Fact Checker: Did Wilton turn Rutland’s deficit into a surplus?

With the 2012 campaign season in full swing, Seven Days has teamed up with VTDigger.org to create a fact-checker feature to test the “truthiness” of claims made by the candidates who want your vote this November. This week’s Fact Checker was written by Paul Heintz.

CLAIM: “As city treasurer, Wilton turned Rutland’s $5 million deficit into a $3.8 million surplus.”

— Television commercial supporting Republican state treasurer candidate Wendy Wilton, paid for by the conservative super PAC Vermonters First.

FACTS: When Wilton and Rutland Mayor Christopher Louras took office in March 2007, the city was reeling from years of sloppy bookkeeping.

Due to an improper commingling of accounts, the city’s general fund had been depleted to cover deficits in its water and sewer funds. The situation grew so dire that Rutland had to borrow $5 million in 2006 to plug a hole in the general fund.

When Wilton took office, she implemented new accounting practices and began providing regular, accurate reports to the board of aldermen, the mayor and the public. Over the next few years, Louras and the board — with input from Wilton — brought the budget under control by trimming expenses and raising property taxes and water and sewer rates.

In 2010, Wilton refinanced the remaining debt from the $5 million loan, along with $3 million in new expenses stemming from a 2004 roof collapse at Rutland’s water-treatment facility. Water and sewer ratepayers — who include residents of several neighboring towns — are still paying off that $6 million debt today.

According to Wilton, the $3.8 million surplus mentioned in the Vermonters First advertisement — and used in her own campaign literature — refers to Rutland’s fiscal year 2011 general-fund balance. That figure does not factor in the city’s long-term debt, which totals $15.13 million.

Rutland’s general-fund balance has not increased dramatically during Wilton’s tenure. According to revised figures from a 2008 audit, Rutland’s general-fund balance was $2.7 million three months after she took office. It has since grown to the current level of $3.8 million.

SCORE: The ad raises two questions: Did Rutland in fact transform a $5 million deficit into a $3.8 million surplus? And does Wilton deserve credit for it?

On the second question, Wilton receives near universal acclaim from Louras and members of the board of aldermen for enabling them to take the necessary steps to stabilize Rutland’s budget. But several aldermen argued that Rutland’s turnaround was a team effort and that the super-PAC ad inflates the role Wilton played.

While the ad was developed independently from Wilton’s campaign, the Rutland city treasurer stands by the accuracy of the claim.

On the second question, the figures cited in the Wilton ad are an apples-to-oranges comparison. The $5 million figure refers to a loan the city took out before Wilton took office to recover from a predecessor’s bad bookkeeping. The $3.8 million refers to the general-fund surplus — the city’s annual revenues, minus expenses — but does not include long-term debt obligations.

The numbers used in the ad paint an incomplete picture of Rutland’s overall financial picture, which is more nuanced. For that reason, we rate the claim “Debatable.”

Comments

  1. Stan Hopson :

    By all accounts Wilton did lead the way to a surplus in Rutland City. The City was mired in red ink and bad books for 30 years. Now Rutland has the first clean audit in three decades too. The same Board of Alderman essentially have been in place for a decade, so you have to give credit where credit is due to the leadership of Wilton and the Mayor.

    The only thing that’s debatable is what percentage of the credit do you giver her? Ask the people in Rutland City and they’ll say the majority share.

  2. George Cross :

    I assume that by using the term “debatable” the author really means wrong. Given that there was never a $5M deficit, there was no magical turn around. Increasing a $2.7M fund balance to a $3.8M fund balance in three years may be commendable, but is not the miracle of turning a $5M deficit into a $3.8M surplus. There is also a difference between fund balance and surplus. The article seems to ignore this point. Fund balances are typically made up of several categorical balnces such as; the restricted balance, the committed balance, the assigned balance and the unassigned balance. In such a case only the unassigned balance can be considered surplus for any given fiscal year.

  3. Randal Smathers :

    The Rutland City budget is the mayor’s responsibility. The mayor produces a budget and the board may approve or cut, not increase it, so Chris Louras probably deserves the “most” credit for the city’s relatively healthy financial picture. I’ll leave it to the author and commentators to quibble over those “debatable” details.
    It is worth noting that the article glosses over one of the key changes during this period, a revision of the city’s charter that inadvertently eliminated an arbitrary tax cap in favor of the residents voting directly on the budget … a tax cap that had helped create the need to continually borrow from one account to pay another and to postpone basics like infrastructure maintenance. That cap would have made any reform much more difficult.
    But given the shambles that was the treasurer’s office before Wendy took over, it is safe to say that anything done on the budget would have been impossible without her fixing those internal problems first, and she probably deserves as much credit as anybody except Chris for the turnaround, which was real and not magical.

  4. Paula Schramm :

    From the information in the article and in these comments, Wendy Wilton deserves great credit for fixing serious internal problems that had accumulated over years of sloppy bookkeeping at the Rutland treasurer’s office. She also oversaw an increase of the general fund balance from $2.7 million in 2007, when she took office, to $3.8 million in 2011.
    That’s an increase of $1.1 million in the general fund balance, or a”surplus”, I guess it’s being referred to.
    There is also a $6 million debt that water and sewer rate-payers are still paying off, and a long-term debt of $15.13 million for the city.

    The claim of the ad that she has “turned Rutland’s $5 million deficit into a $3.8 million surplus” is clearly misleading.

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