Kudos to William Hellmann, CPA! He whipped those budgeteers into shape (or they meekly submitted to his directions, in not sure which) and herewith presented is the Preliminary General Budget fund for 2008-09. (Link fixed Dec 23, 2007)
Is there anyone out there who can compare this to the 2007-08 budget and see how much we're saving in taxes this year?
The budget will be adopted at the next board meeting, January 23, 2008
Friday, December 21, 2007
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6 comments:
First, your link to the budget was broken, so here it is again for everyone: http://www.mv.org/files/news/prelim_budget_0809.pdf
Now for the tax question. Page 7 of the Preliminary Budget actually answers the question based on 2007-08 ACTUAL numbers as opposed to budget numbers. The difference is that the 2007-08 actuals (for real estate tax) were under budget.
So for apples-to-apples comparison, I'll also answer it based on the 2007-08budget. Page 3 of the Preliminary Budget shows revenue (taxes) from local sources. Line item 6111 is the real estate tax in the amount of $12,840,224. The final 2007-08 real estate tax was $12,170,366. This reflects an increase of $669,858 over last year's real estate taxes. Divide that by the number of owner-occupied housing units, 2346, and you get an average increase of $285.53 per home.
The total local taxes (Line Items 6111 through 6400) for the Prelim Budget is $13,674,224; on the 2007-08 it was $13,051,066. This reflects an increase of $623,158 over last year's local taxes. Again, divided by 2346 homes, that equates to an average $265.63 increase.
Essentially, the budget as it stands is proposing a 5.08% increase in millage, from the current 205.10 to 215.51 mills.
One interesting thing on page 6 is a $1.25M transfer from the Capital Reserve Fund. There had been much discussion about whether that can or cannot be legally done. Should be interesting. Nevertheless, this still leaves a good chunk (not enough, IMHO) of cash in the Capital Reserve Fund if they decide to renovate. If they do not, then I expect to see a serious tax cut, since on page 11 we still show a $2.7M Debt Service. If they choose to do nothing, then the remaining Capital may be invested (to earn no more than the interest on the debt) and cut the Debt Service.
At some point, in all my spare time (Ha!), I plan to review the preliminary budget in more depth to see how the allocations may have changed. I'll report back if I find anything of interest.
Thanks for the catch on the link. It has been repaired.
Thanks for being able to share your prior experiences with us. Some of the arcane issues in accounting are sometimes very hard for non-CPAs to understand. What are some of the legal issues around moving the money from the Capital Reserve?
Is it unfair to say the new board is doing nothing and taxes are STILL rising? I would prefer to at least have a foundation hole in the back of the high school with a promise of relief, rather than an emptier pocket with no visible evidence of progress.
One interesting thing on page 6 is a $1.25M transfer from the Capital Reserve Fund. There had been much discussion about whether that can or cannot be legally done.
Well, if William Hellmann, CPA, says it can be done, then by God it can be done! Oh, LEGALLY done? Uh, lemme get back to you on that......
So if I'm reading this right, we're getting a 10.41 mil tax increase (about $187 for a house with an ave. assessment of $18,000)with NO new school construction or renovations? Plus, they're depleting the capital reserve fund by $1.25 million to accomplish this? The capital reserve fund that exists for the purpose of undertaking capital projects, you know, like new school construction or renovations? And without the $1.25 million transfer, the legality of which I guess is questionable, the tax increase would have been about another 20 mils (~$400 per house) higher?
I hope no one is fooled by any claims of superb stewardship of our tax money, which relies heavily on the financial gimmickry of defunding the construction/renovation fund to reduce a still substantial tax increase for 2008-09, all the while slamming the brakes on addressing the conditions of the schools in any meaningful way.
Caveat: I am neither a lawyer nor a CPA.
That said, the legality of transferring funds from the Capital to the General budget was the topic of much debate, especially between William Hellmann, CPA, and Reba Dunford (also CPA) and Tom Kelly, Esq. Once money has been earmarked in the Capital budget it must be used for Capital projects. It does not have to be for the one that it was initially reserved (a new building in this case), but it must be for Capital improvements. William Hellmann, CPA, disagrees.
Is it unfair to say that we are getting an increase with nothing to show? Sort of. The Debt Service would show as an expense regardless of whether we build, renovate or do nothing. The difference is that if they are truly planning on doing nothing, then I would expect to see an equal amount on the Revenue side of the balance sheet under Investments. If that were the case, then I would expect to see taxes go down, not up. But it's not there, which gives me a little hope that they are still contemplating some kind of renovation. I might be naive.
Correction/Clarification:
I erroneously said the transfer was from the Capital Reserve. That was incorrect. The budgeted transfer is actually from the Capital Projects fund which is, indeed, the budget for construction/renovations.
The Capital Reserve, in contrast, is used for routine maintenance and repairs.
Sorry for the confusion.
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