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BOARD OF FINANCE
BUDGET WORKSHOP
MINUTES
April 11, 2012
Chairman Thomas Harrison called the conference to order at 7:02 pm at the Avon Senior Center. Members present: Chairman Thomas Harrison, Vice Chairman/Secretary Thomas Gugliotti, Brian Stoll, Catherine Durdan, Margaret Bratton, James Speich and Dean Hamilton. There was the presence of a quorum.
II PLEDGE OF ALLEGIANCE
The Pledge of Allegiance was led by Mr. Harrison.
III OLD BUSINESS
11/12-05 FY 12/13 Budget: All Three Boards
a. Board of Finance Workshop: Set Budget Goals and Objectives
b. Adopt Final Recommended Budget
c. Sign Call of the May 7, 2012 Town and Budget Meeting
Chairman Harrison introduced the evening’s conference, as it is referred to in the Town Charter, referring to the 3 Boards present, the Board of Finance, the Board of Education and the Town Council. He continued mentioning that the business of the evening’s meeting is to discuss the FY 12/13 budget going forward. If necessary, the Boards will meet for an additional meeting the following Monday. Taking into consideration the many new members on the Town Boards, Chairman Harrison explained how the evening would unfold. He explained how Steve Bartha (Assistant Town Manager) and Peg Colligan (Director of Finance) created a very helpful computer application to assist in calculating the budget. The beginning of the meeting there will be an opportunity for them to share how it works. This evening is about
“Show and Tell”. The TC and BOE will have an opportunity to discuss their budget and then the BOF will have an opportunity to discuss their thoughts. Mr. Bartha then explained how the computer application worked including how putting different mill rates into one cell would allow them to see immediate results including how it would raise the budget. The different Boards reductions can also be adjusted by certain percentages depending on the preference of the user. Mr. Harrison asked if, for example, we wanted to set a mill rate of 2.0%, what would the changes be. Mr. Bartha detailed that if we wanted to decrease the mill rate from 3.31% to 3.0% we would need to find $207,116.00 in reductions. At a 2.5% mill rate increase, the number of spending reductions would be $541,000, splitting 60/40 the BOE would need to find $324,000 and the TC would need to find $216,000. The Boards continued to learn more about the application by testing out various numbers and mill rates.
Mr. Harrison then asked Mr. Robertson if there are any new additional revenues. Mr. Robertson responded that they did go through and there are 6 revenue sources, which they were able to identify increases in 5 of those. Those 5 revenue sources are property taxes and assessments, intergovernmental, licenses and permits, charges for services and miscellaneous other sources. The majority of the additional revenues, which the total equals $158,100, is driven by development trends. The first time they take a shot at the budget back in October they are very prudent because they don’t know about permits and how they are maturing. Flash forward to March/April, they have a better idea and can see how they are trending. There is also a fairly sizeable increase in intergovernmental. The elderly tax relief seeing qualifying
offset revenue from state. Bottom line for most of them is there is an increase of $158,100. Mr. Robertson is confident in that amount. Mr. Robertson then turned it over to Gary Mala. Mr. Mala identified a $130,000 reimbursement from the school choice program, which can also be connected to intergovernmental.
Mr. Mala explained there was an additional $130,000 in revenue from enrollment in the school choice program. Mr. Mala directed everyone to the reverse side of the provided handout, which included an explanation and provided a dollar amount of reimbursement based on number of students. Now that Avon has entered into another tier, this amount has increased. Historically that number was $2,500, now because it is a higher tier that number has gone up to $4,000/student. As you know, as you look at the 12/13 budget, this revenue was used to offset magnet school tuition, about $130,000. Next year there are a larger percentage of school choice students. Mr. Stokesbury commented that the letter came out after the initial budget they planned. They were notified during March making this unknown revenue. Mr. Harrison questioned
if both Mr. Mala and Mr. Stokesbury were comfortable with those numbers and they answered yes. Mr. Speich asked if those numbers go with the chart handed out earlier. Mr. Harrison answered that he didn’t think so. Ms. Colligan answered that on Monday night (at the public hearing) we were looking at a 3.55% tax increase. Tonight’s includes the $158,000 from Brandon but not $138,000 from BOE. Mr. Gugliotti questioned if we should factor in BOE now and everyone agreed yes. Mr. Bartha adjusted the computer application to include the new amounts of revenues and mentioned how at this point it really is based on the Boards faith in them as the numbers will adjust other cells, but they really just need to be ignored. It was unanimous that each Board member expressed they had faith in Mr. Bartha and Ms. Colligan on the numbers included.
Mr. Mala asked the Board to take into consideration the extreme difference in budgeting that took place this year and that this amount is really the number they need to make the schools run well.
Mr. Zacchio added that he is glad to hear there are more revenues to add to this, as now we don’t need to act as aggressively as maybe expected. We have to approve a budget that we know the public will approve for us. As a starting point both budgets coming in, as a sub 3% number, is something we haven’t seen in a while. Take caution as you guys go through the process and think about the tax impact to the town and that you do it with a keen eye and see how far we’ve come over the last year and what we need to deliver the services that we promise.
Mr. Harrison introduced that now it is time for the BOF members to do their show and tell and detail where they think the Budget should be. First up is Vice Chairman, Mr. Tom Gugliotti.
Mr. Gugliotti began by saying that it is remarkable that the Boards have come in at sub below 3% increase in their operating budgets. That really demonstrates great work and responsibility. He continued to say that he has been on the BOF for 15-16 years and can bring that perspective of seeing many budgets. He has heard lots of comments over the year such as that they are taxing people out of town. He has never known of anybody that has moved out of town because of that. We are lower than most surrounding towns. It’s hard because nobody wants to go above 0. During those same years he’s heard people stand up and swear that we are killing the school system and there is a total demise of the educational system and that hasn’t happened either. Mr. Mala demonstrated that, with some numbers, Avon does very
well despite what some may say about “doom is upon us”. This hasn’t happened, that’s the reality. Whatever we’ve been doing, we’ve been doing well. This isn’t done though, success isn’t done with a 0 increase. It isn’t done with a 2% increase; operating budget just to remain even 2% is not enough to keep even. A lot of talk about this budget and others in previous years is about salaries. There are fervent advocates and there is no secret about which salaries, for this budget there is nothing we can do about this. Those salaries went through arbitration; we can’t touch the teacher’s salaries. We can’t stay at zero and see what happens, a lot of places have this problem. We have the ability; this town is very fortunate to have the economic situation we have. We can’t go into arbitration over salaries we just can’t. I end by saying leave it where it is, reduce to 3.12% mill rate increase. Previous
years I said leave it alone, let the people vote. I’m old enough and smart enough I think that I didn’t get anywhere with that last time and I won’t this time. I would like to see it not go below 2.9%. I have some thoughts on where to take that but that can come later.
Mr. Speich commented that he was pleased to see 2 very responsible budgets presented before the BOF. This makes their job a lot easier and he appreciates that everyone worked so hard on the budget. He commented that he looked at the people that spoke on Monday and he wonders if the economy is any better this year than it was last year. In my mind, I’m not sure it is. Rising a bit but not much. The days of 2%-3% grand list increase are gone. Increase in state taxes are a burden, increase in federal taxes- well that’s a different story. Everyone is looking for a piece, this is one place you can have a little bit of say. There is an increase in oil prices, we all feel it. To me, there is not much improvement over last year. It’s evident that, over a lot of facts, town is building out, there is not much left
in residential building, soon Avon is going to be full. Maybe new development in town but not really, school enrollment flattening out, we should mind that as we go forward and start reflecting on that by not coming in with big increases, start moderating, expect (as resident says) with less students the costs should come down. I applaud BOE in finding ways to combine forces to reduce costs and how they are trying to work together to do common things under one umbrella, continue to do that and there is probably more work to be done but great working together. Look at all the residents in all walks and times in life. I don’t think all residents can afford a significant increase in taxes, be mindful of that. Like Mr. Gugliotti mentioned about negotiations on contracts salaries, there is only so much we can do on contracts. As a parent with no children in schools, I understand my civic obligation and that it is good to see all children being educated. All that being said,
looking at the budgets, there is not much room for change, they are fair. These increases of revenue that had come along are good but if we had known on February 29 we could have noted that there was some additional money. There are a couple of places last year we looked at; specifically health care, and we may have overestimated. Maybe that would be a place to make some cuts. If contingencies on budgets were the normal way, my thought would be to hold to where we were last year for an increase and not go beyond that. I looked at 2% and I couldn’t find that level of money to decrease. I would be in favor of the same amount as last year, which would keep it consistent and send a good message. Looking at the Capital Improvement for the schools, Mr. Speich would like to see the project wait one year and move it to the roads.
Mr. Harrison added that Mr. Speich’s final number was 2.45%, the same as last year.
Ms. Cathy Durdan began her comments saying that she too is also very pleased with this year’s budget. One resident asked her what she uses in making her deciding factors with the budget. She answered that she looks at economic indicators in determining recommending tax increase. For example, the cost of goods, food and gas and how it affects everyone in town, and items such as healthcare and even Social Security. There was an increase this year for Social Security of 3.6% but nothing for the past 3 years, that averages at 1.2% over each year and that is not enough. The unemployment rate is still very high and it gives concern at how you can ask for an increase. The economy is such that we can’t hold it from where it was last year. We should keep it this year’s budget at 2.45%.
Ms. Margaret Bratton said that our town and school budgets should align with the many federal state and local economic indicators. She thanked the TC and Mr. Robertson’s team for coming in with a well thought budget. She gave special thanks to Gary Mala and their team, because they have tackled some big issues and had some big accomplishments. She was pleased that residents expressed that at the public hearing and also around town. There are two rays of light, the student population trend is going downwards and, as Mr. Gugliotti mentioned, the upcoming contract negotiations. There are no guarantees with that but that is the first major Board of Ed employee one since the economy change. I’m close to the middle of the 2 numbers, 2.45% also sounds good.
Mr. Stoll added that although he is new he has been able to see all the hard work that goes into this process. Everyone has been responsible and as we think about these issues we need to think about specific issues in the budget rather than just trading percentages for dollars. The same way you wouldn’t negotiate a claims settlement by saying I think this is worth $5,000, etc. I want to discuss why it is worth $5,000, those kinds of issues. It’s important to have that kind of transparency. In terms of the budget it is mostly driven by salaries and the Town. By definition if you go below 3% you are taking money out of the non-salaries budgets, which are pretty small. As we know salaries are locked in through contracts. We have seen the process as to how those contracts are done but on Monday night we
heard appetites for investment in other pieces of infrastructure and appetites for investment in schools but particularly an appetite for investment on the Town side. Given the salaries, in particular, I don’t think we can use the Town budget to send that message. In terms of the Capital Budget, I believe in most of the items there, but I’d just comment on items like the culvert boxes on roads, there should be a limit set on these items, something that’s 50-40k less, something like that, if anything more than that it should be put right in the BOE or Town Budget. To comment on the BOE budget, I think if we were able to look at the original budget after the impact of mandated programs, what we would see is a decrease or at least no increase in the non-mandated programs portion of the budget for a number of years. That’s an important part of the conversation since we are investing so much in schools, the cost just keeps going up and over the years the number
of paraprofessionals in the schools is growing and I understand the reason for that. I think that takes me to skilled and responsible teams on both Boards and I trust the administrators and BOE to do everything they can. I think 3.13%
Mr. Hamilton mentioned he has been on the Board for only a few weeks and mentioned he likes the way the budgets came in, they were well thought out, but he doesn’t feel we are living in a perfect world. Some people are unable to find full time work. 750 people in town are unemployed, which hurts and doesn’t give a whole lot of leeway. It hurts if you are on a limited income. In CT we are number one again for tax freedom day, last state in the union to figure out how to pay the burden of our state and local taxes. We should look at all the increases across the board because disposable income drops with every one of them. In 2010 census, there are about 7,200 households in town and 2,470 have children under 18, 1/3 of the population. 75% of population is 18 or older, 17%- 65 or older. Taxes keep going up
and as I look ahead I’m concerned there will be huge increases at the federal level as we go into 2012 because of all these various rebates and deductions given that should have come back but because of how things are looking in Washington it is unlikely. The recession doesn’t seem to be going away. As Mr. Gugliotti mentioned, this is not a place to negotiate salaries. A lot of what we are looking at is fixed costs that we can’t change but I think we should stay at a level that doesn’t bring too much change looking across the town. I would like it at 2.0%, Mr. Gugliotti wants 2.9%, and meeting in the middle is about 2.45%. I am comfortable with 2.45%.
Mr. Harrison made his comments saying that this year (FY11/12) was the ten-year anniversary of the budget referendum being defeated. It was passed on the second try though. The reason to mention that is because even it was the first time the BOE budget hit the 30 million dollar mark and the first time the unified budget hit the 50 million dollar mark. In 10 years we have gone on the BOE side from 30 million to 50 million and on the unified side we have gone from 50 million to 79 million. Some very significant jumps, we’ve had population growth, student enrollment growth, a significant jump in a relatively short time. I listened carefully to all the speakers on Monday night, a couple of them focused on an issue that I think we need to consider, but we won’t be able to solve it tonight. Every year the mill rate
goes up. Each time we increase the mill rate, that becomes the start up for the following year, it’s not a one shot one time wonder. I do think we deal with what the speakers mentioned and we look at some sort of long range planning. I do think we need to start this, not tonight but over the next few months. Where, as a town, would we like to be in 5 years? What kinds of tax base would we like to have and how do we get there. Would like to see us look into that. Put that on the table for future consideration. I join everybody on thanking the TC and the BOE for coming in with thought out budget requests and tremendous accomplishments. It’s been one year for Mr. Mala and two years for Mr. Robertson. These two managers of the town are bringing in a lot of positive, excellent change. I really believe that is going to continue. The energy, effort and professionalism that they bring to the job, we are lucky to have you and your staff. It’s a wonderful change to
see what’s coming out of that. Having said that, I do look at several of the other speakers. They mentioned the economy, it’s not booming. It’s not going the way it should be. Unemployment level is higher than it has been. It means there are people that are hurting. Eliminating income from one or even two people is serious. There are people struggling to make their payments. It’s real, it’s hurting many people, people that we know. Not just seniors but people with kids in the school system. I don’t think we can or ignore this. There are a lot of taxes on the state and federal level. They are highly likely to increase. I agree with everyone that 0% is not on the table and yes it might be nice to say 1% or 2% but I agree with 2.45%. This is a number that was widely endorsed and widely supported. When making spending reductions they would come from the pending requests. Bite some sort of bullet by reducing spending by some sort of amount. When you
see the number it won’t be close to past years. The reality of unemployment leads us to have to make some spending reductions.
Mr. Gugliotti added that many of his colleagues pointed out what is going on the “world” but he feels that we can’t solve those problems by reducing the mill rate by that little bit. He feels for those unemployed but Avon’s residents can handle this increase. This is all awful things 3.55% would bring the tax up for a $500,000 house up $400.00 a year- roughly $10.00 a week. We are kidding ourselves that all the economic difficulties, the best tax dollar you pay is the one you send to the tax collector of Avon. He added he was anxious to see the numbers but that lowering the mill rate would not fix these socio-economic.
Mr. Harrison added that he agrees with Mr. Gugliotti on everything he has said and that tax payments to Avon really has the best value.
Mr. Stoll commented that they are a pretty similar range and the public should have the right to vote on the budget as presented.
Using the budget application, Mr. Bartha input 2.9% which would cause a decrease of $143,927, $57,571 from the Town and $86,000 from BOE. Inputting 2.45% would cause a decrease of $444,580, a decrease of $177,832 from Town and $266,748 from BOE (60% town and 40% BOE).
Mr. Gugliotti commented that he thinks $100,000 should be taken out of the surplus (additional revenue) and put into the requested amount to temper the difference between the 2.45% and 2.9%. Understandably it helps with the rating for bonds but it is something that people have already paid for. It wouldn’t be a terrible thing to take out that money and reduce the hit. Ms. Bratton questioned if next year is the re-evaluation and Mr. Harrison responded yes. Ms. Bratton added that she would hate to take it out this year as it could really affect their status. Mr. Harrison added that $500,000 is taken out the first year after a re-evaluation year. Ms. Durdan added that she does not agree with taking the money from the surplus because it’s not a substantial amount and would hate to see it taken out when we have a
lower budget this year. Mr. Stoll added that just a few years ago the surplus was 4.6 million, it increased by 1.4 million within the last year. I don’t think using a little of it to make the budget work especially when salaries have a 3% increase across the board. Mr. Hamilton commented that he finds himself in the middle as he feels the surplus should be kept. It doesn’t seam a large amount but worried about reevaluation next year. Mr. Speich commented he believes we should not use the surplus this year but set a precedent for the next re-evaluation year. Mr. Harrison mentioned that there is a policy adopted about the surplus and he doesn’t believe this would meet that policy.
Mark Zacchio added that to meet in the middle (as Mr. Hamilton has mentioned) 2.9% & 2.0% = 2.6%, about $100,000- the amount you are looking at from the surplus. Mr. Harrison questioned if that means he is in favor or not and Mr. Zacchio added that that is up to the BOF.
Mr. Stoll mentioned that the other way to go is to look at the Capital Improvement projects and look to see if any of them could be held off for a year. The big number on the sheet is the CIP, it is what brings the final ncumber up. Mr. Zacchio responded that there is going to be a challenge for more years to come. Capital Items are not going to go away and will be there next year. Mr. Stoll commented that it appears the reason we were able to be at 2.45% last year is because we put off CIP last year and Mr. Zacchio responded yes, actually for a few years. It’s easy to do because you don’t feel the crunch in the operating budget but they sneak back up on you. You can’t starve capital anymore.
Ms. Bratton questioned about Storm Alfred and if we are going to get 75% back and if we are paying out 25%, where is that coming from. Mr. Robertson responded that they are in the process for 2 reimbursements and what we had to do was pay it out of the Operating Budget. Ms. Bratton questioned if the reimbursement would be in by June 30th and Mr. Robertson answered that all towns are experiencing this same problem and if you have an award letter by June 30th it will be accepted.
Mr. Harrison requested that Mr. Bartha check the amount of $344,580 in the computer application. This changes the mill rate to 2.6%- a change of $137,745 to TC and $206,618 to the BOE.
On a motion by Mr. Harrison to reduce the budget by $444,580.00- Mr. Stoll stopped the motion and requested to have more information about WHERE the dollars would come from. Mr. Harrison responded that the BOE decides that at a later date. Mr. Stoll added that he is asking the Board Of Finance where THEY think it would come from. Mr. Harrison added that at this time the BOF couldn’t come up with that information. Mr. Gugliotti added that sometimes they simply ask the other Boards if they think they can make it work. He then turned and asked the BOE if they could make it work. Ms. Roell answered that she thought it looked like they have no other choice. She added that Mr. Mala didn’t include any gimmicks in the proposal and this would mean very real cuts. Mr. Harrison questioned the TC if they can make this
work and Mr. Zacchio responded that they can make anything work but it means some compromise across all members would be great. Ms. Bratton questioned what $60,000 would mean and Ms. Roell responded that that is equal to 1 teacher.
Ms. Bratton added that she believes both numbers are reasonable.
On a motion by Mr. Harrison, seconded by Ms. Durdan,
The BOF recommends the unified total budget of $78,729,793 to the voters for consideration at the referendum, that the adjustments be split between the Board Of Education with a decrease of 60% and the Town Council at a decrease of 40%, and further recommends the Town Council further allocate between the Operating Budget further move to delegate to the Town Manager to make final adjustments so that the mill rate increase will be 2.45%.
Messrs. Harrison, Speich, Hamilton and Mmes. Bratton and Durdan voted in favor. Messrs. Stoll and Gugliotti opposed. Motion carries with a vote of 5 to 2.
IV NEW BUSINESS
There was none.
There was none.
VI ADJOURN
On a motion by Mr. Harrison, seconded by ??, it was voted:
RESOLVED: That the Board of Finance adjourn at 8:58 p.m.
Messrs. Harrison, Gugliotti, Stoll, Hamilton and Mmes. Bratton and Durdan voted in favor.
Respectfully Submitted,
Thomas A. Gugliotti, Vice Chairman/Secretary
Attest: Amber Wyzik, Clerk
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