Audit shows surplus of $300,000 Revenue from county, state increases, along with impact fees

25% of town's budget

Councilman suggests cutting debt, funding capital improvements

November 12, 1996|By Mary Gail Hare | Mary Gail Hare,SUN STAFF

An increase in revenue from county and state sources and from town impact fees has generated a budget surplus of nearly $300,000 for the town of Sykesville.

An independent audit of town finances identified the surplus, which is about 25 percent of the town's $1.2 million budget and comes in the same year that Sykesville has reduced its property tax rate by 4 cents per $100 of assessed value.

The surplus could mean another tax reduction next year.

"I know there will be a lot of sentiment to lower taxes again, but we have to see about putting this money to the best possible use," Mayor Jonathan S. Herman said. "The surplus puts us in a good position for the future."

In addition to county property taxes, town residents also pay 79 cents per $100 of assessed value in town taxes.

The surplus came from unexpected sources and was not the result of poor planning, Herman said. When the town staff worked through its fiscal 1997 budget, it underestimated annual expenses, impact fees and other revenues from the state and county, the mayor said. Auditors also found a slight error in the assessable base, he said.

The staff's "fiscal responsibility" saved the town about $35,000, Herman said.

"All our departments did well and did not spend their entire budgets," he said. "We also made conservative forecasts of income from the state and county."

Efforts to control growth also contributed to the town's surplus. In April, after a long debate, the county enacted interim development controls that curtail development in areas where schools and roads are crowded. In anticipation of a moratorium, developers applied for building permits in record numbers.

In Sykesville, the rush to get permits translated to $75,000, a $45,000 increase in the revenue projected from municipal impact fees.

Additional money also came from the county, which increased its property tax rate by 27 cents.

"We were conservative in projecting revenue, and we never figured the county would be raising its taxes," said Councilman Michael Burgoyne.

Overall, the auditors found $137,000 more than had been forecast in property tax revenue.

Lindsey & Salita, a Columbia-based accounting company, reviewed the audit with the Town Council yesterday.

"The real story is what we do with the surplus," said Burgoyne, who added that he would like the town to use the extra money to retire part of its long-term debt and to fund capital improvements.

The town owes $95,000 on the loan to build a police station three years ago and is paying 9.75 percent interest.

The accountants recommended paying off the loan or refinancing to a lower interest rate.

"If you pay off the police station loan now, you would have many more dollars for other capital improvements in the future," said J. A. Lindsey Jr., co-owner of the accounting company. "Liquidity and safety are your primary concerns."

The town also might reconsider the cost of the services it provides, including police protection, a $250,000 annual expense. Sykesville is also the only town in the county that offers its residents trash collection and curbside recycling, both of which push the public works budget to nearly $258,000 a year.

"If there were no more town of Sykesville, how much in additional costs would the county pick up for the services you are now providing?" Lindsey asked.

Reinvesting part of the surplus is vital to the town's future, the mayor said. He sees the money as a means of revitalizing the Main Street commercial district.

"We have a strong commercial base in town, and we need to work closely with the Sykesville Business Association to update our vision for Main Street," Herman said.

Pub Date: 11/12/96

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