A significant tax increase may be the only long-term solution to Edgecomb’s budget woes, selectmen said at their meeting Monday, April 20.
A warrant article will be presented to voters at Edgecomb’s May 16 annual town meeting asking what sum, if any, voters will authorize to transfer from the approximate $180,000 Woodend Fund to the town’s surplus account.
Even if the full amount is appropriated for surplus, Edgecomb Treasurer/Town Clerk Claudia Coffin said, it may not be enough to compensate for the deficit discovered during the audit for the 2013-2014 fiscal year.
The audit findings to date indicate Edgecomb’s surplus account was in the negative at the end of the fiscal year on June 30, 2014.
In the 2014-2015 fiscal year, Edgecomb overdrew its sand and salt account by approximately $40,000, compounding the deficit.
According to the auditor, Fred Brewer, with the accounting firm PFBF, the audit of the 2013-2014 fiscal year is ongoing and the true amount in the surplus account has not yet been established. Brewer confirmed the number, when known, will be a negative amount.
Estimates of the amount in the surplus account, stated at the April 20 meeting, ranged from “a couple of thousand dollars” to over $100,000 in the red. Brewer said he could not give an official amount because the calculations have not been completed.
The figure will most likely be somewhere in between the two estimates, Brewer said. The audit is expected to be finalized by May 1.
The recently discovered deficit in the surplus account is the resurfacing of the tax commitment error from 2012-2014, which caused a budget shortfall resulting in Edgecomb’s property tax increase.
Edgecomb’s mil rate increased by over 10 percent as a result of the error, from 13.15 in 2013-2014 to 14.90 in 2014-2015 – a much lower rate than it could have been due to use of the surplus account.
At the 2014 town meeting, Edgecomb voters approved using the surplus account to cover the full amount of the tax commitment error, $437,904.77, according to The Lincoln County News archives. The initiative was recommended by selectmen to prevent a much more dramatic increase in the town’s mil rate.
With a 2015-2016 municipal and education budget that calls for an increased tax contribution of 3.13 percent, an anticipated increase in the county tax commitment, and a depleted surplus account, an increase may now be inevitable.
Selectmen have previously discussed dissolving the Woodend Fund, established to create public water access in Edgecomb, and transferring the balance of approximately $180,000 to surplus to offset the anticipated budget shortfall.
Meeting April 20, selectmen decided to keep the fund intact and present voters with a warrant article asking what amount, if any, voters would authorize to transfer to the surplus account.
The warrant article was a compromise reached after outspoken objection in public comment to proposals to dissolve the fund. The compromise will allow the account to remain an established fund to be built back up over time, selectmen said.
The amount to be transferred to surplus would be determined by voters at the town meeting. The warrant carries no recommendation for approval or recommended amount from the board of selectmen.
Even with use of the Woodend Fund, selectmen agreed raising Edgecomb’s mil rate was the only long-term solution to the town’s financial predicament. “We’ve tried hard to keep the burden off of the property owner,” selectmen chair Jack Sarmanian said. Sarmanian asked the board – do we raise taxes or do we continue to be equitable to the community.
“Both,” Selectmen Jessica Chubbuck and Stuart Smith said in unison.
