Without speculating whether the town will close the fiscal year with a deficit, Village Administrator Mike Sturino flatly reported that Forest Park is more than $1 million in debt. That news was given to village commissioners at their April 28 meeting in accordance with a newly adopted practice to do away with financial projections.
Only one council member, Commissioner Martin Tellalian, questioned the value of such information without context. Repeatedly, he emphasized the need for “better projections” to help the council understand where the municipal ledger is headed.
“By the information that’s presented, there’s no way for any of us up here to assess where we’re at,” Tellalian said.
The fiscal year for the village ends today, April 30, just two days after elected officials saw a balance sheet that pegs the deficit at $1,182,453. That information was current as of March 31, according to the report, and at no point did Sturino or Finance Director Judy Kovacs offer any insight into the last month’s worth of finances.
Mayor Anthony Calderone said that prior to recent years the village did not receive projections as part of its financial report, painting the practice as nonessential. Municipal budgets have “a lot of moving parts” and village staff is working on drafting a more effective report for the council.
“I think we can agree on a format that isn’t going to be taken out of context,” Calderone said.
For several years, Kovacs has provided council members with a monthly financial report that includes a projection in which she attempts to outline trends within the budget. Recently, that task was wrested from her and Commissioner Rory Hoskins – the commissioner of the finance department – the mayor and Sturino are now providing greater oversight. In 2007, Kovacs estimated the village would see a deficit of $1 million, but the fiscal year actually ended with $84,600 in red ink.
On March 10, Kovacs projected the village would end the current year with a $1.6 million deficit. Stacked against the village’s slim cash reserves, she said it was possible that a loan would be needed to cover expenses. Since that report, several public officials have publicly questioned the usefulness of Kovacs’ projections.
According to the summary given Monday by Sturino, the village’s cash reserves swelled between March 10 and March 31. Savings that once represented only 20 days’ worth of operating expenses would now cover the village for almost 45 days.
Still, revenues have come in at only 70 percent of what the village had anticipated, falling well short of the $25.6 million against which expenses were allocated. At the same time last year, more than 82 percent of anticipated revenues were received, according to the report. Spending is also down from last year, but has outpaced what the village is taking in by more than 5 percent.
“This is our first shot out since that direction [to exclude projections] came down from the mayor and the finance commissioner,” Sturino said. “It looks short now, but we have receivables” that should lessen the gap and shrink the $1.1 million deficit.
Tellalian said he’s eager to see how easily the next finance report can be understood, because he is “grasping at straws” trying to interpret the latest set of numbers.
In other financial matters discussed at the council meeting, village officials were able to cover three separate bond and interest payments using portions of the revenue stream set aside to do so. Sales taxes and property taxes collected within two tax increment finance districts generated sufficient funds to make the scheduled payments in 2007, meaning the village does not have to pull money from other revenue sources to cover those costs.
Also, village commissioners voted 4-1 to borrow $195,000 to finance the purchase of a new fire truck. The loan will be paid over 60 months at an interest rate of 4.5 percent, according to municipal records. Tellalian voted against taking the loan, arguing that the amount to be financed is relatively small and could be paid in cash. During a terse exchange with Hoskins, Tellalian criticized the village for not setting any money aside to cover what is a foreseeable capital expense.
A grant for $190,000 will cover the remaining costs of the truck.