Red Hook Village mayor not surprised by state’s financial rating

Many economic factors fed into 'fiscal stress' finding, Blundell says

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Red Hook village mayor Ed Blundell says a state report labeling the village in fiscal stress is not news to him, but he urged residents to look beyond the numbers.

According to the report, released Feb. 7 by the state comptroller, the village is one of seven in the state found to be “susceptible to fiscal stress.”

The village’s overall fiscal score was 49.2, just above the cut-off of 45 points, in the state rankings. The bulk of those points were the result of a low fund balance, which is the cash reserve a municipality has on hand to be used for any purpose. It is essentially made up of excess revenue after expenses are subtracted.

The comptroller’s office sets 15-20 percent of total expenditures as an ideal for a village fund balance, which for Red Hook would be about $340,000, according to Blundell. Red Hook’s current fund balance, about $150,000, is closer to 9 percent.

Blundell told the Observer that he knew the village was in a tough financial position when he came into office in 2011 after serving six years as a village trustee. The comptroller’s report, he said, “didn’t unearth anything we didn’t know about.”

“[In 2011] the fund balance was depleted…nonexistent…You can’t make up $340,000 in one year, two years, or three years. It’s a work in progress,” he added.

Blundell pointed out that larger economic factors — softening property values, lower home sales, and a drop in both the tax base and retail sales tax revenue — have all hurt village revenues. In a statement released Feb. 10 in response to the comptroller’s report, he also said,“[T]he village had pre-existing budget problems, which were being exacerbated by expenses outside its control, such as higher state-mandated pension funding levels and increased healthcare costs, which had double-digit increases.”

In the 2012 budget season, he said, the village board agreed on a five-year plan to bring up the fund balance by 2 to 3 percentage points a year.

In addition, he said, the board has also worked with village departments and employees to keep expenses in line with the budget once it is adopted and the board monitors how revenues and expenses fluctuate throughout the fiscal year.

At the end of the last fiscal year, the village hired a CPA firm to do its year-end audit, which Blundell thought made a big difference.

“If you look at Red Hook Village, it’s a great place but it got wracked economically…and it’s coming out of it,” he said.

The state report looked at a number of fiscal stress indicators over the period of 2011-2013 for 535 villages that have fiscal years ending on May 31. The comptroller’s office studies municipalities whose fiscal years end Dec. 31 separately.

Red Hook village was one of 15 put on a list for fiscal stress. In addition to getting 37.5 points for the low fund balance, the village also got 10 points for its percentage of cash to monthly expenditures, which was 32.7 percent in 2013 where the comptroller’s office considers 100 percent to be ideal. Another 1.7 points was earned because the percentage of debt service was 13.8 percent of net revenues in 2013, up from 13.3 percent in 2012 and down from 14.4 percent in 2011.

Beginning in March, the village board will begin discussing its 2014-2015 budget and will hold budget workshops open to the public every Thursday at 7pm in village hall starting March 6.

Blundell said the board will continue to emphasize growing the village’s fund balance without a major property tax increase or cutting services.

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