In the latest Purcellville Citizen Update and other media, Mayor Lazaro states that he is proud that the Town of Purcellville has ended this fiscal year with a surplus. The number given for the surplus is $623,000. On the surface one would think that this was a commendable performance. Before all the accolades are passed out, perhaps a closer look is appropriate.
A surplus exists when an entity takes in more money than it spends. A surplus does not exist if you have borrowed money and end up with some sum left in the checking account, unless the checking account balance is greater than the amount you borrowed. What is the truth in this case?
The General Fund revised budget was scheduled to borrow $5.7 M last year. This amount included approximately $4M for a partial payment of the new maintenance facility but did not include purchase of the new town hall. In fact, a separate public hearing was conducted to borrow $3M for purchase of the new town hall. That brings the expected amount that Purcellville General Fund went further into debt to a sum of $8.7M. Also, according to page 75 of the budget, line item 100-3980000-0000, the town transferred $437,800 from the Cash Reserve account.
Then one needs to ask questions about the revenue. Other than the huge county settlement income (about $2.8M out of a total of $5.8M), was other income as projected? If the income was indeed $623K more than budgeted and the town simply did not spend the extra revenue, it might not be worth many accolades. The projected real estate tax was just $2M. The source of the surplus needs to be determined; was it caused by fewer expenses or larger than expected revenue.
Mayor Lazaro has stated how well the town is doing in these hard economic times. Is the town really doing well in these troubled times? The town is going deeper and deeper into debt. The projected debt for all funds, as of July 1, 2009 is $65M. The ambitious plans of this administration will result in the debt to increase to a total of $100M by 2014. This amounts to a liability of approximately $40K per household in Purcellville. How many homeowners knew that by purchasing a residence in Purcellville that they assumed an extra $40K in debt?
While the town may have ended the year with $623K in the checking account, given the amount of debt that the General Fund incurred this year and the huge influx of money from the settlement of the county lawsuit, the facts do not support the conclusion that Purcellville has a surplus. The facts should send a red flag to the citizens that we are facing very serious economic problems in this town. Just like the Federal Government, Purcellville cannot continue to borrow without severe economic impact on the future of its citizens.