NORTH KINGSTOWN – During Monday’s North Kingstown Town Council meeting, finance director Jim Lathrop issued the town’s June 2020 budget report, showing a projected surplus of $1.5 million for the fiscal year. And while the department anticipated a slow in tax collections due to the COVID-19 pandemic, Lathrop said the decrease “did not have a material impact” on the town’s finances.
The June report represents the final budget report of the 2020 fiscal year, however the report is just a projection dependent on the upcoming audit, after which the figures could be revised. The figures shown in the report could also be modified during the “60 day rule” that states that any expenses paid during the 60 days following the end of the fiscal year, which apply to the prior fiscal year, can be allocated back.
While the town’s current report showed a $1.9 million surplus, Lathrop said that after the audit of the 2020 budget was completed, the surplus would be about $400,000 or $500,000 less.
“We had a good fiscal year, we still have quite a few adjustments to make,” he explained to the town council. “We are projecting right now, by the time we get done with the audit, a surplus in the range of $1.4 to $1.5 million.”
Lathrop said the surplus was due to departmental revenue, which has come in $2 million more than what was budgeted.
“This is due to strong tax collections, significant increase in police detail revenue, and strong investment income,” Lathrop wrote in the memo to his report.
“Overall the surplus is related strictly to revenue, as a whole the departments came in pretty close to right on budget,” he added during the meeting.
The fire department was highlighted in Lathrop’s report as coming in well under budget, however the finance director said that, after adjustments were made, the department’s surplus was less than originally projected.
“The fire department, in my original report, had a pretty significant surplus. But as we made some adjustments this week and last week, we are weaning that down significantly,” he said. “But they still will have a surplus and we thank them and we thank all of the departments for making efforts at the end of the year to keep with the budget.”
However, the report also stated that there were several departments that exceeded their expenditure budgets, utilities, assessor, and finance. The finance department was singled out as having been impacted by higher insurance cost and wages. The report went on to say that any additional funding for upcoming revaluations were transferred to the reserve account from the assessor department.
At the meeting, Lathrop explained that, due to the negative ramifications of the COVID-19 pandemic, tax collections were a big concern going into June.
“We were concerned about the impact COVID-19 would have on June collections,” Lathrop said. “But we saw only minor decreases that did not have a material impact,” Lathrop wrote.
Aside from some weaknesses in certain areas, tax collections were better than expected.
“Collections were good in June, which we were kind of concerned about,” he said. “We did see some weakness in the hotel and meal items, which is something that we expected.”
But Lathrop said that, due to a delay in motor vehicle tax bills, “cash flow” was the town’s big issue.
“Cash flow is our big issue, we are looking at first quarter payments and they were a little weak,” he said. “And that was primarily due to the delay in the mailing of the motor vehicle taxes.”
This week, the audit committee will meet and take up the 2020 budget audit for the first time. The town is working with Marcum LLP, an accountant and advisory services firm, on the audit.
Lathrop said that the audit committee would be using an “inflow product,” as they did last year, giving the committee a “real time status of what due dates are for certain items,” while also providing the finance department with information regarding meeting those due dates.
“It’s a great tool and I think it was a big reason we were on time with the audit last year,” Lathrop said.
He also said the finance department was currently planning a presentation on the use of e-check to pay residential tax bills. Lathrop said the use of e-check has skyrocketed in fiscal years 2020 and 2021.
“Hopefully we’ll be providing you with a presentation over the next month of what we’d like to do,” he said. “I’m impressed by what the staff has already shown me.”