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.