By Kathryn G. Menu
For North Haven Village Mayor Laura Nolan, ensuring the village has a healthy fund balance is critical when looking towards the unknown, like if a storm system similar to Superstorm Sandy hammers the village, leaving hundreds of thousands of dollars necessary in immediate repairs.
The fund balance was one of the items most heavily debated at Tuesday afternoon’s budget work session, during, which the board went line by line through its draft $1,348,531 spending plan for 2013-2014. Overall, the spending plan mirrors many municipal budgets — increases in spending, particularly in terms of benefits and health care are coupled with dwindling revenues.
However, despite decreases in revenues the North Haven Village draft budget proposes to allocate $363,150 of its $801,810 fund balance in order to keep the tax rate stagnant as it has for the last six years.
On Tuesday, trustee Jeff Sander questioned how village officials were able to calculate what an appropriate fund balance should be in North Haven. Sander said often he feels the village overspends in its budget, rolling the extra tax dollars over into the fund balance, and questioned whether or not a better system could be devised.
According to village treasurer Eileen Tuohy, 15 percent of the village budget or about $202,000 is the minimum amount of fund balance North Haven should keep in its coffers, although she added “that’s low” when compared to what other municipalities hold onto in what is ostensibly a rainy day fund.
Sander suggested instead the village should create a reserve account, or a series of reserve accounts, fund them over several years until they are at an acceptable level based on their need, whether it be a roads reserve account, a long-term planning reserve account, a contingency reserve or a retirement reserve account. Sander said once they were funded at an appropriate level, the village could then replenish them as necessary.
Village clerk Georgia Welch noted the village budgets for issues like road maintenance and long term planning within the annual budget. If it is not used, it rolls over into the fund balance and is used to offset the budget the following year.
Sander said he was just trying to figure out what the board should use as a method of calculating what the fund balance should in fact be — whether that be $200,000, $500,000 or $1,000,000.
Tuohy said if the village was to create reserve accounts, an idea she advocated for when it comes to issues like retirement, it should do so by consistently adding to those accounts year after year, rather than funding them with big chunks of money in one budget year.
Nolan noted that maintaining the fund balance is one way they have been able to maintain a flat tax rate for over six years. Tuohy added that the fund balance, while still healthy, is dwindling and the village will have to keep in mind a two-percent tax cap mandated by the state.
“We just need to budget what is reasonable for the village and spend what is reasonable for the village,” said Sander. “We should budget based on our spending rate. I want a system to figure out what we should have in reserves.”
Nolan argued the village has smartly budgeted for items like roof repair, saving for it over several years before spending money on the project.
“But the day they built this building it would have been good to create a fund so we could replace that roof in five years,” countered Sander.
“I look at the fund balance as an emergency number,” said Nolan, noting if this community had been hit as hard by Superstorm Sandy as New Jersey, for example, waiting for the Federal Emergency Management Agency (FEMA) to come through with disaster relief funding would be much more dire a situation.
That being said, Nolan said she was open to looking at reserve accounts and asked board members to look at what items they should seek to cover in the village through those accounts.
The next budget meeting for the North Haven Village Board will be held next Tuesday, March 26 at 3 p.m.