HUDSON — The city’s unassigned fund balance is $1.6 million more than the $900,000 estimate that Treasurer Heather Campbell gave to the Common Council on April 12.
The city now has $2.5 million in its unassigned fund balance.
The off-estimate was partly due to an error from the treasurer’s office, on which Campbell based her treasurer reports for months.
The city also cited significant savings from spending decreases in response to the pandemic along with high sales and lodging taxes as part of the reason for the unexpected funds.
Campbell’s reports included a miscalculation where some allocations were counted twice, which made it appear that less money was available than there actually was, according to the city.
Campbell said she is happy the error delivered good news rather than bad news, adding it would have been horrible if it had gone in the other direction, with the estimates being more than reality.
“It’s certainly better it went this direction,” she said. “Obviously it wasn’t ideal, but it did help everybody focus on the fact we need to focus on being financially conservative.”
The miscalculation has been part of the estimates for months, Campbell said Friday.
“I got too far ahead of myself and forgot that I already set those things up,” she said.
The allocations counted twice were the assigned unappropriated fund balance, referenced to as encumbrances, and money that had to be taken from the fund balance to balance the 2020 budget, according to Campbell. The amount counted twice from balancing the budget was just under $500,000 and encumbrances were a little more than $700,000, Campbell said Friday.
What Campbell often refers to as encumbrances are technically assigned unappropriated fund balance amounts, she said. The pockets of money come from the prior year’s budget but have already been committed to specific purposes. For example, money reserved for a purchase made in November that is scheduled to arrive in February, Campbell said. Grants and donations to specific departments are also considered encumbrances.
The $700,000 included 20 to 25 different items, including $100,000 for a truck study grant, $125,000 of unspent tourism board expenditures and $160,000 for the Promenade Hill Park ramp, which Campbell said will get moved to a capital fund this year.
Campbell’s rival for the city treasurer seat does not see the situation the same way.
Michael Hofmann, a local activist and employed in nonprofit arts fundraising, issued a statement Friday about the error, calling it a breach of public trust.
“An inaccuracy of this scale is a massive breach in public trust,” he said.
Hofmann is relieved Hudson is not in a budget crisis but said the off-base number the city has relied on for months has ramifications.
“Many concerned Hudsonians have been unfairly forced to worry about how we move forward in a fiscally responsible manner for our community, including many in city government,” he said.
City expenses were $1 million lower than budgeted for 2020 and significantly below forecast.
Mayor Kamal Johnson asked departments in August 2020 to create spending reduction plans and issued an executive order calling for expenditures of $1,000 or more to be approved by the Board of Estimate and Apportionment, which includes Campbell, Johnson and Common Council President Thomas DePietro.
The books for 2020 don’t close until March, so late 2020 costs such as payroll and invoices that come in early 2021 and are called chargebacks, Campbell said. The chargebacks were less than the treasurer’s office expected.
Johnson’s executive order likely made departments more cautious, she said.
While some larger departments provided specific budget changes following Johnson’s request to trim spending, other departments tried to be more responsible with spending but did not provide specific numbers to the treasurer’s office, Campbell said.
The city’s annual mandated financial document is due May 1, so it is normal for the city not to have final numbers from the year before until this point, Campbell said.
Sales tax came in April and was about $150,000 more than the treasurer’s office anticipated. Campbell’s April presentation had the up-to-date number for sales tax. Fourth-quarter sales tax in 2020 was the second highest on record, at $503,373, she said. Sales tax for 2020 was $1.85 million, which Campbell thinks is the highest it has been in the city. Sales tax in 2019 totalled $1.79 million; sales tax in 2018 totalled $1.74 million and sales tax in 2018 totalled $1.6 million.
The city also received $220,000 in 2020 lodging tax revenue.
“It was extremely encouraging to see lodging tax rebound, since it also bodes well for local businesses,” Campbell said.
Johnson credited the good financial news to the city’s efforts addressing the pandemic.
“As city leaders we didn’t panic,” he said. “I created a spending plan. We followed it and it paid off. Plus we did it without raising [property] taxes or laying off employees.” Prioritizing public health and supporting businesses through local grant programs and the Shared Streets program contributed to the economy, according to the city. Every department contributed to the city’s safety and prosperity, Johnson said.
Johnson did not know which allocations were counted twice, he said Friday.