To the Editor:
In his recentMr. Churchill stated that the indirect rate structure “is a deeply flawed one” and falsely accused my office and the Municipal Council of having a “yearly slush fund”. Mr. Churchill is either confused on the issues or is intentionally attempting to mislead the public.
The Massachusetts Department of Revenue recommends that every community with an enterprise fund should (1) establish a written, internal policy regarding indirect cost allocation, (2) review this policy annually, and (3) apply that policy on a consistent basis. In fact, the Massachusetts Department of Revenue further recommends that local financial officials “should understand and agree on what indirect costs are appropriated as part of the General Fund operating budget and what percentage of these costs should be allocated to the enterprise fund.”
And that is exactly what we have been doing here in Attleboro.
In 2004, the City hired Maximus to conduct a comprehensive study to determine what the indirect rate should be for the Water and Wastewater Enterprise Funds. After completing a thorough analysis of the City’s financial data and meeting with all applicable Department Heads, Maximus calculated a fair and reasonable indirect rate for both of our Enterprise Funds.
Since that time, very little has changed in the structure of either of these Enterprise Funds. To conduct a brand new study, year after year, at a cost in excess of $25,000 per year would, in my mind constitute waste. By having this comprehensive study, Attleboro has a written, internal policy regarding its indirect cost allocation. This policy is reviewed, and ultimately approved, by the Municipal Council during each budget cycle.
According to the Massachusetts Department of Revenue, the Director of Accounts may reject any community’s indirect rate methodology, written or otherwise, as unreasonable for tax rate setting purposes. It is important to note that Attleboro’s methodology has never been rejected by the DOR.
Nevertheless, we are already in the process of procuring for an updated study now. This process of procuring for this study began during the budget process long before Mr. Churchill decided to make this an issue. This updated study may result in the same, lower, or an even higher indirect rate. For Mr. Churchill to even speculate that the enterprise funds are being overcharged when he has absolutely no data whatsoever is irresponsible at the very least.
Finally, I take great exception to Mr. Churchill’s use of the term “slush fund”. Any qualified candidate for Mayor would know that the City utilizes a stabilization account, a reserve fund for transfer and certified free cash to fund capital projects, one time expenses, and emergency situations. The Municipal Council and I have worked very hard to ensure that the City is financially prepared for its emergencies and capital needs. The taxpayers have benefited greatly by having these funds available because by doing so it reduces the need for the City to incur the high cost of debt. This has occurred through sound financial management and careful planning. In fact, our bond rating has increased because of our reserves. Many other cities and towns across the Commonwealth have not faired so well.
Mr. Churchill’s labeling of the City’s reserve funds as “slush funds” is as offensive as it is baseless, especially given the fact that the indirect rate has no bearing whatsoever on any of the reserve funds.
If Mr. Churchill would like to discuss the indirect rate structure, or any other City-related issues, I invite him to a public debate where our citizens can determine first hand each candidates’ level of knowledge and credibility on the issues.
Kevin J. Dumas