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$3.6 million surplus in Cumberland

January 20, 2012

CUMBERLAND — An audit of Cumberland's finances shows the town ending the 2011 fiscal year with a $3.6 million surplus in its general fund, according to Town Finance Director Steve Woerner, who highlighted the results of the municipal audit at the Town Council's meeting Wednesday. The audit was conducted by the Warwick-based public accounting firm of Bacon & Company, LLC.
“We had a very good year, just as we intended to,” Woerner told the council.
Woerner said the surplus was built into the fiscal 2011 budget to make up for the budget shortfall in 2010, which was caused by the loss of excise tax revenue from the state and delays in sending out motor vehicle excise tax bills because of uncertainty of what the exemption would be.
“We promised the rating agencies we would recoup that deficit and the surplus we have is about $3.6 million for the year,” Woerner said.
“The good news,” Woerner added, is that the surplus comes, for the most part, from tax revenue collection.
“We collected more than expected in 2011,” he said. “Also, in the 2010 levy we're $1.6 million over. And we also collected more in back taxes by around $400,000.”
According to Woerner, the general property tax collection for 2011 was $59.6 million, which includes $200,000 in interest. The general property tax collection for 2010 was $50.8 million.
“From this we were able to buy the two new rescues with cash instead of having to borrow,” Woerner added. “This allowed us to bring our general fund balance up to $8.5 million, which is just under 13 percent of our budgeted revenue. This has also allowed our negative fund balance to go from a negative $1.1 million to $3 million, which is 4.9 percent of our budgeted revenue.”
Woerner said the audit showed the School Department with a surplus of $1,521,982.
The Water Department had an operating income of $381,000, which is good, Woerner said, but it still showed a $1.7 million negative in unrestricted net assets. He said that issue will be examine in more depth in light of a two-phase water rate and management study of the department, which is currently being conducted by a Providence-based consulting firm hired by the town last year.
Town officials are hoping the study will help the department lower operating costs and repay the roughly $4 million the department owes the town's general fund in accumulated debt.
The first phase of the study will evaluate all the department's current and future debt, expenditures and revenues and determine where water rates need to be set for the next five years to help eliminate the department's debt to the general fund, and create an operating reserve.
The second part of the study will focus on management and include a performance audit that will look at everything the department does from meter reading practices to all of the department's interior processes and controls to its production costs versus purchase costs.
The audit, Woerner said, showed that the Sewer Department broke even, but had an accounting loss of $180,000 - $60,000 of which were transfer payments to the town.
Woerner said a copy of the fiscal year 2011 audit is posted on the town's Web site at www.cumberlandri.org.

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