'Scare tactic': HI council candidate criticizes preliminary budget figures

Thursday, October 29, 2020

By Scott Loftis


Will Holiday Island face a severe budget crunch if voters reject a proposal to incorporate as a town in the Nov. 3 election?

The answer depends on whom you ask.

In an Oct. 20 news release, resident Wesley Stille said the Holiday Island Suburban Improvement District presented two preliminary budgets at its meeting on Monday, Oct. 19 — one budget based on Holiday Island becoming an incorporated town and the other based on voters rejecting incorporation. Stille is a member of a citizens committee promoting incorporation and a candidate for recorder if incorporation is approved by voters.

“If incorporation is rejected, the District will face a projected cash flow deficit of $169,667 which would require an 8.4 percent increase in assessments to bring the District to break even,” the news release says. “If incorporation passes, revenue provided and expenses transferred to the incorporated town in the amount of $363,833 would create a surplus of $194,166. This would allow a decrease of 9.6 percent in 2021 assessments and still provide a balanced budget.

“Revenue received from turnback funds received by the town would provide the necessary funds. After other town expenses are paid, cash flow projections for the town result in a surplus of approximately $55,000 which creates a cash reserve.”

Holiday Island resident Barb Talbot, who is a candidate for city council in the event that incorporation is approved, criticized the news release as a “scare tactic.”

“So here comes the Incorporation Committee shouting the ‘gloom and doom’ that HISID will have a HUGE shortage of money next year,” Talbot wrote in a letter to the editor. “The District Manager boasts of the District’s financial stability in one breath and then cries ‘the sky is falling’ to support the process of incorporation in the next to amplify the ‘fear factor’ and get residents to vote yes.”

Talbot also referred to Dan Kees, a member of the HISID Board of Commissioners who is a member of the incorporation committee and a candidate to be the town’s first mayor.

“The wanna’ be mayor, if HI incorporates, is a member of the HI board of commissioners and has been actively using that position and the assistance of the HISID District Manager to further the incorporation cause,” Talbot wrote. “Questionable conduct at the very least.

“This budget ‘shortfall’ and scare tactic of an 8.3 percent raise in assessments is a new low even for them. It won’t happen because HISID wants to preserve the assessment of benefits (yearly amount owners pay) and the budget game is just beginning.

“As in every other year, the fat will be cut out of department requests, the capital improvement wish list will be modified to needs instead of wants and the final budget figures will be brought in line as happens every year,” Talbot wrote.

Kees confirmed that the budgets were discussed at the board of commissioners meeting.

“There’s still a lot of work to be done on that budget,” he said. “They were preliminary numbers.”

Kees said the budget numbers weren’t intended as a scare tactic.

“Any budget process, that’s always the case,” Kees said of Talbot’s statement that the budget would be adjusted to avoid a shortfall. “I’ve never seen a budget process yet in my 40 years of manufacturing or in the district where the first budget showed a surplus. They always show a deficit. But I would have to say that our budget this year that we’re working on for the district is impacted by the COVID-19 problem. We’re budgeting that revenue from the amenities is going to be down for next year, which is going cause us to either cut some capital spending or something that we normally would have made or make some other drastic cuts or increase assessments, so those are kind of the options. It’s not a scare tactic. It’s just the financial reality of having that extra revenue deficit for next year.”

District manager Lawrence Blood also said the preliminary budget “was not intended to be a scare tactic.”

“The district over the last four years has had a positive net position,” Blood said. “We had more money. We’ve been able to grow our reserve fund. We do that not only from having a balanced budget but just working it the entire year. Hopefully things turn out the way that you project them to turn out both on the expense side and on the funding side.”

Blood said he suggested to the board of commissioners that it delay any further work on the budget until after the Oct. 15 deadline for payment of real estate and personal property taxes and the Nov. 3 election.

“They could all have either a negative or a positive impact on the budget,” he said. “That’s why it was just a preliminary budget, which has no board action whatsoever.”

Blood said the district is “in good financial health.”

“The bigger picture is not the short-term budget, but our long-term sustainability with 50 percent of our revenue coming from assessments,” he said.

Talbot said she asked twice for a copy of the preliminary budget but did not receive it until she filed a Freedom of Information Act request. When she did receive the information, she said it reflected an even larger shortfall if incorporation is not approved.

“In the meeting, they identified a gap of $169,000, which would require an 8.25 percent increase in the AOB to make up the gap — which we all know that it is a preliminary budget. They also said in the meeting that the board was not going to be working on the budget until after the incorporation (vote) so they would know if they need to make adjustments that considered the incorporation or not. The new preliminary budget that I got then went all the way up to $225,000 with an 11.25 percent gap. This is why I want to see the worksheets. I want to see what the process is, what’s involved and what changes. In two days’ time, especially when we’ve been told nobody’s going to work on the budget until after incorporation but it increases almost $70,000 in two days time, it just leave me scratching my head all the time.”

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