NORTH KINGSTOWN—North Kingstown Town Manager Michael Embury sat behind his desk Tuesday afternoon with a stack of papers, emails and phone messages to sift through after the long holiday weekend and, on the surface, he should have had a smile on the face.
After all, the numbers from the end of June were in and, at the close of the fiscal year, the town is set to finish 2011 with a net surplus. But it’s hard for Embury to think positively about the state of finances in NK, especially with what promises to be a long, hard road ahead in 2012 and 2013.
After a better-than-expected collection of back taxes, North Kingstown finished the fiscal year with $33,255,000 in estimated revenue and $32,982,000 in estimated expenses, closing out the year with a net surplus of $233K. While the numbers aren’t final just yet—the books will remain open for 60 days following the end of the fiscal year and are still pending an audit—all indications point to NK closing out 2011 in the black.
But, over the next two years, Embury says, continuing to accomplish that is going to prove difficult.
Currently, the town of North Kingstown contributes 13.44 percent, 21.94 percent and 17.66 percent, respectively, to municipal, police and fire pension funds. Those numbers are expected to go up to 23.06 percent, 41.16 percent and 40.33 percent, respectively, for a total increase of $2,477,725 from fiscal year 2012 to fiscal year 2013.
Add in the estimated increase of $3 million the school department expects to need for its pension contributions and the fact that the town can only raise a little over $2.6 million total next year and it’s clear that several cuts are going to be needed to balance the budget going forward.
“The plans are out there and they’re not going to be things people want to hear,” Embury said. “There isn’t a whole lot we can do except cut the living daylights out of stuff. That’s the only thing that’s left. In all seriousness, I’m not being facetious, that’s the only way you can save money or at least balance it out.”
The biggest costs on the town side this year, Embury said, had to do with the Fire Department. In addition to an estimated $200K in arbitration costs, the town has had to pay significantly for overtime while the arbitration process plays out.
According to Embury, the arbitration process with the Fire Department has been ongoing since February and though a decision was expected three weeks ago, the town has still not received final word on what the terms of the contract will be.
“It could cost us a lot of money, it could save us a lot of money,” Embury said. “You never know what the arbitrator is going to come up with.”
Embury cautioned that, while it was nice that North Kingstown got a boost in revenues this year, the town shouldn’t rely on those numbers to balance its budget every year
“The reasons why the revenues are up is because of back taxes,” he explained. “If we didn’t collect that amount of back taxes, we would have had to be digging into the undesignated fund balance to balance the year out because of expenses that there wasn’t really a whole heck of a lot of control of. We didn’t have control over how long arbitration was going to drag out, what the final costs were going to be. We still don’t have a decision by the arbitrator.”
If the numbers hold, the town should have a surplus of roughly $8.5 million in its undesignated fund balance.
“It’s ten percent and that’s the required range all the financial houses talk about,” Embury said. “If we have a hurricane, it could be a lot of money spent to repair what we need to repair in the town so we’ve kept it at the level.”
Going forward, Embury said, the best thing North Kingstown can do is brace itself for a rough couple of budget seasons.
“People need to start talking about what the important services are,” he said. “The problem is I don’t know if it’s gotten to the point where it’s a discussion instead of people saying ‘well, you can’t cut this and you can’t cut that’. We have to figure out what the essential top-three or top-five are and how do [we] fund those?”