Oak Creek In a small town like Oak Creek, everyone seems to know everyone else's business. Except, that is, for the town's business.
After several months of major decisions regarding town employees, town fees and the town's budget, word began to spread that Oak Creek was broke.
Not true, say town officials. Rather, the decisions were in response to years of financial mismanagement by previous administrations.
Town Board member J. Elliott, a longtime business owner, said many residents are quick to jump to conclusions about the town's finances because they don't understand how its budget operates.
The town's budget is split into two fund accounts -- a general fund and an enterprise fund. The general fund collects revenues from sales and property taxes and other minor miscellaneous fees. The enterprise fund is fed from fees collected for water, sewer, electric and trash services.
Oak Creek's general fund has been operating at a loss for several years, according to town budget documents. But its enterprise fund appears healthy and self-sustaining.
Oak Creek Mayor Kathy "Cargo" Rodeman said previous town administrations drew thousands of dollars from the enterprise fund and deposited them into the general fund to keep it from operating at a loss.
The town's Denver-based auditor, Tim Mayberry, recently advised Oak Creek officials that taking such large sums of money from the enterprise fund and transferring them to the general fund could be perceived as unethical, if not illegal.
Mayberry did not return several calls seeking comment about his audits or assessment of the town's financial condition.
Town audits from 2001 and 2002 show sums of money ranging from $19,000 to $70, 000 being taken from the enterprise fund and put into the general fund.
Rodeman said town officials ended that practice several years ago and began taking steps to change how the town handles its money.
"Although this worked for them, as I'm sure it would for us, it's not legal," Rodeman said. "That's why there is a difference with how things are now."
According to town budget documents, Oak Creek is spending more money from its general fund than it is taking in. The town's projected revenues for 2006 are $1,696,207, and projected expenditures are $1,729,543 -- an end deficit of $33,336. The town's reserve and emergency fund, which is fed mostly through an investor's choice savings account and CDs, is worth between $250,000 and $300,000, town Treasurer Sandy Jacobs said.
Rodeman said the restricted funds are "safe, intact and have not been touched except to add to them."
Jacobs said the town is working to rebuild its general fund, although that likely will involve more tough decisions and cuts.
"We were alerted to this problem last year when (Mayberry) noticed the funds (in the general fund) depleting. I guess he was worried then, and was more concerned this year that the cash was gone," she said.
One of the problems Jacobs said she encountered when she took the job in February was that no one knew how much money the town had. Nonetheless, town officials continued to spend money.
"They publish their accounts payable every month. That's a huge number. I was surprised at how much money was going out the door every month," she said.
The town's accounts payable for June was $150,231.
"With the things they can change, they have," Jacobs said. "I really think they caught the problem in time. Now it's just a matter of tightening up, spending less and finding more costs to cut."
Biting the bullet
Rodeman said the town has taken numerous steps -- some small, some large -- to fix the budget problem.
"The town isn't broke. The town isn't close to being broke. We've made the adjustments this year, and we will continue to do so," she said. "No more robbing Peter to pay Paul."
Perhaps the biggest step has been reallocating the accounts from which town employees are paid. Instead of paying Public Works Director Jim Photos' salary entirely from the general fund, portions of his salary will be taken from the enterprise funds because he spends much of his time working on the town's water, electrical and sewer systems. Similar changes were made for water plant manager Stan Gale and public works employees Phil and Levi Wisecup.
Dealing with the police department budget and insurance is not so simple. The police department costs the town more money than any other general fund expenditure. The department's 2006 operating budget is $148,595. In 2005, the department cost the town $104,935. The increase primarily was because of increased salaries and insurance costs.
Previous town administrations used enterprise funds to fund the police department's budget, Rodeman said. But because the town can't "legally and logistically" allocate police salaries and expenses from the enterprise funds, the town will have to continue to fund the department through the general fund, she said.
The alternative -- not having a police department -- is unthinkable, Rodeman said.
"If we didn't have a police department, we wouldn't have this problem with the general fund. But if we didn't have a police department, we would have no bank, no liquor store, no grocery store, no families, nothing," she said.
Although the town has decided not to replace the vacant code enforcement position, Rodeman said the town can't get by with just one police officer.
In addition to reallocating funds across the board, Town Board members have forfeited their $80 monthly stipends. Rodeman forfeited her $90 monthly meeting stipend. However, as the town's mayor and grants writer, Rodeman still is paid about $24,000 a year.
Town officials also have decided not to make donations to community groups, and they are decreasing the number of consultations they have with town attorney Bob Weiss.
Oak Creek's tap fees have increased 50 percent, and town officials recently decided to charge the Oak Creek Fire Protection District $500 as month to lease the old Oak Creek Town Hall on Main Street. The fire district previously was charged $1 a year to lease the space.
Oak Creek's town government is operating with a billing clerk -- who does not have town insurance, town clerk Karen Halterman, Jacobs and Rodeman.
Another recent change has been the town's vigilance in collecting overdue utility bills and other fees from residents.
Although the recent changes and decreased staffing may seem drastic to some, Halterman said she wouldn't be surprised if the town is faced with tougher decisions in the future.
"The board is going to have to be very vigilant and start looking at cutting more expenses. It may be more personnel, it may be benefits, it may be raising the town's (utility) rates. I don't know. Whatever it is, I'm certain it won't make anyone happy," she said.
A community concerned
For some Oak Creek residents, including former mayor Debbie VanGundy, the town's financial woes are alarming.
VanGundy said her biggest concern is that townspeople don't know what's going on.
"The first rumors I heard was that (Town Board members) weren't getting paid because the town was broke. Then I heard they weren't going to replace (code enforcement officer) Judy (Meyer). I'm hearing a lot of complaining, and I think the townspeople need to know what's going on," she said.
"If I owned a piece of property in this town, I'd be very concerned. I love this town. It has been home for 20 years. Right now I am concerned about its future."
The efforts of town officials to fix the budget and change old habits don't seem like enough, VanGundy said.
"It all just seems like a last-ditch effort because there is no money in the general fund," she said. "Everyone seems to be keeping pretty quiet about this stuff, except for the rumors. But even with rumors, there's usually some sort of truth at the bottom of them."
Oak Creek Fire Protection District Chief and longtime resident Chuck Wisecup agrees there's been financial mismanagement, but he disagrees that transferring money from the enterprise funds to the general fund is wrong.
"I don't know where they got this thing that it's illegal to transfer from the enterprise to the general (fund)," Wisecup said. "Without those transfers there would be no town of Oak Creek."
"It's all taxpayer money. I don't care if it comes out of the left pocket or the right pocket."
Wisecup also is concerned about the increased rent the town is charging the fire district and the effect it will have on fire protection service.
"This isn't going to kill us, but it's definitely going to effect what we're going to be able to provide," he said. "With $6,000 a year, we would have been able to buy five sets of new bunker gear or 12 new radios."
Halterman said one of the main reasons the town historically has had problems with its budgets is because Town Board members know little about government fund accounting. They are elected every two years and barely have time to get comfortable with one another, town policies and town finances before they are pushed out, she said.
Losing that continuity -- and the town's decision years ago to not employ a town manager -- has a lot to do with why the town is struggling now, Halterman said.
"The bottom line is that they are inexperienced citizens who become involved because they mean well and they love their town, but they're just no familiar with government funding," she said.
"The next board comes in and inherits the previous board's problems and it snowballs from year to year. New people come in and they don't know what's going on. We're still at a point that were spending more than we're taking in."
Halterman made it mandatory for town officials to attend a Colorado Department of Local Affairs budget workshop last week. She said it was the first step in learning how to handle town finances. Town Board member Dave Fisher was the only one to not attend.
"Right now there's not one person on the Town Board that understands the town budget. There's not one person that understands the town's finances, and I've been there," Halterman said.
Nevertheless, town officials are optimistic that recent changes and future measures will lead the town to a more secure financial future.
"We're survivors. We'll survive, " Elliott said. "What we're doing is biting the bullet now to make sure the Town of Oak Creek will be OK in the future. That's what you do. You leave things in better shape than you found them."
To reach Alexis DeLaCruz, call 871-4234 or e-mail firstname.lastname@example.org