August 1, 2026
The Town recently declared a $4.7 million surplus for 2025. Sounds like a good thing, right? Read on.
Understanding Surpluses
A surplus and a deficit describe opposite financial conditions: a surplus means you have extra money because income is more than spending, while a deficit means you are short because spending is more than income.
Tax Levy and Property Taxes are used interchangeable here.
Surpluses are created when
(Tax Levy+Revenue) are greater than Expenses
This means the town collected more tax than needed. This lower need can be a result of increases in other revenues (grants) or lower expenses (operating spending below budget). Differences here can be the result of new saving programs that had not been budgeted or a result of artful budgeting and project execution.
Transparency
A SURPLUS means the town collected more property tax, in the year, than was necessary to conduct the town business for the year. To declare a surplus as a good thing you need to have a good accounting of how it occurred.
The explanations offered by the Mayor and the Town Treasurer for the current surplus do not provide sufficient transparency to really understand what caused the $4.7 million surplus. No detail explanations and numbers supporting the $4.7 million are offered. It is also concerning that the explanation for the 2025 surplus is exactly the same, word for word, as the explanation for the 2024 surplus and the 2023 surplus – except for the dollar amount.
Three years in a row we are offered the same explanation for surpluses
The following excerpts are from The Town of Pelham Annual Reports and are commentary by our Town Treasurer regarding those surpluses.
Aside for the dollar value the commentary is exactly the same for each year. I mean exactly the same. It is surprising having the same drivers causing surpluses year after year.
If the drivers or reasons for surpluses are the same, we should be concerned with the adequacy of the planning and budgeting processes. If the reasons are not the same, we need to be concerned about transparency and the quality of financial reporting.
Recent Declared Surpluses
$4,720,490 2025 Annual Report - Surplus Comments Page 23
$8,314,997 2024 Annual Report - Surplus Comments Page 23
$9,176,283 2023 Annual Report - Surplus Comments Page 24
More Transparacy?
A seemingly more detailed analysis of the surplus is in the 2025 Consolidated Financial Statements schedule 2 on page 30. Unfortunately, this schedule does not provide any comparisons to budget for any category or segment. Its surprising to see 5 of 7 segments have zero surplus/deficit. All it seems to say is that the $4.7 million surplus comes out of general government. We cannot discern if its from supplemental taxation, nor grants, nor recreational revenue, nor interest.
This information has limited informational content to the reader.
Points To Remember
1) The total tax levy is the difference between BUDGETED expenses and BUDGETED revenue. If BUDGETED expenses are high the tax levy, your property taxes, will be higher.
2) Surpluses are caused by your property taxes + ACTUAL revenues being higher than ACTUAL expenses.
3) There is no mechanism to "refund" excess property taxes back to you.
4) Current year surpluses are added to previous years and are thereafter included in accumulated surpluses. They are not directly refunded to property tax payers.
5) A portion of accumulated surpluses is identified as "reserves".
