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Williamsport another year older and deeper in debt

March 21, 2006|by ANDREW SCHOTZ

WILLIAMSPORT

The town's emerging financial problems sound twice as bad under one accounting method than another.

Speaking to the Williamsport Town Council last week, accountant Ron Shifler described the town's deficit as about $457,000 for fiscal year 2005.

Added to about $386,000 for the previous year, that would put the town more than $840,000 in the hole.

That estimate is correct, Shifler said in an interview later in the week, under a system that accounts for depreciation of assets, or the decrease in value of property.

For the average taxpayer, though, a cash-flow basis of accounting - excluding depreciation - might make more sense.

Using that approach, Shifler said the town lost $163,700 in fiscal year 2004 and $261,238 last year, for a total of $424,938.

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The deficit numbers are totals from three town funds: general, electricity, and water and sewer.

Shifler, of Teti & Carswell, the town's accounting firm, said the cash-flow approach doesn't account for transfers to other funds, but does include capital outlays or expenditures.

For years, government accounting factored in depreciation for "enterprise" funds, such as water, sewer and electricity, but not for general operating funds, Karen Benton, a senior policy analyst for the Maryland Department of Legislative Services, said Friday.

The Governmental Accounting Standards Board pronounced in 2004 that depreciation must be a part of accounting for general operating funds, as well, Benton said.

Williamsport officials didn't comment on accounting methods during Shifler's presentation of his final report for fiscal year 2005. They've known for months of financial difficulties.

Shifler said at the March 13 town council meeting that a discrepancy in utility billing is part of the problem.

The town buys about 10 percent more electricity than it bills, he said. For water and sewer service, the gap is about 18 to 20 percent.

Shifler said both discrepancies are unusually high. He said leaks, bad meters and improper billing all are possibilities for the gap in sewer and water service.

Mayor James G. McCleaf II said the town's aging sewer system, with its inflow and infiltration problems, is largely to blame.

Shifler and town officials also pointed to a sharp loss in tax revenue.

From fiscal year 2003 to fiscal year 2004, the amount of personal property tax that Allegheny Energy paid the town dropped sharply.

McCleaf said the drop was from about $400,000 to about $100,000.

Shifler said the town didn't do a good job of budgeting when the revenue dropped off.

"In general, we're just spending more than we're taking in," Shifler said.

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