The folks who write the Amherst Center op-ed piece in the Bulletin seem to be unhappy with Larry Schaffer's meeting the Finance Committee's target of no more than 2% growth by increasing earnings (aka fees) for a couple of departments. The Centrists give Larry credit for creativity but then go on to argue that his actions somehow deprive other town functions, including those whose budgets the Town Manager is not responsible for, of needed revenues. They believe that revenue from ambulance fees, for example, are not used simply on ambulance services but “spread across” the other priorities of the town. If Liesure Services can raise revenues, shouldn't those revenues get shared with perhaps the library?
But if the article's correct, Larry's meeting the target by raising fees, not taxes. There are a whole range of fees a town can raise either by statute or bylaw. Whatever the case, a fee is designed not to raise general revenues but to compensate the community for the provision of the service, has to relate to the provision of that service and provide a benefit to the fee payer. Fees aren't intened to be spread all over, taxes are.
The Centrists appear to have the same misunderstanding of enterprise funds. Basically, the fund gets used to offset the particular operation or department its set up for. Any retained revenues have to get deposited back into the fund at the end of the year, rather than becoming free cash. You can take money out of the fund to reimburse the town for expenses related to the operation of the enterprise. In short, if wastewater is operated as an enterprise, you can compensate the town for expenses related to wastewater but you can't take funds from the sewer bills for the library or have them “allocated like any other revenue.”
In getting a department to pay for some, or all, of the costs of operating itself Larry is in effect freeing up general revenues (that would be taxes and unearmarked state aid) for other purposes. The last paragraph notes that revenues should be shared “where the law allows” and its helpful to know where the limits lie. The Centrists are certainly correct to suggest that all sources of revenue be on the table when discussing the town budget as a whole, if for no other reason to determine to what extent departments can be self funding. To state the obvious: if a department is self-funding but less than functional, that's a good reason to consider eliminating it.
2 comments:
Hi Bernie
You may have misinterpreted our view in our column. We fully believe that Enterprise Funds should be protected - they should be run as town-owned businesses. Account for their direct costs against their revenues. If they turn a profit (surplus) then TM can vote that surplus somewhere else - but only TM has that authority.
Any revenues that are *not* in Enterprise Funds should be balanced across the town. That is why they are *not* Enterprise Funds. The Planning Department is a good example. Inspections generates a good amount of revenue - that revenue is not retained by the Inspection Services, not even by the Planning Department (of which Instpections is a part). That revenue is used in the General Fund for all our town services.
The bottom line of our column, what we tried (not so succinctly) is this: The Budget Coordinating Group should come up with a list of all Cuts and all Revenue Increases in our town (that are not in Enterprise Funds) and prioritize them *as a town*.
If you think that LSSE should raise revenues, or Inspections should raise revenue and that revenue should be protected and not be used to fund *any* other services in town, then those organizations should be placed into Enterprise Funds.
In fact, personally, I believe LSSE *should* be in an Enterprise Fund. But they are not.
Thanks for reading our column!
Regards,
Baer Tierkel
Baer,
My reading of the Department of Revenue (DOR) regulations is that enterprise funds can be expended only for costs related to the enterprise. So if there is a "profit" (retained revenue) it can't be spent on an unrelated activity, even by town meeting. That's not the case with enterprise funds in other states.
DOR also insists that a fee be related to the cost of the activity the town's engaged in. That revenue can go into a "pool" (general funds) as you suggest and get allocated out. Some towns put fees into specific revolving funds. In some cases you have to sequester the revenues -- wetlands fees raised by the Conservation Commission is the one that comes to mind.
We really don't have that much of a disagreement regarding the pooling of fees and then allocating available revenues. That's pretty much standard operating practice in many communities and the way I approach budget preparation. The caution here is not to raise rates in one department for the purpose of supporting another as a matter of principal. That leaves one open to having the fee structure challenged.
We agree that the real task here is to get folks to step back and look at the town as a whole and not simply to defend their turf.
Keep up the struggle!
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