Dave Reports on the Prop 46 Subcommittee
On Tuesday November 16th the Prop 46 subcommittee formed in July of 2009 submitted its final report, both pages, to the Woodstock board of finance. Readers might recall that this subcommittee was formed in response to a request by the town treasurer regarding concerns that had been raised about the accounting practices and certain errors that had been made in the administration and application of Prop 46 which had resulted in budgets that exceeded Prop 46 spending limits. In its report the subcommittee only directly addressed the one of several issues and that is the rolling over of emergency expenses.
The practice of rolling over of emergency expenses from one year to the next resulted in the carry-over of monies approved as one time expenses for as long as Prop 46 was used to set the spending limit for the budget and taxpayer funding of those expenses over and over through property taxes. Prop 46 was used to set the budget from 2004 through 2009 though used rarely in previous years and not used since. The handling of emergency expenses in the Prop 46 calculation was specifically addressed in a written letter of opinion by the town attorney dated March 5th 2008 where he stated quite clearly that non-recurring expenses (emergency expenses by definition are non-recurring) added to the budget subsequent to the adoption of the annual budget should not be included in the base for the following year. The subcommittee however found the practice acceptable
The justification for all this? Simple, this is the way we always did it and the budgets were approved in either town meeting or referendum and so all is legal. When it was pointed out that this too was in conflict with the same written legal opinion noted earlier, the chair of the subcommittee, George McCoy, responded,” we’re done”. It became immediately clear that Mr. McCoy, and perhaps others on the board, did not understand the implications of what they were suggesting for if it is not required that the proposed budget be incompliance with Prop 46, as the town attorney states in his written opinion, then Prop 46 itself would have been invalid or of no consequence since its inception as the board of finance could have proposed any budget they chose and if passed by town meeting or referendum would have been valid – they could have simply ignored Prop 46 all along, something multiple town’s attorneys have said they could not do, as Prop 46 has been validated over and over again since the early 1980’s. It is also abundantly clear that the only time town officials support Prop 46 is election time when they need the votes.
The subcommittee did not address the failure of the town treasurer to properly update the Prop 46 worksheets and the resulting errors that added several hundred thousand dollars a year to the allowed spending limit, and therefore taxes assessed, during the years 2004-2009 when the Prop 46 spending limit was used to set the budget. However, some progress was made with regard to this issue when board of finance chair David Hosmer verbally assured that in the future Prop 46 worksheets would be reviewed and properly updated at the time of the public hearing – usually the last BOF meeting prior to setting the budget for presentation at the annual town meeting – though the board declined to put anything in writing as I suggested. Since it is unlikely that Prop 46 spending limits will be applicable for quite some time as tax increases at or near double digits for next year and as high as 6% or more for the next several years are likely now that ARRA (stimulus) funds are gone and the state begins to deal with its financial crisis as was outlined by Marsha Marien of Marien & Assoc. (the town’s auditor), it is more likely than not that these kinds of errors will repeat in the future if Prop 46 again becomes a limiting factor in spending growth.
Audio of the subcommittee report part of the board of finance meeting -HERE- (requires media player).