When Brookfield’s 2005-06 budget was passed last July, it was balanced on the strength of two sizeable transfers from enterprise funds to the village’s general operating fund. But last week, Village Manager Riccardo Ginex announced that, under the advice of the village’s attorney, those transfers won’t be made.
As a result, the general fund, which pays for day-to-day operating expenses may take an unexpected hit to its bottom line when the 2005-06 fiscal year closes on April 30. Exactly what sort of shortfall, if any, the general fund balance will experience won’t be known until the books are audited this summer.
According to Village Attorney Richard Ramello, he argued against including in the 2005-06 budget a $406,900 transfer from the water and sewer fund and a $108,650 transfer from the garbage fund that would in effect “repay” the general fund for water/sewer and garbage-related charges paid from the general fund during fiscal years 2001-02 and 2002-03.
The problem with making such a transfer, Ramello said, was that there was no case law on the books authorizing such a move. If the transfers were challenged in court, it could end up costing the village even more money.
“The concern is that any taxpayer would have the right to question whether the village has the authority to do it,” Ramello said. “You could end up spending $50,000 to $100,000 proving you’re right, and where does that get you? Do you want to spend taxpayer money making law for the state?”
During 2001-02 and 2002-03, financial records indicate that expenses for operating Brookfield’s Water Department, including salaries and benefits, were not paid from the water and sewer fund. The village was also not allocating expenditures that could be directly attributed to garbage collection to the village’s garbage fund. Rather, those expenses were paid through the general fund, depleting that reserve.
When former Finance Director John Dolasinski was hired in 2002 and discovered the problem, he moved to start reallocating water/sewer and garbage expenses appropriately. He also proposed transferring money from the water/sewer fund to retroactively pay back the general fund.
“The previous village manager Dave Owen and John Dolasinski in previous meetings indicated we could make those transfers this year to make up for the previous years,” said Ginex, who was hired in August 2005 as Owen’s replacement.
“At that time, it was the board’s desire to do that to make up for the general fund.”
Will the inability to make the transfers result in a $500,000 shot to the general fund balance? That’s not clear, said Mark Tomassini, a certified public accountant who is serving as a part-time financial consultant while the village searches for a replacement for Dolasinski, who resigned in February.
Tomassini said that the cost-cutting measures since last fall, specifically related to village personnel, may mean that the hit to the bottom line won’t be that severe. He also called the $405,900 transfer amount proposed by Dolasinski “an educated estimate.”
“There have been cost savings to make up for the [lack of] transfers,” Tomassini said. “The big cost saving is in personnel?”salaries and benefits.”
Last fall, as part of the approved 2005-06 budget, the village enacted a series of cuts in the village manager’s office and Public Works Department.
Asked if the lack of case law could also be interpreted as no impediment to transferring the water/sewer and garbage funds to the general fund, Ramello said that his interpretation was “a matter of being fiscally conservative.”
Ramello also stated that it might be possible for the village to still transfer garbage funds retroactively, since there is an old precedent in place for such a move.
“I think transferring the garbage funds would be less problematic,” Ramello said.