New budgeting practices muddy understanding of true cost of specific town services
The 2025 TMRB includes changes in budgeting practices that raise questions about transparency in understanding the true cost of essential services. These changes became apparent to us when we prepared our analysis of total departmental spending, which we presented to you last week.
True cost matters to ensure best allocation of financial resources
Understanding the true cost of these services is important because, among other things, it ensures that funds are appropriately allocated to maintain and improve services without overspending or underfunding. In addition, it promotes transparency and accountability in town spending, helping taxpayers understand how their money is used.
Staff addressed some of these changes in response to town council members' questions during the council's two-day, 12-hour TMRB study session earlier this month.
There is a change in budgeting practices where casualty and property insurance costs, previously attributed to specific departments, are now consolidated into the town manager's budget. According to town Finance Director David Gephart: "So public works, police, some of those costs where those, you know, the insurance costs were segregated or allocated to those departments, we kind of rolled them all into one big bucket in the non-departmental category there." When asked Council Member Bohen why he made this change, Gephart said that allocating the premiums to departments was..."causing extra work and confusion, and there's not really a discernible benefit." Inconsistent application of budgeting practice could lead to subsidization of Town's General Fund by Water Fund
Apparently, understanding the costs of running each department doesn't matter to Gephart, except when it comes to the water department. In that case, it mattered because the town can recoup these costs through increased water rates. The allocation of insurance costs to the water department, combined with the lack of independent audits for these charges and the town's administrative service charges to the fund, raises the potential for subsidization of the town's general fund by the water fund, leading to concerns about financial transparency.. That's bad because it is illegal!
Lumping together all town vehicle replacement costs hides true funding needs of public safety
The police department reports directly to the town council, making the council entirely responsible for their budget. The council should be able to quickly identify all costs necessary to support the town police department. Having some of these costs buried in other budgets is wrong.
The TMRB Capital Improvement Plan includes one lump sum for vehicles: $3.8 million. This total includes police vehicles, public works vehicles, and transit vehicles, without specifying amounts by department. Fleet costs are a significant part of the public safety and transit programs. Town Manager Wilkins emphasized the importance of this clarity at the beginning of the study session on the CIP budget, stating: "Of note in this chart, while public safety appears to account for only 1% of this year's capital spending, OVPD's robust fleet replacement program is included in the town's public facilities vehicle and equipment category here." Given the police department's direct reporting to the council and the council's sole responsibility for its budget, fleet costs should be identified in the CIP budget as specific to the police department.
Fuzzy vehicle replacement budgeting
The town uses a funny model for accounting for its vehicle replacements. They set up "reserves" for vehicle replacement and then book these reserves as expenditures in the general fund and revenues in the capital. Funding of vehicle should be an interfund transfer... not an expense or income item like other general fund transfers to the capital fund. The town needs clearer accounting on this.
Contingencies everywhere
The town has contingency funds in various places in the budget. They even invented a new category for capital projects. They call these contingency projects. These projects, which have not yet defined their scope, include significant future developments... like remodeling the police faciliity or building a new one.
Is this a "shell game" or does Wilkins not really want council input?
It's hard enough unpacking the TMRB when information is budgeted consistently from year to year. Consistent budgeting allows for year-to-year comparisons, better financial oversight, and quick understanding of budget needs.
However, when budget methods change without immediate identification, as they did this year, it raises questions about whether staff is playing a "shell game" or, worse, if they don't want anyone to truly understand the budget.
