Hawthorne may be facing $400k budget woes

The Hawthorne City Commission will be reviewing Hawthorne’s budget again, after a concerned resident pointed out Tuesday evening what he believed were numerous discrepancies in the town’s guiding financial document.

Ray Daniel, a retired deputy state materials and resource engineer, attended the meeting to inform the commission of errors he found in the budget. Although it was passed as a balanced budget, Daniel’s own calculations show a deficit. A deficit he estimates to be nearly $400,000.

The problem, according to Daniel, arises from utility allocations made in the budget.  The adopted budget appears to reflect transfers from utility revenues into several other departments such as the City Commission, City Manager, Executive and other departments.  But those deductions seemingly never appear to come out of any of the utility departments’ budgets. 

According to the budget Daniel was referencing, 95 percent of the Customer Service department’s $42,000 budget is to be funded through “Utilities Allocations” while the remaining five percent would come from the general fund revenues.  But none of the city’s three utility departments reflect that $39,911 expenditure.  

“Utilities Allocations” were used to fund seven other departments as well and none of those transfers in are balanced by transfers out from any of the utilities.

To remedy the deficit Daniel believes the city will have to increase water/wastewater rates by 193.5 percent, almost triple what it is now, unless the city trims its budget drastically.

“Citizens of Hawthorne cannot afford such increases,” Daniel said.

He argues that if the city commission continues to use funds at the rate they are, with a reliance on the uncertain ‘balanced’ budget, the city will run out of money in the spring. Then to recover from the deficit, he believes the city will have no option but to quadruple the water/wastewater rate.

“I guarantee if you all do not take action you will have rough times ahead for the citizens of Hawthorne,” Daniel said to the commission at the meeting on Tuesday.

City manager Ed Smyth mentioned that he had the budget looked over by an accountant and was told that the budget was balanced. He did admit that the accountant only gave the budget a cursory glance.

Now Smyth is concerned that a he may have missed something or a mathematical error may have thrown off the balance. He said he was not sure of what exactly Daniel was arguing, and he cannot verify nor deny Daniel’s arguments. Smyth pointed out that he was not prepared for a discussion of the budget, and had no paperwork with him to discuss the issue.

“I have no idea what methods were used [by Daniel] or what version of the budget he used,” Smyth said.

Smyth is certain of one thing, he will make sure he and his accountant go over the budget in more detail.

Residents at the meeting were concerned that such serious problems may have been overlooked in the budget.

“I’m amazed, and it scares me,” Vivian Wagner, a concerned resident and regular attendee at commission meetings, said.

Commissioners were worried about the budget issues brought up in the meeting as well, and the commission decided to hold a budget workshop to further discuss these issues on Tuesday, Oct. 26 at 10 a.m.