Auditors presented their findings from the 2010 Financial Report at the Colonie Town Board meeting on Thursday, Oct. 20, where Republican Councilman Dan Dustin tried to get to the bottom of whether the operating agreement for the landfill is a sound idea or not.
Representatives from Bollam, Sheedy, Torani and Co. LLP presented the year-end financial statements from the Town of Colonie to the public for the first time. What was revealed was the current deficit in the general fund as well as a discussion over whether the operating agreement for the landfill should be considered a one-shot gimmick to close the deficit.
Bill Freitag of BST said the town was very well prepared for the audit when his firm looked at both the financial statement audit and also the compliance audit. George Person, also of BST, said the town reported a 2010 surplus of $3.7 million but a $6.5 million deficit in the highway fund.
“It sounds worse than you think,” said Person, who added that the town’s villages had originally opted out of the collection of the town sales tax, which he said would have been allowed if the town had not raised taxes in the town’s park fund.
The town has been paying off the highway fund’s deficit since 2008 and has paid its last $6.5 million to the fund this year. Person said the debt should be paid off in the fiscal year 2011.
“Over the last few years, the deficit was no more than a reflection of using the finance fund to fix it,” Person said. “Everything else has relatively been holding their own.”
Auditors also noted that the town’s biggest expenditures were in salaries and benefits, which Freitag said made up 60 percent of the town’s total expenditures.
Dustin soon began asking questions about the town’s current financial situation, as he asked whether BST had performed any professional services and analyzed what he referred to as the “lease” of the town’s landfill to Waste Connections, Inc.
Freitag said his company did not, but said that the town had asked them to give an opinion on how it would be reported in the financial statements. He said that BST became curious once the contract had come in but said it would be something that will be figured out during the months of April and June of next year.
Dustin than asked how the town would be able to account for the money coming in from the landfill deal properly, as he said the town is treating the payments as income coming in each year. Freitag said the town must put together the proper accounting treatment and present it to an outside certified public accounting firm to make an analysis.
“It is the obligation of a CPA that if your treatment is improper than this is what it should really fall under,” Freitag said. “The outside CPA firm basically says, ‘this is how you’re supposed to account for this.’”
Dustin then asked whether BST would be able to provide that analysis before the town’s public hearing on its 2012 tentative budget, and Freitag said it could be supplied.
The town’s spending versus its revenue was also discussed by looking at areas where the town budgeted for incoming revenues in 2010 but never ended up realizing it. One of the examples Person used was the sale of Heritage Park, which he said the town never ended up closing but budgeted it to pay off a recurring cost. He then clarified that the landfill was not considered the same thing.
“If the landfill is used to reduce the deficits, that would not be a bad situation,” he said. “You’re using the revenue to finance a non-recurring expenditure.”
Supervisor Paula Mahan assured the auditors that the $23 million up front from Waste Connections would not be considered a one-shot deal, as the rest of the contract states there will be guaranteed annual payments to the town.
“There will be income coming in every year for the life of the contract,” Mahan said. “At the end of the agreement, the town still owns the landfill. That asset belongs to the town and it’s making money off of it every year.”
She then added that the $10.8 million governmental fund deficit will be paid by part of the $23 million while $11 million will have to go into escrow, as the town still has to pay off bonds on the landfill that have yet to be satisfied.