With tremendous fanfare and all flags flying, Mayor Hsueh released details of his proposed 2015 West Windsor municipal budget to the two official town newspapers on February 12, the latest date allowed by the state’s Department of Community Affairs. However, it wasn’t until the afternoon of February 17 that the full budget was finally posted on the town’s website for the public to see.
As usual, the mayor is fixated on his favorite topic, the fund balance. He bemoans the fact that it came down from $6.6 million at the end of 2013 to $6.4 million at the end of 2014. Disaster apparently looms if we don’t raise taxes to bring it back up again. If we don’t, then it’s all council’s fault, especially in an election year.
Now, what exactly is this sacred fund balance, before which we must all bow down and worship? It’s the difference between cash and investments plus a small amount due from the state, and current liabilities at one particular moment in time. As we all know, our personal fund balances vary significantly from day to day depending on when we receive income and bills and when we deposit checks and write them.
Within certain limits, we can adjust these dates unless we run our own business and have to satisfy the IRS. They ask people who are self-employed whether they use the cash or accrual method of reporting net business income, and taxpayers have to be consistent on this until they formally change their method.
Obviously, both current receivables and current liabilities come into play here. Some time ago at a council meeting, I asked our business administrator whether the town does use the accrual method. Accrual for liabilities would mean that all outstanding bills would have to be submitted by December 31 and registered on the books even though they wouldn’t necessarily be paid until the following year. However, as I have seen in the past, this isn’t always the case.
The answer I was given at the meeting was that we use a “partial accrual” accounting method, which means that the fund balance reported for that date may not necessarily reflect a fully consistent state of affairs. Without knowing what “partial accrual” means in our case, we in the public have no way of knowing exactly how the fund balance is calculated as of the close of business on December 31.
In any case, have no fear. Our town is fully solvent and we have no real worries about our financial well-being even though the mayor is concerned that the sky is falling. There will be open budget hearings in the next few weeks before the budget is formally introduced. I plan to attend these meetings and hope to report back later on changes that council may be making.
John A. Church
