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Frugality pays off for Town of Lockport with large, growing surplus

LOCKPORT – While many local municipalities and school districts are scraping the bottom of the financial barrel in the era of the tax cap, the Town of Lockport’s surplus is large and growing.

An audit by the town’s accounting firm, Lumsden & McCormick, released earlier this month, shows that as of Dec. 31, the town had more than $8.5 million in its fund balances, or more than two-thirds of the $12.6 million in total expenses the town incurred in 2012.

The surplus grew by $1.3 million in 2012, after going up by about $300,000 in 2011.

Yet in the past decade, the town has opened three parks and purchased a building that could be used for more town offices while not charging a general property tax. Also, the town hasn’t borrowed any money since 2002, though there have been refinancings of past bond issues.

The town actually is steadily reducing that bond debt. It paid off more than $1.5 million of the bonded debt last year, bringing the total below $8.5 million. Similar payments were budgeted this year. All the debt was incurred for water and sewer projects.

The town has a long tradition of being frugal, traced back to Supervisor Floyd D. Snyder, who ran the town from 1962 until his death in 1995.

Snyder probably never would have opened a park – he famously advised town residents to use the City of Lockport parks – but his spirit of finding the least expensive way to do things lives on.

“That’s been the perception, that we’re just trying to control expenditures,” Town Supervisor Marc R. Smith said. “Our secret is, we’re just as focused on raising revenues.”

Since there is no general town tax – there are special district levies for water, sewer, fire protection and, in the Rapids area, street lighting – the main source of general revenue is the sales tax.

Lockport’s growing population – it topped the 20,000 mark in the 2010 census – gave it a bigger share of Niagara County’s population-based sales tax pie than it had in the previous decade.

But Smith said town policies are focused on increasing business activity and, thus, the sales tax receipts.

“We talk all the time, ‘Buy in Niagara,’ ” Smith said. His long-term efforts to create a Transit North corridor on the South Transit Road commercial strip also are pointed in that direction.

But the Town Board is constantly emphasizing the need to keep a tight grip on the town’s wallet.

“They take it very seriously and keep me to the letter of controlling expenses,” Smith said.

“You have to analyze everything,” Councilman Paul W. Siejak said. “It’s easy to spend money. Anybody can do that.”

Last month, Siejak temporarily blocked a request from the county to appropriate $4,800 toward a study of the need for broadband Internet service in rural Niagara County. Smith estimated that about 15 percent of town residents lacked broadband access.

Several other towns had approved the contribution, but in Lockport, County Legislator David E. Godfrey had to come to a Town Board work session and explain the project in great detail, emphasizing that the new Internet service would be run by a private company, before the board would approve the money.

Siejak voted recently in favor of an application for a $500,000 state grant to install traffic medians on South Transit Road, part of the Transit North plan. But even that made him hesitate, because a 20 percent local match is required.

“At the end of the day, that grant money may cause us to cough up $100,000,” Siejak said. “You have to think.”

The town decided to get involved with parks because of its increasing population, but as always, it looked to do things as inexpensively as possible.

Many municipalities, for example, would have hired a contractor to erect a restroom building in Day Road Park. After costs for a prefabricated building proved “exorbitant,” as Siejak put it, the assignment went to the workers of the town Highway Department.

“They saved us $70,000 by doing it for us,” Councilman Mark C. Crocker said.

About four years ago, the highway workers erected a building to shelter their department’s heavy equipment.

“We had the talent to do it, and they saved us a ton of money,” Crocker said. “They do it on their downtime.”

By that, he meant days when they weren’t plowing snow or repaving roads.

Several towns have senior citizen centers. Lockport does not. It pays the Dale Association $45,000 a year to provide programs for seniors in Town Hall and elsewhere.

“We don’t have to have our own senior center. They do it better than we could,” Crocker said.

Although support for volunteer fire companies costs the town about $1.1 million a year, Crocker said not having a professional department saves the town plenty. Also, the town uses the Niagara County Sheriff’s Office and the State Police for its law enforcement.

In fact, the town is the landlord for the State Police, whose station is located next to Town Hall in a town-owned building that also holds the Town Court.

The town’s volunteer Recreation Commission organizes numerous programs in the parks, and the town negotiates discounts for its residents for several local attractions.

“We’re not looking to invest in expensive recreation departments that have a lot of programs,” Crocker said.

In 2011, the town bought the vacant former Carpenters Union headquarters on Dysinger Road – a $250,000 purchase – using surplus funds. The purchase included five acres of land – with the intention of using it for town offices. .

Auditors for the State Comptroller’s Office have in the past slapped a community’s wrists for having too large a surplus. “I used to hear that a lot before the Great Recession of 2008,” Smith said. “I haven’t heard much about that lately.”

Mark Johnson, the comptroller’s deputy press secretary, told The Buffalo News, “We don’t suggest that a certain percentage of the budget should constitute the fund balance. The law only says a municipality can keep a reasonable amount of fund balance.”

The state auditors generally recommend that a municipality should have at least two months’ worth of expenditures stashed away, Johnson said.

The Town of Lockport passed that threshold long ago.

“The positive fund balances ensure the town has top AAA ratings from the ratings firms,” Crocker said. “Over the years, the Town of Lockport’s credit ratings have achieved wide acceptance and have saved us a substantial amount of money in the form of better interest rates. In other words, it pays to have a healthy balance sheet. No apologies.”

“Everything’s not as rosy as it seems,” Siejak said. The town’s health insurance costs rose $217,000 this year to about $750,000. Siejak attributed that to some unusual claims, “which is why you have insurance.”

But with federal mandates expected to boost the health insurance costs by another 15 percent next year, according to Smith, the town will have some concerns.

Also, Siejak said, the 2012 highway fund balance was almost wiped out at the start of 2013 when the town had to pay about $180,000 for a new truck it had previously ordered.

The town is studying future waterline improvements in the Carlisle Gardens and Lincoln Village subdivisions and has raised rates in those districts over a three-year period to build up money to pay for them.

Crocker said the town also plans to move a water main that lies beneath a traffic lane on South Transit Road so future repairs can be made without tearing up the road. That will be an expensive project, one that’s expected to be done in annual stages.

Smith also said the town faces long-term costs for retirement health benefits for town employees. Smith said he is talking with Lumsden & McCormick about allocating some of the surplus in that direction.

“Regardless, the surplus funds belong to the residents of the Town of Lockport, and we take stewardship of every penny very seriously,” he said.