The Chestertown Town Council heard the findings of the town’s fiscal 2012 audit last night from the CPA firm of Mayer Hoffman McCann, which indicates the Marina purchase raised the long-term debt for every town resident to $1,100.
“If you back out the Marina debt, you’d be down to $700,” said Steve Ochse, one of the firm’s CPAs who presented at the council meeting.
The Chestertown Marina was officially purchased in May with a 20-year infrastructure bond from the state in the amount of $2,045,444–at an interest rate 3.562 percent.
With property taxes of $11,000 and principal and interest obligations, the town has an annual liability of around $156,000, roughly $13,000 per month. The report, which only covers activity on the marina for May and June, the last two months of the fiscal year, showed $41,534 in operating revenue for the two-month period–with nearly $12,000 in net operating income. See page 23 of the Financial Statement 6-30-12.
But the marina purchase also increased the town’s fixed assets by nearly the same amount to $2,002,432, the audit report said.
Audit Compared Chestertown’s revenue and expenses to Centreville and Denton
Chestertown took in only $725 in revenue per resident in FY2012, compared to Denton and Centreville, which took in $1,013 and $938 respectively. Most of the revenue came from property taxes and sewer services.
Expenditures of $888 per person in Chestertown were also lower that Denton and Centreville, which came to $969 and $955 respectively. Of the total expenditures, Chestertown paid more per person for public safety at $221 per resident than Centreville at $216. But Denton dwarfed Chestertown and Centreville with $375 per person expenditures for public safety.
Chestertown also had the lowest debt per person of $1,101—with Denton and Centreville coming in at $1,338 and $2,622 respectively. The debt figures combine “governmental” and “business-type” activities, with Chestertown showing a mere $7 for government activities—compared to Denton and Centreville at $768 and $939 respectively.
Of the town’s $1,094 per person debt for “business-type” activities, nearly 40 percent was attributed to the Marina.
How the actual budget compared to the FY2012 forecast
Property taxes declined by $130,000 but income tax revenue made it a wash with $136,000 in unanticipated income tax revenue. General budget expenditures were $11,000 less than budgeted. Combined expenditures for public safety and public works came in at $81,000 below what was budgeted.
Unrestricted net assets, which come in the form of investments and cash-on-hand, rose to $2.32 million from fiscal 2011 and was largely attributed to a $500,000 settlement paid to the town for MTBE contamination that occurred in the 1990s and the bump in income tax revenue of $136,000.