HERMON, Maine — A recent transfer of funds earmarked for economic development into the town’s checking account to meet payroll obligations will be among the matters that the Town Council will address Thursday night.
The meeting is scheduled for 7 p.m. in the public safety meeting room.
Town Manager Clinton Deschene said last week that in order to address a cash flow problem related to the town’s April 1 due date for property tax payment, he transferred more than $500,000 in revenues from the town’s tax-increment financing district into the town’s checking account.
As it turned out, however, the funds were not used because enough cash came in to cover expenses, Deschene said. He said the funds since have been put back into the economic development account.
Deschene said that while the town had enough cash on hand to pay town workers, there was not enough in the account to cover the payroll for school employees. He said that historically the town’s cash flow takes a deep dive each February because property tax payments are not due each year until April 1.
Last year, voters rejected a warrant article that sought to split property tax payments over two due dates, a measure that Deschene and several Town Council members have said would smooth out peaks and valleys in the town’s cash flow.
What has generated some controversy in town is that Deschene did not seek council approval before transferring the funds on Feb. 23. Councilors learned of the transfer through a memo dated March 5, according to memos and council meeting video footage related to the issue.
Town Council Chairman Timothy McCluskey said Wednesday the council would have been informed on March 1 but a meeting scheduled for that date was canceled because of a storm.
“Information explaining the cash transfer was in the March 8 table packet for the council to discuss during our March 8 council meeting but the council, running late, elected not to review the information in the table packet, and they pushed it off to review on the March 15 meeting instead,” McCluskey said.
When the issue came up on March 15, Deschene said there was no requirement that he seek council approval and that no state or town rules were violated.
Town Councilor Tony Reynolds, however, disagreed and has requested an independent audit, which will be discussed Thursday.
The council also will look at strategies to prevent the need for such a move in the future, McCluskey said.
While Reynolds said he would have supported the transfer, he said last week that the council should have been informed before the transfer was made as opposed to two weeks after the fact.
Reynolds said this week that he will not sign town warrants until his concerns about the town’s fiscal management are addressed.
Concerns raised about the transfer prompted McCluskey to request an opinion from the town’s legal council. The town’s auditor also looked into the matter, he said.
The opinion, written by Erik Stumpfel of the Bangor firm Rudman Winchell, found that because the economic development funds weren’t actually used, there was no violation of state law regarding the use of TIF revenues, the town charter or the town’s reserve policy.
Despite that, however, Stumpfel advised that Deschene seek council approval in the future.
McCluskey wants to see cash flow problems handled differently in the future.
“The council and the manager are reviewing why there was a need to transfer these funds and our intent is to develop workable policies that will prevent these types of shortcomings in the future,” he said.
“But in the end it is the manager’s responsibility to make sure our accounts are managed properly and I feel the town of Hermon is in capable hands with the current manager, as we have been able to retain a low tax rate and maintain the town’s financial stability during these tough economic times,” he said.
“I would prefer that there not be cash flow problems at all but in most towns there is a lull of revenues at different times of the year,” he said. “Some towns borrow on a short-term tax anticipation note. We don’t typically do that but maybe we should consider it in the future.
Tony Reynolds and Tim Richardson, especially Richardson with his embarassing comments he made at the last meeting to Clint, are behind this bull crap ( they are trying to get two more of their buddies on the council in the next election),its a personal thing between them and anybody else, especially Clint,they are nothing but troublemakers in town,and they both think alike and have the same credibility imo, who cares what either of them think, they should be happy to have a mangr. of the ability they have and a mill rate of 13 ,goood luck finding someone else after Clint retires or moves up ,check with Bucksport and how long it took them ,no one wants to deal with this small town mindedness.And PS the townspeople should have voted for the two payment dates , its the same dang thing, ya just divide it in two.
Did councilor Reynolds disagree because he feels local/state laws were violated or because he feels slighted…If it’s the former, then have an audit…if it’s the latter…then deal with it without the audit.
No laws were broken, he is a troublemaker and very unprofessional, listen to him on the meetings, all he does is kiss up to Richardson , they already have their buddies picked out to try and grab two seats in next election ,hopefully the townspeople arent fooled ,they already slid Reynolds in there.
This reminds me of former President Clinton’s discussion of smoking pot – I smoked it but didn’t inhale. Hermon has rules regarding the use of funds from the operating account or any reserve account. The transfer of more than $25,000 not included in the operating budget to a reserve account or the use of more than $25,000 from an existing reserve account requires approval granted via special town meeting. There is no wriggle room on this such as it was transferred but not spent. The Town Manager transferred these funds without proper authority.
Not true, even Reynolds said that night, he didnt do anything wrong,he was slighted. Waaaa
Thank you Tim, it is nice for once to hear a rational voice in any level of politics.
written by tim :) btw which tim
McCluskey, and no I am not him.
Herman readers, you need to first find out if the Town has converted their financial management system to TRIO software. This allows the ‘operative’ to move funds around with absolutely no trace.
Case in point. Lisbon converted from Northern Data Systems which does track every penny, to TRIO when the current town manager ‘slithered’ his way into our little community via the current in the Androscoggin River.
Continue to learn more about small town corruption here http://www.lisbonreporter.com
dumb, nothing is hidden, thats what the latest audits have shown .
Thank you biggnfast! Someone finally exposing Tony and his motives. He only ran for council to stir up trouble. If you are a resident of Hermon you should attend the meetings. It seems the only ones who go are there to criticise every move the Council and the Manager make. In response to ConcernedMainer1, the TIFF account is not a reserve, therefore it does not fall under the reserve rules. The town manager did what he had to do to make sure people got paid.
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Personal vendettas are the basis for the audit that has been requested, not good fiscal managment. Poor use of my tax dollars given the Town Attorney has already confirmed that no laws were broken. In the managers notification to the Council I believe he suggested developing a policy on how to handle the situation if it happened again. I urge cooler heads to prevail, save the money on the audit and develop a policy because I for one would like to see the Town and school staff paid on a regular basis.
See you at the Council meetings.
Exactly, Reynolds whines about money spent on Annis road last year (it sorely needed it)money which was spent BY THE VOTERS, along with Billings Rd (even worse, if its possible) then wants to blow money on an audit, is against purchasing one small fire truck, but suggests spending more money on a bigger one. Totally clueless ! Hermon doesn’t lack for money with industrial parks in town(almost 400 businesses) that constantly pour money into the town coffers.
The Town has low taxes because we have a good base of business (thanks to the Council, Ron Harriman, & Clint) and we have very few services. No public water, no public sewer to speak of. The budget is largely the school. People should be asking themselves what Tony and his cohorts are up to? If it’s about lower taxes, what are you going to eliminate? SNOW PLOWING, the SCHOOLS!!! Of course not, this is all about throwing around his “old boy” status and removing a guy he doesn’t like.
If your really on a mission to improve transparency in Hermon, you would focus on the school system, not the Town office. The town budget doesn’t have $2.2 Million in cash reserves.
no they actually have more than that,trust me you dont wanna go public on water and sewer its a beast that nevrer stops growing,ask bangor and brewer and its dictated by the feds.other than that your spot on.And BTW they aint gonna elimniate snow plowing Richardsons boy has that contract ,see how the ole boy network works? but they should and have the town do it.
The article in the paper was initiated by Tony. He called the Bangor Daily.
What a shocka !!!
When you have millions in your town accounts and millions more in your school accounts you dont have cash flow problems ! So shift it around till the taxes roll in,its called an interest free loan, every town wishes they could do this, instead of a TAN( tax anticipation note) .
http://fu.gy/20Y
is ther some back masking goin on here whats the hidden message
Did you break out the coffee brandy a little early today?
LOL yep
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First of all, I have personally dealt with Clint Deschene as a representative for the Town of Hermon over the last several years and find him very forthright, honest (too honest sometimes) & professional. He has served Hermon well and I have no doubt that what he did was for the right reasons. However, I think that rules sometimes get in the way of “common sense” as a result of society trying to legislate such a quality (which cannot be done no matter how many pages are a result).
Having said this, I think Mr. Deschene would now agree that some sort of pre – notification would have been a much better idea. :) Whether it was completely “legal” per rules / regulations or not, that type of money being transferred certainly raises concerns and all of the recent indiscretions by municipal officials in other towns brings this sort of thing to light.
However, Mr. Reynolds’ actions are much in the way of the “embellishment” rule for hockey. This is a complete flop and his ability to be on the board should be the real question here. To call for an AUDIT after the one you are questioning has informed you of the issue ??? REALLY ?? I would think that annual audit would be just fine along with the message to your trusted town manager to “please ask / inform us next time” would be sufficient. Freedom of speech doesn’t allow you to yell “FIRE” in a crowded room.
Instead, maybe the attention should be diverted to the real issue … cash flow …. Simply a result, as many of us other towns have to deal with, of taxes being post paid. The simple solution would be the split dates on payment as some towns do. Those that don’t pay on time will be late anyways and may pay a little more interest, but many have escrow accounts that would simply adapt to the new payment schedule. Yes, the TAN is an option, but can be rather expensive and adds to the overall cost to run your municipality. What about a simple line of credit with the bank???
Simple problem … simple solution … Doesn’t require the reinventing of the wheel …
Good luck, Clint :)
Speaking of transparency, ever notice how the school budget is not posted anywhere, not put out for review at the school committee meetings? The town puts their budget on the website and has copies for the public at their meetings. And yet, no one ever questions the amount of the school budget. What is the school trying to hide?
And the school never wanst to be videoed
It also is incumbent of the council members to act professional towards one another, this has been the case except with mr Reynolds and his constant snipping at Mr Deschene and others, if you have a problem it should be aired in private, not in public for show, its bad enough that the someone from the public does it(they can be removed for getting personal which has happened a lot lately) he wasnt elected to act like a spoiled brat, scolding his fellow officials, its is pretty obvious that its a grandstand move on his part,he should be removed next election if he cant act appropiately.
I guess I missed the follow-up article to last nights meeting entitled “Hermon Councilor A Loose Canon”. Ms. Gagnon might take note that all of the sabor raddling and posturing by Reynolds and not a single impropriety occurred. Probably more than 50% of the community got wind of the first article. A second article focused on his actions would be welcomed.