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DOR notes budget areas of concern; City auditor: All items have been addressed.

Byline: M. Elizabeth Roman

FITCHBURG - A review of the fiscal 2008 budget by the state Department of Revenue confirmed what officials have known since early this year: Balancing the books is going to be tight.

After completing a pro forma review for the city, Gerard D. Perry, director of accounts for the Division of Local Services for the Department of Revenue, sent a letter dated Aug. 8 that noted four items for officials to monitor to ensure a balanced budget. The pro forma review stemmed from a concern about officials' ability to set a tax rate because of a projected multimillion-dollar budget gap. Fiscal 2008 began July 1.

"It appears that on the basis of the information presented, the city's budget is still out of balance at this time," Mr. Perry wrote.

He stated the following concerns:

$500,000 from free cash had not yet been certified by the DOR. The money is needed to balance the fiscal 2008 budget.

$161,242 must be paid in September to the city's assessment to the Montachusett Regional Vocational Technical School.

A $655,000 Wastewater Department deficit must be paid in full by December 2008.

The letter also stated that further documentation was needed to demonstrate how the city plans to make up a fiscal 2007 self-insured health care deficit while also sufficiently funding the item for fiscal 2008.

"It's an early look designed to bring to the surface the issues that could prevent the city from certifying their tax rate," said Robert R. Bliss, spokesman for the DOR. "It's better to talk about these issues now."

He added that the fiscal 2008 review is a continuing process with close collaboration with city officials.

City Auditor Richard N. Sarasin said the letter was helpful, but noted that each item already has been addressed.

He said the city may not need any, or only a small amount, of the $500,000 from free cash to balance the budget.

"As receipts have come in, it's looking like we are going to just about break even," Mr. Sarasin said yesterday. "We did better than expected."

He said revenue from the landfill and a near 100 percent collection rate for other department fees may help the city stay in the black. Mr. Sarasin plans to close the 2007 books on Aug. 22.

Also, Mr. Sarasin said he already has plugged the Monty Tech regional assessment into his calculations of the $117 million needed to run the city the next fiscal year.

"The council just has to approve the assessment in September," Mr. Sarasin said.

Mr. Perry's concern about the city's insurance fund, meant to keep stocked to cover pending claims, stems from a $300,000 gap in what the state recommends and what the city has allocated. The state recommends a city like Fitchburg keep about $900,000 in the fund. The city has about $580,000.

"We have to demonstrate that our calculated rate-increases on premiums will make up the $300,000 difference," Mr. Sarasin said. He added that a broker and analyst, Peter Kenny, is preparing the documentation for the DOR.

As for the concern over the Wastewater Department's $655,000 deficit, Public Works Commissioner Denis Meunier said an 85-cent rate increase from $1.75 to $2.60 per 100 cubic feet was calculated to cover the debt before the December 2008 DOR deadline.

However, the City Council only approved the fee increase until February 2009. Then members would have to decide whether to keep the hike. Mr. Meunier said any decrease to the fee would stymie the enterprise fund's fiscal progress. He also said fiscal 2008 cuts made to planned maintenance items could affect the department's ability to sustain a projected $1.8 million increase to its fiscal 2008 revenue stream.

"Like any good business we need to maintain our equipment," Mr. Meunier said yesterday. "We have to compete with other providers."

Another potential budget buster is pending legal challenges from workers who say they were illegally displaced.

Mr. Sarasin also said that the DOR may decide to reject fiscal 2008 revenue items that are based on grants that have not been disbursed by a certain date.

"It was a friendly letter," Mayor Dan H. Mylott said. He said he appreciated the letter being sent to the city so officials can straighten out the issues before the time comes to certify the tax rate.
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Title Annotation:LOCAL NEWS
Publication:Telegram & Gazette (Worcester, MA)
Date:Aug 11, 2007
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