By JOAN MCCOY
Leader staff writer
Cabot’s $7 million general fund and street budgets have been in a cash crunch much of the year, and one of the main reasons for the problem was revealed Monday night during a budget meeting held before the regular council meeting.
Instead of having about $850,000 left over at the end of 2005 to carry into the New Year as the 2006 budget seemed to say, the city actually had only about $450,000.
Add to that apparent $400,000 discrepancy the $200,000 that was estimated as new revenue from a special census that will not likely be competed this year, and the city has about $600,000 less to operate on than the 2006 budget said it would.
The census was not scheduled as it was supposed to be because the $280,000 cash to pay for it was not available. (See article on this page.)
Alderman David Polantz, chairman of the council’s budget committee, said Monday night that he thought the city books should be audited, not because he thinks money is missing but because no one seems to know how much there is.
But none of the other council members present (Eddie Cook, Tom Armstrong, Bob Duke and Patrick Hutton) were inclined to call for one since the regular state audit started that day. “There’s no way around that. We don’t know where we’re at,” Polantz told Mayor Stubby Stumbaugh, who became angry over his assertion that the budget numbers had “no validity.”
Polantz learned from financial records he received during the June meeting of the budget committee that the carryover number was less than estimated in December 2005 and asked Finance Director Dale Walker to explain why the number was half the amount it should be.
Stumbaugh said during the Monday night meeting that all the numbers for a budget are estimates, and gave what has become his most frequently used example of that fact: If Wal-Mart burned down, he would have to lay off half the city’s employees. But he said Tuesday morning that he also was surprised that the $850,000 carryover wasn’t available cash. “The bottom line is the money we thought was there, wasn’t there,” Stumbaugh said.
But the cash not being available as the mayor and council members believed it would be was not really a mistake, said City Clerk Marva Verkler. It was a misunderstanding caused by the type of accounting the city uses now.
When Verkler was responsible for accounting in the city before Stumbaugh took over as mayor almost four years ago, she used the cash method. But Walker uses the accrual method and an $850,000 carryover with that method doesn’t necessarily mean cash, she said.
The council stripped Verkler of her bookkeeping duties at Stumbaugh’s request and created the position of finance director. Verkler was openly distressed by the loss of her duties and filed a lawsuit that she later dropped to get them back. But recently she and Walker have started working together more and she said Tuesday that his numbers are accurate. The real problem is that the accrual method, though used now in many large cities, is almost impossible for the average person to understand, she said.
Verkler said new accounting software that Walker recently started using should prevent misunderstandings in the future.
And Stumbaugh said that although he was surprised that his definition of a carryover didn’t agree with his finance director’s, the problem did not warrant Polantz’s harsh criticism.
During the budget meeting, Polantz said the city council should freeze spending unless cash is available. The city has never done anything else, Stumbaugh said the next morning. If it did otherwise, the special census would have already been completed, he said.
The budget committee agreed to carry only one motion to the full council. The cash problem has been especially hard on the street department, which has no money for street maintenance.
The committee agreed to transfer $60,000 from the $2.1 million in bond money for streets that was part of the extension of the one-cent sales tax passed in September 2005.
The full council, which met about 10 minutes after the budget meeting ended, agreed to the request.
