BOARD OF FINANCE
MINUTES
NOVEMBER 27, 2006
I. CALL TO ORDER – Chairman Tom Harrison called the meeting to
order at 7:30 pm in the Selectmen’s Chamber, Town Hall.~ Members present:~ Margaret Bratton, Cathy Durdan, Tom Gugliotti, Bill Hooper and Jim Speich.~ Mike Monts was absent.
II. PLEDGE OF ALLEGIANCE – Led by Tom Gugliotti.
III. COMMUNICATION FROM AUDIENCE – None.
IV. MINUTES OF PRECEDING MEETING:~ October 23, 2006
On Page 1, Item IV, Paragraph 3, line 2, Mr. Harrison noted a typographical error, the word “years” to be substituted for “yeas”.
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On a motion made by Mr. Gugliotti, seconded by Mr. Hooper, it was voted:
RESOLVED:~ That the Board of Finance approve the minutes of the October 23rd
~~~~~~~~~~~~~~~~~~~~~~~ meeting, as amended.
Messrs. Harrison, Gugliotti, Hooper and Mrs. Durdan voted in favor.~ Mr. Speich and Mrs. Bratton abstained.
V. OLD BUSINESS
05/06-24 – Review and Discussion:~ FY 07/08 Budget
The Town Manager gave some background on the accounting and setting up of Reserve Funds.~ There is a need to start up funds for depreciation of fixed assets such as roads, sewers, storm drains, and buildings including schools.~ With this as a goal, one recommendation is to capture a small portion of the Surplus, i.e. $25,000 or more on a year-to-year basis.
The Department of Public Works has set up an intensive schedule of equipment owned by the Town and when it needs to be replaced.~ Chairman Harrison stated that the Board of Education, in reference to the high school project, has identified a one-time operating cost figure of $425,000 - for increased lighting, heating, etc.~ Part if not all of that figure will be needed in the 07/08 budget due to the delays in construction and resulting cost increases.~ The gym and cafeteria should be ready sometime in spring of 2008.~ Other than that, there are no other extraordinary costs anticipated.
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When asked what the Board should be aware of in setting spending targets for the 07-08 budget year, the Town Manager spoke about anticipated revenues.~ According to the Assessor, revenue from the Grand List income will increase approximately 1.5%, possibly 1.75%.~ Other revenues are forecasted at a flat rate.
Board of Finance Minutes
November 27, 2006
Page 2
V. OLD BUSINESS
05/06-24 – Review and Discussion:~ FY 07/08 Budget (continued)
Building permits are much lower than they have been; there are 7 active permits and usually there are 20-25 in the first third of the year.~ There may be some increases in state aid.~ Conversely, the conveyance tax is due to end in June 2007 and there is a push to extend it.
Increasing utility costs are going to impact the budget significantly.~ Additionally, the cost of hydrant rental is going to be greater; Avon Water Company has asked for and received a 30% rate hike and CT Water Company has also asked for a rate hike.~ This will mean a possible increase of $100,000 in the Town budget just for hydrant rental.~ Town Manager Schenck reported most labor contracts affecting the Town are in place.~ He noted that there is some pressure to develop a youth services program with a cost of $28,000 of which the state would fund half.~ There is also a need for general assistance program funds.~ There are no funds budgeted for general assistance although there are between 60 and 80 families in need. ~We are now beginning to build welfare money back into the budget.~ There may also be a request
from the Police Department for a third police officer on every shift.~ We also have a variety of other expenses including the retirement of Caroline LaMonica, and the hiring of Blythe Robinson as Assistant to the Town Manager.~ Since the devastating hurricanes in the south, Homeland Security duties have been focused on preparation for natural disasters.~ The state is setting up secondary evacuation sites in Avon, Farmington and Canton with landing areas for CH47 Chinook helicopters.~ The Town Manager has asked the Fire Marshal to focus 18.5 hours per week on these issues.
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In answer to Mr. Harrison’s question, Mr. Schenck stated there will be a 4% bump up in Debt Service, the first of three or four increases with the top year being 2011.~ This is based on the high school renovation project.
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As to the Capital Budget, there are a lot of unmet needs.~ These include a new roof for Roaring Brook School and trucks for the Department of Public Works.~ The Town Hall buildings 5, 6, and 7 renovation project is awaiting cost estimates due March or April.
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Mr. Harrison asked how things are with the Surplus since much of it has been used this year. ~~Director of Finance Peg Colligan stated that although the audit is not yet finished, it looks like $600,000 to $700,000 will be added back into General Funds, much of it from interest income.~
Board of Finance Minutes
November 27, 2006
Page 3
V.OLD BUSINESS
05/06-24 – Review and Discussion:~ FY 07/08 Budget (continued)
In setting targets, Mr. Harrison commented that it looks like increases in revenue will have to come from property and car tax revenue rather than other revenues, grants, etc. Chairman Harrison thanked the Town Manager for his review.
There are two issues:~ what numbers do we want to set and do we want to set the same number for both the Council and the Board of Education or different numbers for each board.~ Mr. Gugliotti commented that he thinks the number to be set should be something that the voters will tolerate considering what happened with the high school.~ He does not believe an increase greater than last year will pass. Mr. Hooper stated that perhaps the increases in interest rates would help sell any tax increase.~ Mr. Harrison commented that next year is a big year with the $30 million bond for Avon High School.~ There was a discussion of Avon High School being completed in stages which would alleviate the need for a large increase in personnel at one time. ~Mr. Speich feels nothing higher than last year should be set, so is in favor of 5%;
he has not seen much discipline in terms of savings.~ Mrs. Durdan concurred with the 5% for both boards.~ Mrs. Bratton stated that 5% is acceptable for both boards but would not mind seeing something a little less.~ Mr. Harrison will draft a letter of explanation of the Board’s reasons and goals in setting the target number; the letter to be sent to the Town Council and Board of Education after being circulated to the BOF members.
On a motion made by Mr. Hooper, seconded by Mr. Speich, it was voted:
RESOLVED:~~ That the consensus of the Board of Finance is that they would like the Town Council and Board of Education to present budgets calling for spending increases for each board not in excess of 5%.
Messrs. Harrison, Gugliotti, Hooper, Speich and Mmes. Durdan and Bratton voted in favor.
06/07-07 – Review and Discussion:~ Development of Policy on
Supplemental Appropriations from General Fund
Undesignated Fund Balance (“Surplus”)
Mr. Gugliotti reported on the conclusions he and fellow subcommittee members Margaret Bratton and William Hooper had arrived at after emails, discussion and research.~ They asked whether or not there could be a policy that says something such as “you cannot spend in excess of so many dollars” etc. ~The conclusion was that a Surplus is a “rainy day fund”, a place where one can go for funding when necessary if an emergency comes up, an event that, as such, cannot be predicted.~ Therefore, a hard and fast set of rules is impossible to develop.~ They felt that use of Surplus should be in answer to an extraordinary event.~ They developed the following:
Board of Finance Minutes
November 27, 2006
Page 4
AVON BOARD OF FINANCE
Policy Regarding the Use of Surplus
November, 2006
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1. Any use of Surplus should only be considered by the Board of Finance after a showing of substantial support for such use by the requesting authority (including the Town Council and Board of Education).~ The Board of Finance shall exercise its discretion in finding whether or not there has been the requisite “substantial support” for such request.~ Demonstration of “substantial support” alone shall not be a sufficient basis to approve such request. The following additional criteria must also be met.
2. Approval of any request for the use of Surplus shall only be given upon a finding by the Board of Finance that such use will meet an extraordinary need or unusual opportunity, which need or opportunity must be timely met.~ Such need or opportunity must have characteristics demonstrating real and immediate circumstances which compel the extraordinary measure of using Surplus. The proponent of such use must demonstrate, and the Board of Finance must find, that such use will result in a tangible and significant benefit to the Town, which benefit outweighs the extraordinary process of utilizing Surplus funds.
Mrs. Bratton would like to explore whether there is a way, after spending off cycle, to replenish funds used in the next budget.~ Mr. Gugliotti does not believe it would be right to tax in order to put back the funds used out of Surplus. A Surplus is built by under expenditures and over revenue and builds over time. If depleted, the fastest way to rebuild it is to budget for it which is to tax for it.~ Currently the Town has 5.4% and Moody’s likes to see a AAA town such as Avon have 10%. There may be additional ways to rebuild the Surplus, i.e. through insurance payments, the monies from the auction of equipment, etc. Members discussed the idea of limiting a department’s next year’s operating budget by the amount taken out of Surplus. ~The sense is that the policy must be flexible and there must be solid
justifications for a request to be granted. The recommendations of the subcommittee will be circulated and voted on at the next meeting.
The next revaluation will be October 1, 2008 which will impact July 2009 tax bills.~ The Town Manager stated there is a state statute that allows a pass on revaluation if the sales ratio analysis falls within certain parameters.~
On a motion made by Mr. Speich, seconded by Mrs. Durdan, it was voted:
RESOLVED:~~ The Board of Finance thanks the committee of Mr. Gugliotti, Mrs. Bratton and Mr. Hooper for its hard work, and its diligence and its excellent work product.
Messrs. Harrison, Gugliotti, Hooper, Speich and Mmes. Durdan and Bratton voted in favor.
Board of Finance Minutes
November 27, 2006
Page 5
VI. NEW BUSINESS
06/07-08 – Approve 2007 Meeting Schedule
The proposed meeting schedule was given to the Board members.~ It was noted that the schedule needed to be amended to change the December 24, 2007 meeting to December 17, 2007.
On a motion made by Mr. Harrison, seconded by Mr. Speich, it was voted:
RESOLVED:~~ With the amendment changing the December 24, 2007 meeting to December 17, 2007, that the Board of Finance adopt the meeting schedule proposed by Mr. Schenck.
Messrs. Harrison, Speich, Hooper, Gugliotti and Mmes. Durdan and Bratton voted in favor.
VII. MISCELLANEOUS
VIII. OTHER BUSINESS
IX. ADJOURN
On a motion by Mr. Harrison, seconded by Mr. Hooper, it was voted:
RESOLVED: That the Board of Finance adjourn at 9:00 pm.
Messrs. Harrison, Gugliotti, Hooper, Speich and Mmes. Durdan and Bratton voted in favor.
Respectfully submitted,
Thomas A. Gugliotti, Secretary
Attest:~ Susan Burdsall, Clerk
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