BLYTHEWOOD – A financial report on the Town and the Doko Manor by the Town’s CPA, Kem Smith, at the Jan. 27 Town Council meeting turned out to reveal not only a Town government with some cash flow problems, but perhaps more importantly, a nervous Town government unwilling to answer questions from the media about the particulars of the report.
After emailing a list of follow-up questions to Smith after the meeting, the list is reported to have ended up in the possession of the Town Attorney/Interim Town Administrator Jim Meggs who did not answer the questions nor make any reply to The Voice. The Voice then contacted two Council members for answers to the questions. One of those, Councilman Bob Mangone, explained to The Voice that he didn’t feel the Town’s CPA was the proper person to be answering questions about the Town’s budget, that questions of that sort should probably be addressed directly to Mayor J. Michael Ross. Ross said that, because Smith is a contract consultant, the Town would be obligated to pay her for the time she spent answering questions about the financial report. The mayor said the list of questions was forwarded to a Councilman who is a CPA, but at press time, no one had returned emails or answered The Voice’s questions about the financial report.
Some of the worrisome numbers presented by Smith at the Jan. 27 meeting were upstaged only by the theatrics of one already edgy Councilman. Bob Mangone lit into Smith for not having at the ready a spread sheet with details of a particular entry on the balance sheet that had to do with deferred revenue for the beleaguered Doko restaurant. In an increasingly boisterous tirade that lasted nearly five minutes, Mangone berated Smith, telling her she needed to be better prepared with a spread sheet detailing the moneys that made up the amount in question.
“I mean, if you are going to give us an audit, you ought to be prepared to come up with a spread sheet to show us what makes up all these numbers,” Mangone bellowed at Smith. Smith, taken aback at the outburst, explained that she could have brought along such details had she known Council wanted them.
“That’s why I sent the packet to you early,” Smith said.
After Mangone had raised his voice at Smith, to the surprise of the board and audience, he then accused Smith of yelling at him. The Mayor interrupted, explaining to Mangone that Smith was not presenting an audit, that she had only been asked to present the balance sheet for the Town and the Manor and not the details. The Mayor also told Mangone that the Town Hall was still holding some of the checks that were the subject of Mangone’s consternation and that Smith probably did not yet even know about them. Still, Mangone was not satisfied, instructing Smith, “in the future you should be ready to provide those details, then I won’t have to call you up the day after I get this.”
Review of Town’s Finances
Smith reported that while total revenue was budgeted at $1,210,000 and actual revenue at midyear was only $306,007.86, some of the Town’s revenue, such as business licenses, comes in later in the year. On the ‘good’ side, Smith said Council’s total salary and expenses were down. When asked why, Councilman Mangone speculated that it was money saved due to the vacancy of one council seat earlier in the year. The Mayor’s salary and expenses were also lower than budgeted, but there was no explanation. Smith said staff salaries and benefits were over budget at mid-year and she put them on her watch list. Also of concern are the Town’s legal fees, which are at $36,093.32 at mid-year, with only $50,000 budgeted for the entire fiscal year. This does not include the $54,000 paid annually to Meggs as the part-time legal consultant for the Town (Meggs also earns $6,450 per month for 15 hours of work per week as the Town’s part-time interim administrator). Smith also put the Town Maintenance expenses on her watch list and explained that $14,000 of the Events and Conference Director’s salary would now be paid out of the Hospitality Fund.
Total actual expenses at mid-year exceed $700,000 while the Town has budgeted for only $210,000 in expenses for the entire fiscal year 2014.
Review of Manor’s Finances
In her Jan. 27 report on the Manor’s finances, Smith reported that, with only $4,600 in available cash in the Manor’s bank account, “in the pretty near future the Town is going to have to transfer some money into the Manor account.” Smith reported in October that the Manor was operating at a deficit of $106,000 ($52,000 in furnishings and $54,000 in operating costs) during its first six months of operation (March to October 2013). During the first half of fiscal year 2014, revenue was still off considerably and expenditures continued to exceed budgeted expectations. Smith reported operating losses of almost $23,000 during the first half of the 2014 fiscal year (July – December 2013). Revenues from facility and equipment rentals and facility maintenance fees were budgeted at $59,000 but were actually only $27,988.50.
Smith said the somewhat improved reflection of operating losses resulted from spreading some pre-paid expenses over the 12-month fiscal year. But, Smith said, “the Town needs to be realistic about the Manor’s losses and revise the budget to better mirror what’s happening.” Smith said the Town also needs to set up a payment schedule for repaying the $52,000 it took out of the general fund to purchase furnishings for the Manor.
Smith told the Council that to break even, the Manor needs to bring in at least $6,600 each month. The Town has underwritten an average of about $4,000 each month. Under expenditures, the Town budgeted for $33,000 for program and oversight salaries, which had increased to almost $26,000 at mid-year. Also at mid-year, maintenance services and supplies were $7,246.51 over the $12,000 budgeted for the entire year.
The Mayor ended the Manor report on an optimistic note, saying, “I think when Ms. (Martha) Jones (Events and Conference Director) gives her report next, we’ll at last get some first quarter projections.”
But that didn’t happen. Jones, who was director of the events at the Manor as the deficit ballooned during first nine months of operation, was not prepared with first quarter projections. Jones reported that during the month of December, with many holiday festivities, the Manor only lost a little over $500. She also explained that the rental prices had been raised and that there are now more paid rentals than free rentals, which were the rule during the first six months of operation. Many of the free rentals were given to the Richland 2 School District. The Town frequently covered the District’s costs for tablecloths, napkins and other equipment. Civic clubs in Blythewood as well as some churches were also allowed to use the facility for free, but other churches were charged. Jones left her job with the Town last Friday to go to work for Richland District 2.
