We encourage Crestwood residents to look up the word “deficit” in their dictionaries.
Here’s how our Webster’s New World Dictionary defines deficit: “… The amount by which a sum of money is less than the required amount; specifically, an excess of liabilities over assets, of losses over profits or of expenditure over income.”
Crestwood city officials apparently haven’t bothered to look up the word deficit or have elected to ignore its meaning given comments by Finance Officer Douglas E. Brewer in the latest edition of the city’s Crestwood Connections newsletter.
In the newsletter, Mr. Brewer writes, “A recent article in a local newspaper, providing a synopsis of the city’s second-quarter financial report, prompted citizens to question the city’s financial position. The article reported that the quarter’s combined expenditures exceeded revenues in the city’s three major funds, creating a ‘deficit’ of $351,578. While the figures are accurate, the extraction of a few pieces of data certainly cannot provide the overall health of the city’s financial position …”
Given the fact the Call was the only newspaper to write a separate article about the city’s second-quarter financial report, one might think city officials would be pleased we provided the information to residents. But no, city officials apparently are taking exception with the use of the term “deficit.” The fact of the matter is the city is deficit spending — and not just for the second quarter because Crestwood’s projected expenditures for all of 2009 exceed its anticipated revenue for the current year.
It’s simple: That’s a deficit.
But Mr. Brewer writes, “The term deficit should be used cautiously when referring to a municipality’s finances. Revenues are received at different times of the fiscal year. For example, the city does not begin receiving any aquatic center revenues until late spring. Likewise, merchants have until July 1st to pay for business licenses and citizens have until Dec. 31st to pay property taxes. Therefore, expenditures will exceed revenues at times due to cash flow and this does not constitute a deficit.”
Once again, our Webster’s defines deficit as expenditures exceeding revenue. More importantly, however, this is not an issue of cash flow as the 2009 budget originally adopted by the Board of Aldermen last December was balanced by using $687,785 in cash reserves.
That fact was not lost on Crestwood’s longest-serving alderman, Jerry Miguel of Ward 3, who noted last December when the board adopted the budget that it contained ” … a $600,000 operating deficit …”
In fact, with the board’s decision earlier this year to prepay $865,000 toward the city’s remaining estimated Proposition S debt of $1.6 million, nearly an additional $800,000 of cash reserves will be used to balance the budget this year.
Many governmental entities routinely use cash reserves to balance their budget. The difference is they acknowledge the deficit.
Serious financial challenges lie ahead for Crestwood. We encourage city officials to spend more time seeking solutions to those problems instead of wasting precious resources trying to convince citizens a deficit does not exist when expenditures exceed revenue because fund balances won’t keep the city financially afloat forever.