A financial analyst from the state gave Edgewood a report on its finances at the mayor’s request last week, concluding that the town is in “fairly sound” condition.
Michael Steininger spoke to the town council for about an hour last week, reviewing the town’s finances. It was the first time that the mayor and town clerk Juan Torres had heard the report, he said.
Steininger said he went through the town’s budget numbers without knowing particulars about loan payments, General obligation bonds, or other aspects of the town’s activities, looking for items that stood out.
Steininger noted that 40 percent of Edgewood’s budget comes from gross receipts taxes, which are at 8 percent in Edgewood. Some 25 percent of the town’s budget is “contingent on food and medicine,” he said.
Edgewood can enact another quarter cent of gross receipts tax, he said. At 8 percent, he said it’s the “lowest rate in Santa Fe County,” but the rate is higher than surrounding communities including Moriarty, Torrance County and Bernalillo County.
“It appears that the town’s entire budget is critically dependent on the general fund,” Steininger said, adding that this is a “red flag for me.”
He also brought up $17,000 paid to the Edgewood Chamber of Commerce, $5,000 in support of a festival and “$12,000 in dues.”
Steininger said, “Chambers of commerce are historically anti-donation violations all over the state—it’s very hard to find one that is not.” He said the town can sign a contract with the chamber, adding, “You can’t just hand them a check for a thousand dollars a month.” The anti-donation clause of the state’s constitution prohibits the government from giving financial benefit to a private entity.
He suggested passing a lodgers tax before the hotel under construction in town is finished, because it’s harder to get passed later.
Currently Edgewood is “either right at or just below historical average gross receipts tax revenue,” he said. Because over half of the town’s budget comes from two industries, retail and construction, that is something to keep an eye on, he said.
He came up with three primary areas of concern, he said: a “pattern of budgeting expenditures in excess of your anticipated revenues,” subsidies the general fund pays to the other funds, and the fact that half the town’s budget comes from two sources.
“I spend my entire time in a county or a municipality,” Steininger said. “If these things are concerning to me … as a DFA employee and as a finance person, … I think it’s important you be made aware of it.”
Mayor John Bassett said the town has instituted a quarterly budget review, adding, “We want to see how we look from outside eyes.”
Steininger suggested putting that budget review on the town’s consent agenda.
After Steininger’s report, Torres gave the town’s quarterly budget review.
He mentioned that police overtime had been left out of the budget and mentioned a few other details that will need to be adjusted through a budget resolution, which the council did not consider last week.
“Overall, right now our general fund is doing well,” Torres said. “We’re watching our spending, and we do have some savings,” and added that the town “revenue-wise is more or less projected where we’d be.” He said his biggest concern about the budget is “those subsidies.”
At the request of the mayor, Torres said he would fine-tune the quarterly presentation on the budget.