BOARD OF FINANCE
MINUTES
December 17, 2007
I. CALL TO ORDER
Chairman Harrison called the meeting to order at 9:40 p.m. at the Avon Senior Center.~ Members present:~ Margaret Bratton, Catherine Durdan, Tom Gugliotti, Bill Hooper, Jim Speich, Mike Monts, and Tom Harrison.
II. PLEDGE OF ALLEGIANCE – As he is stepping down from the Board, Mike Monts led the members in the Pledge.
III. COMMUNICATION FROM AUDIENCE:
Nancy Kostal, 31 Rosewood Road, made her comments from her prepared statement. She stated she is opposed to the imposition of guidelines for increased budget requests as she does not believe a potential 5% increase would pay for the current programs and would not allow for any additional services. The Board of Education has had to increase class sizes because of current budget limits. She urged the Board of Finance to refrain from imposing a cap on budget increases.
Sam Levine, 98 Cotswold, asked that the Board of Finance not put budget limits on the schools and that caps have lowered the services and increased class sizes. Caps make it more difficult to have well rounded students as programs are cut. She hopes all will be able to move forward.
Rebecca Parry, 215 Huckleberry Hill Road, reminded the Board that at the October meeting, Mr. Harrison said that this year the Board might not set a cap on budget increases.
Robin Schwartz, 88 Harris Road, stated that the Board should be proud of the community support and embrace that as a sign of progress. She realizes it is a struggle to balance the budgets.
Linda Merlin, 48 High Gate Drive, wanted to lend her voice to the process and hopes that all the boards can work together for the best result for the community.
Mr. Harrison thanked everyone for their comments and said a number of points had been made. He explained that when a guideline is set, it is not an arbitrary decision or number. It is not the Board’s money; it is the taxpayers’ money. Through voting at the referendum in May, voters determine whether or not a budget will be accepted and that will determine the amount of any tax increase. The Board of Finance makes a recommendation; the voters accept or reject. In recent years, 4 out of 7 budgets were rejected. The audience was reminded that on April 15 of each year taxes are sent to the IRS and “zilch” is returned; state taxes go to Hartford and “almost zilch” is returned. The Town then asks for money and that is when the citizens of the Town are
able to decide on how much they are willing to accept in increases or to reject.
IV. MINUTES OF PRECEDING MEETINGS:
November 26, 2007 Minutes
On a motion by Mr. Monts, seconded by Mr. Speich, it was voted:
RESOLVED: That the Board of Finance approve the minutes of November 26, 2007.
Messrs. Harrison, Gugliotti, Hooper, Monts, Speich, and Mmes. Bratton and Durdan voted in favor.
V. OLD BUSINESS
06/07-21 Review and Discussion: FY 08/09 Budget
a. 7:30 p.m. Senior Center: Attend Town Council Meeting: Financial Impact of Teacher Arbitration Award: Presentation by Board of Education
Board of Finance members attended, by invitation, a Town Council meeting where the Board of Education presented the results of the recently arbitrated contract between the Board of Education and the Teachers Union. The Board of Education presentation was concerned primarily with the financial impact of the teachers’ arbitration award over the next three budget years. After the presentation the Town Council members present (Messrs. Carlson, Shea, Zacchio and Mrs. Hornaday) approved the contract. Members of the audience were invited to speak at that point.
b. 8:20 p.m. Presentation by Town Assessor and Town Planner: Grand List and Community Growth
Town Planner Steven Kushner and Town Assessor Harry DerAsadourian presented their overview of anticipated increases in growth within the community over the last several years and the trends continuing forward. They indicated land in Town that could potentially be developed and for which use. Questions from the audience were fielded by both.
The Town Council meeting adjourned at 9:30 p.m.
VI. NEW BUSINESS (the order of discussion was amended)
07/08-09 Discussion of Potential Spending Guideline for Next Year’s Budget
Mr. Harrison opened the discussion by stating that the Board had been aggressively and earnestly lobbied by the chairs of the Town Council and the Board of Education not to set any spending guidelines. It was noted in the comments from the audience earlier in the meeting that voters are anxious to see all three boards work together more closely. With the presentations earlier, it is clear that the Board cannot rely on growth of the Grand List. Last year the Board of Finance suggested a 5% increase which was to be funded by a tax increase of 3%. It is fairly clear that this year that will not work. Mr. Harrison stated that if the Board is totally silent, there is a risk that without a guideline, the result might be unrealistic budgets. He does not believe that voters are prepared for
unlimited tax increases. In the past, voters have approved a 3% tax increase. He reviewed the scenario charts prepared by Town Manager Schenck which show was varied levels of spending will mean for tax increases. He does not believe that the $425,000 adjustment for Avon High School operations should be absorbed by the Board of Education.
Members of the Board of Finance need to be aware of the statute the charter gives the Board that they are to provide “checks and balances” and have to be willing to say no to requests for increases. Mr. Harrison presented his compromise idea of setting a guideline yielding a tax increase of no more than 5%. He stated it is possible for the three boards to work together to come up with figures that will not cause a tax increase of more than 5%. It would enable the Board of Finance to provide flexibility for the Town Council and the Board of Education to increase their spending and feels a case for it could be made responsibly. It would enable the Board of Finance, the Town Council and the Board of Education to meet their fiscal responsibilities in a budget that could be approved by
the voters.
Mr. Gugliotti then spoke saying that, while Mr. Harrison’s comments were thoughtful, he did not agree. He feels that the Town is at a critical point and wants the budget to be where it will allow Avon to remain the town it is. H would like to proceed without setting any guideline this year; to take off the “training wheels”. He is willing to see the budget fail and to listen to those who can make a case for increased spending.
Mr. Speich stated that the Boards do work together. He asked everyone to keep in mind that it is a guideline and not a cap. He also asked that if someone has a case, to bring it to the Board of Finance. There are a lot of items to work on and the CIP usually takes a back seat to the operating budget. Mr. Speich suggested it might be advisable to bond some of the larger CIP items. The Town is closer to build out and budgets will be tighter and debt service will peak in 2010. He was in favor of setting a guideline of a 5% tax increase.
Mr. Hooper did not see the Town voters approving more than a 5% tax increase and asked if it would be possible to divide an increase unevenly between the Town Council and the Board of Education.
Mrs. Durdan thanked Mr. Schenck for the preparation of the scenarios. She agreed with Mr. Hooper and with Mr. Harrison.
Mr. Monts believes the guideline represents something of a timing issue and it should be more of a process issue. A balance must be reached between needs, wants and affordability. He feels listening is a beginning and that spending is exceptionally tight this year. As long as a guide is just a guide, it can be approached as a process issue and the Board can allow people to make their case. He has not been in favor of a binding guideline.
Mrs. Bratton agreed that there is a need for a higher guideline but the Board should be realistic. What might develop without a guideline is a lot of unrealistic expectations. She is willing to vote in favor of a guideline of a 4-5% tax increase. By making the guideline a tax increase, it would give the boards a total dollar amount with which to work together.
Mr. Harrison stressed that a 5% tax increase guideline would be a guideline. The Board would not expect requests to come in for more. There were 2 proposals at that point in the meeting: a 5% tax increase guideline and second, that no action be taken at this time, setting no guideline, the risk being that it might necessitate a lot of presentations.
On a motion by Mr. Harrison, seconded by Mrs. Bratton, it was voted:
RESOLVED: That the Board of Finance inform the Town Council, the Board of Education and the community at large that, based on information available to us at this time, we do not believe it would be appropriate to recommend a tax increase of 5% or more; that spending increases for the Board of Education, the Town Council, the Capital Improvement Program and the $425,000 for Avon High School improvements collectively and cumulatively should be at a level not requiring a tax increase of 5% or higher.
The motion was restated after some discussion:
That the Board of Finance advise the Town Council and Board of Education that, based on the information currently available to it, it does not believe it is in a position to recommend a tax increase of 5% or higher. Obviously the Boards would have the opportunity to make a case for higher dollar numbers and we would listen to that, but right now, we believe for planning purposes, the two Boards should go on the basis that we do not believe the community would accept a 5% tax increase, but we could be persuaded otherwise if the case is made.
Messrs. Harrison, Hooper, Speich, and Mmes. Bratton and Durdan voted in favor. Messrs. Monts and Gugliotti voted against. The motion passed.
07/08-08 Review, Discussion and Approval: FY 06/07 Year End Transfers and Appropriations
Director of Finance Margaret Colligan reviewed Fiscal Year 06/07 and presented the year end transfers and appropriations to be approved by the Board of Finance. She described the past year as a “different year”. The positive operating results were due to favorable revenues which increased the General Fund by $101,140. This increase was consumed by large appropriations at the beginning of the fiscal year for various Capital Improvement Program projects. The large volume of transfers is due to a lean budget year during which there was a spending freeze. Departments were directed to look for cost savings within their own budgets and to liquidate or redirect encumbrances to cover necessary spending. Due to the $202,585 cost of fire hydrants, $127,063 was not covered by
transfers. There were no new encumbrances and the General Fund aggregate balances being carried into Fiscal Year 07/08 are at an all time low of $17,118.
The Supplemental Appropriations had no effect on the General Fund balance. Police Services were funded by fees charged to agencies requesting the use of police for road construction and water usage/hydrants costs were covered by interest income. The Farmington River Trail fund was reimbursed by the State DEP. The Local Capital Improvement Program had revenue of $3,241 which was appropriated for funding road maintenance. State and Federal Education Grants increased the Board of Education budget by $861,829 and $62,914.33. Additionally, $410,221 was appropriated from the School Cafeteria Fund as well as $62,908.03 to cover budgetary over expenditures.
The direction that GASB and rating agencies are taking is the focus on Town-wide financial basis – designating portions of the fund balance for specific purposes in handling future liabilities. Management realizes that, while the financial position of the Town has not changed, the financial transactions affect budgets within the community. Approvals were needed for several transfers and designations: funding for a 27th pay period in FY 12/13; funding for future Town employee retirement expenditures for accumulated vacation and/or sick time; funding for replacement costs of existing capital assets; funding to replenish the General Fund for Medical Claims; and a $125,000 employer contribution to the Post-Retirement Employee Medical Benefits Trust Fund.
The Final Fiscal Year Transactions Fiscal Year 2006-2007 Report is attached and made a part of these minutes.
On a motion by Tom Gugliotti, seconded by Cathy Durdan, it was voted:
RESOLVED: That the Board of Finance hereby approves the Fiscal Year End Transactions:
Transfers, Supplemental Appropriations, Designations and Appropriations from
Fund Balance as outlined in the booklet Final Fiscal Year Transactions FY 2006-2007 and as described in the memoranda from the Director of Finance to the Town Manager.
Messrs. Harrison, Gugliotti, Hooper, Monts, Speich, and Mmes. Bratton and Durdan voted in favor.
VII. ADJOURN
On a motion by Mr. Hooper, seconded by Mr. Speich, it was voted:
RESOLVED: That the Board of Finance adjourn at 11:05 p.m.
Messrs. Harrison, Gugliotti, Hooper, Monts, Speich, and Mmes. Bratton and Durdan voted in favor.
Respectfully submitted,
Thomas A. Gugliotti, Secretary
Attest: Susan Burdsall, Clerk
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