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.