explained here) hurt. But the real kicker was a 70% increase in unpaid property taxes. Together, these two revenue sources came up short by about $100,000.

As a result, there was no "super-surplus" at year's end to transfer to our Capital Reserve account. The Undesignated Fund balance came in at $322,271; only an excess above $325K gets automatically transferred. So, entering the new year, the Capital Reserve account remained stuck at $163,116. On June 8 voters committed to the lease/purchase of a new plow truck, which will eat up $145,500 of that account over the next three years. The software purchase approved on November 2 will wipe out the rest. Bottom line: rebuilding that account will likely require raising new taxes.

The growth in receivables for unpaid taxes is a particular concern. It should not be surprising that a sputtering national economy sporting double-digit unemployment is constraining government revenues at all levels. From 2000 to 2005, Peru's tax receivables changed little from year to year, averaging less than $140,000. Last year, however, those receivables jumped dramatically from $105,455 (folks were beginning to catch up!) to $179,161. And that was before the new budget was adopted, in which municipal spending is slated to rise 19% year-over-year.

Town Clerk Vera Parent reported last night that receivables have come back down to $143,707, an encouraging trend if it continues. Though property owners are permitted to pay their taxes in biannual installments, many pay off their annual liability all at once as the fiscal year begins. Whether these pre-payments skew the Town's receivables over the short term remains to be seen. The Select Board and Finance Committee will need to revisit these figures after February 1, 2011, to make sure that unpaid taxes are not becoming a more serious problem.

Meanwhile, the Selectmen are withholding the auditor's paycheck until they get clarification on the numbers. It was hoped that the auditor, Keel Hood, would attend last night's meeting to answer questions, but he had other business. He is on the agenda for the next Board meeting on November 22.

How Peru Voted on November 2

Peru had a 61% turnout on Election Day, not bad for a mid-term election. Go here for the numbers. By a 556 to 202 margin, voters approved the local spending article to acquire new accounting and assessing software for the Town Office. Kathy Hussey was elected to finish Corey Jacques' term as Selectman; the term expires in June 2011.

Spending Article on November Ballot

On November 2 Peru voters will be asked to take $25,000 from the Town's Capital Reserve Account to purchase new accounting software for the Town Office. The request has been initiated by the Town Clerk, who points out that the Town's current assessing software (developed in-house by former Selectman Jim Pulsifer over twenty years ago) is approaching obsolescence. The proposed software purchase will replace not only Jim's system, but the Peachtree software that the town has been using for all other accounting functions for the past 14 years.

Last night the Selectmen conducted an informational meeting at the old grammar school to apprise voters of the details. The Concerned Citizens group had three concerns that were not adequately addressed:

1. The Town has yet to release its annual report for the fiscal year ending June 30, 2010. This report typically contains an auditor's overview of town finances. The Selectmen could not guarantee that the report will be available before the election. [UPDATE: The audit is available for public inspection as of late Tuesday, October 19--click here.]
   
2. The Selectmen were unable to provide a copy of the performance contract that they expect to sign with the software vendor. It is expected that regular maintenance for the new system will run $4,000 annually. Voters would like to read ALL of the fine print.
3. Neither the Selectmen nor the Town Clerk would guarantee that the new software, billed as a "time-saver," will result in payroll savings starting in FY2012. In fact, it was revealed at the meeting that Selectmen's secretary Kathy Hussey, should she be elected to the Board (hers is the only name on the ballot), would be disqualified from performing some of the functions now assigned to the deputy clerk. The reason: conflict of interest. This would seriously impede labor-saving and labor-sharing efficiencies in the town office.

Both the Board of Selectmen and the Finance Committee recommend a YES vote on this article. The Concerned Citizens of Peru have no recommendation either way, but have provided a fact sheet (including the exact wording of the article as it appears on the ballot) to help guide voters. The fact sheet, compiled by Marie Eastman, can be viewed here.

Reduced State Aid for Municipalities

Every month the Town of Peru receives a check in the mail from the State Treasurer. The money comes from a revenue-sharing pool that takes in 5% of all the state's receipts of sales, service-provider, and income taxes. Then it gets divvied up according to a formula that accounts for differences among the various cities and town in population and valuation. When the state's economy prospers, those revenue-sharing distributions tend to increase over time. During a recession, they level off or even contract.

In the graph above, you can see that the recession that began in 2008 reduced Peru's annual municipal revenue-sharing distribution from $139,659 in the fiscal year ending June 30, 2008, to $89,289 in the 2010 fiscal year. That is a loss of over $50,000, or 36%. That is not to say that tax receipts at the state level declined by that much. But our representatives in Augusta decided to divert funds from the revenue-sharing pool to the General Fund ($25 million in FY 2009, another $35 million in FY 2010). This left a smaller pie for municipalities to share. Essentially this was a tax shift, where towns were asked to bear a disproportionate share of revenue shortfalls so that the state could balance its budget.

The Maine Legislature's Office of Fiscal and Program Review has just updated its annual report of Major State Funding Disbursed to Municipalities and Counties. The report warns that towns should expect little relief from the state in the near future:

"Looking ahead, the outlook for state funding is not optimistic. The State is facing very modest revenue growth, and it may take until 2015 for state revenue to recover to its peak FY 2008 levels. With the end to ARRA stimulus funding in FY 2011, which helped the State avoid even more significant reductions to state programs and state assistance to local governments, the next Governor and the 125th Legislature will be enacting a 2012-2013 Biennial Budget that must address a General Fund baseline budget shortfall of more than $500 million and a structural gap in excess of $1 billion...It is very unlikely that the share of the state budget for local governments can be sustained in light of the shortfall and the significant increase in state share of Medicaid from the elimination of the ARRA stimulus funds."

In other words, expect the revenue-sharing pool to be cannibalized even more in the future to help keep state programs going. Towns will be left increasingly on their own.

Swinging into Action

This site has been created by a group of Peru residents with two goals in mind:

1. To increase citizens' awareness of issues affecting the Town.
2. To ensure that actions taken by town officers closely reflect the wishes of the townspeople.

Recent actions by the Peru Board of Selectmen have generated considerable concern that citizens are not being heard. First, the Board ignored a vote by the townspeople on June 8, 2010, to keep municipal spending for the 2010-11 fiscal year under the so-called LD 1 tax cap. The tally for that referendum vote was 271 AGAINST increasing the cap (a 57% majority) vs. 207 FOR. Second, the Board decided that a re-vote of the same tax-cap article would be done not by referendum, but by a special town meeting, a process known to suppress voter turnout. The result of that vote (on June 28, 2010) was 32 FOR the increase vs. 30 AGAINST. Third, the Board rejected a petition signed by 217 voters to add a referendum article to the November ballot to see if the Town might wish to restore the original tax cap. If the Selectmen are confident that they are acting according to the townspeople's wishes, why would they fear one more vote?

The denial of the citizens' petition was the proverbial last straw. A group of concerned citizens met for the first time on Wednesday evening, September 15, at the home of Bill and Marie Eastman to discuss how best to prepare Peru's voters for upcoming elections. Next on tap is the general election on November 2. There will be a local ballot to do two things:

1. To elect a new Selectman to fill the seat just vacated by Corey Jacques.
2. To see if the Town will approve the purchase of new computer hardware and software for the Town Clerk's office, with up to $27,000 to be taken from the Capital Reserve Account.

Our group came up with a list of names of people who might be willing to finish Corey's term, which will expire next June. Any candidate wishing to get his/her name on the ballot must return nomination papers to the Town Clerk by September 30.

The Finance Committee is being asked to review the proposed spending article at a meeting at the Town Office on September 23 at 6 p.m. Peru Concerned Citizens will meet next on Wednesday, September 29, at 6:30 p.m. at the Eastmans' on Pleasant Street to discuss the Finance Committee's recommendation. Those who would like to become more involved are welcome to attend.

During October, Peru Concerned Citizens will be disseminating information to residents about the November ballot. Updates will be posted at this site on a regular basis. Anyone wishing to receive updates by e-mail should contact Marie at 562-7357 or at maeastman@hotmail.com. Voters will be encouraged to vote by absentee ballot in advance of Election Day.

Looking ahead, the Selectmen will begin work on the FY2012 budget in February, and the Finance Committee will likely meet in March to review the budget. There are openings on the Finance Committee; anyone wishing to join should contact Kathy Hussey at the Town Office (562-4627).

In June, aside from the vote on the annual budget, there will be elections for the Road Commissioner and two Selectmen.

Please note that there is room below for citizen comments. Feel free to share your comments and concerns with the rest of our community.