Kicking the Can Down the Road

Well, at this point it’s no secret that the Town of Evans is in a financial pickle. As you’ve probably heard, we’ve run out of money, plain and simple. How does this happen? Aren’t we paying taxes so that we can pay our bills? Where did it all go?

Looks like there have been many years of borrowing money from future tax revenues, and not raising taxes accordingly to help repay those loans, which has finally come back to bite us. Our town’s credit is so poor at this moment that even local banks are hesitant to help. No investors were interested in purchasing a revenue anticipation note, or RANS, last month. Lucky for us, Evans Supervisor Mary Hosler appealed to Evans Bank, which finally came through for us by purchasing a smaller revenue anticipation note (RANS) to help cover the town payroll.

But the money from the bank loan is barely enough to last us through the end of this year. Enter the Erie County Legislature, which approved a $980,000 loan to help keep our town out of financial collapse, thanks to Supervisor Hosler. Specifically, the loan that Erie County is giving us is a TANS, or tax anticipation note. Fortunately, the Erie County loan represents no risk to the county since the county can repay itself through the property taxes it collects on behalf of the Town of Evans if the town does not repay its debt.

County Comptroller Stefan Mychajliw told county legislators at a morning meeting. “They’re  (Evans) frozen from the market right now. This is their only option.”

Mychajiliw praised Town Supervisor Mary Hosler’s efforts to try to finally address longstanding issues with the town’s finances, while the supervisor thanked the county for working collaboratively with the town.

“I cannot praise the supervisor enough for her aggressiveness in trying to solve the problem,” Mychajliw said. “It’s bad. She did not hide from it. She did not stick her head in the sand. She reached out to anyone and everyone who could help them solve a very serious problem.”

To be clear on what assistance we are receiving as  “loans” from Evans Bank (RANS) and Erie County (TANS): A revenue anticipation note (RANS) is an advance of 2016 town revenues that may not be collected until early 2017. A TANS or tax anticipation note (which is what the county is agreeing to provide) is a short-term loan based on 2017 property taxes the town has yet to collect. Since the previous administration had already played as many RANS cards as they possibly could, the county could only advance a loan based on potential projected tax revenue for 2017. Continuously borrowing in advance against potential tax income – AND NOT raising taxes all these years to provide the funds to pay back this rolling snowball of debt – was simply reckless and what contributed to the financial ruin of our town.

It seems like Evans’ financial problems began in 2007 under Supervisor Robert R. Catalino II, when the town borrowed $12.6 million to install new water lines, hydrants and a water storage tower. Instead of setting that money in a separate account, as required, the town combined that money with the rest of the town’s funds. At the time, the town put much of the blame on a former finance director Charles Katra and former town supervisor Pordum.

But former town supervisor Pordum said he did not know about deficit problems and issues with past borrowing until his last year in office. He said he kept taxes stable during his 2008 to 2011 term and always spent less than was budgeted. Unfortunately, however, a state audit showed that $2 million of that money was used to cover operating expenses, mostly for the town’s troubled water operations. Ever since then, the town has relied increasingly on revenue and tax anticipation notes to make ends meet.

“They just corroded the fund balance,” said Supervisor Hosler. “The water fund was borrowing from the general fund, which is a misappropriation of money, to the tune of $3.6 million.”

It seems that the State Comptroller’s Office has been sounding the alarm on the town’s finances since 2012. Two audits criticized the town for poor oversight and financial records that were “inaccurate, incomplete and unreliable. The 2012 audit criticized the town for allowing the water fund to sustain repeated operating losses. The town also improperly entered into a lease-purchase agreement with a third party for equipment and machinery that had been previously acquired, the audit said.

Establishing a working, balanced budget and eventually ensuring the town’s financial stability was a big part of the platform on which our current supervisor ran. Hosler who was a regional vice president for Evans Bank until retiring in 2013, has had the backbone to put this out in the open – where it belongs. And to be clear, this mess was not – in any way – her doing. Hosler was elected into this position because the people of this town obviously recognized that she has the knowledge, background and tenacity to face these issues head-on and begin the financial healing process. Hosler said she expected to work with both state and county officials to develop a better long-term plan for the town’s fiscal stability. In the meantime, she says she has already frozen spending and laid off part-time employees.

So kicking the can down the road seems to have been the norm for our towns leadership for a number of years. And of course, no one is crazy about the rise of taxes to cover years and years of mismanagement – especially NEW homeowners here who had absolutely no idea of what we are getting into. We have been given a chance to begin rebuilding our beautiful town’s financial status. Ranting about this situation does little more than raise blood pressure and cause sleepless nights.

As a resident of Evans, think about how YOU – how all of us – can actually HELP resolve this issue.  Send us your ideas or thoughts – we’ll pass them on to Supervisor Hosler.  In the meantime, please take a look at the chart below to help you figure out your tax increase. Remember to use the assessed value of your home  – which you can look up here .   Please give the supervisor’s office a call if you need assistance.


Source, The Buffalo News, 12/2/16, Tann, O’Brien