The Board of Finance held a regular meeting on Thursday, February 22, 2007 in the meeting room at Town Hall South, 3 Main Street, Newtown, CT. Chairman John Kortze called the meeting to order at 7:30 p.m.
PRESENT: John Kortze, James Gaston, Michael Portnoy, Harrison Waterbury, John Torok, Joseph Kearney
ALSO PRESENT: First Selectman Herbert C. Rosenthal, Finance Director Ben Spragg, Judge William Lavery (Library Trustees Chairman), Kelly Urso (Library Trustees Member), two members of public
VOTER PARTICIPATION: None noted
COMMUNICATIONS: Chairman Kortze received communications from Mr. Richard Simon of the Board of Police Commissioners and from the Board of Fire Commissioners regarding their budgets. All members received communications from the Library Trustees regarding their budgets.
ACCEPTANCE OF MINUTES: Upon motion by Mr. Gaston, the minutes of the 2/12/07 meeting were unanimously carried.
FIRST SELECTMAN REPORT: Selectman Rosenthal urged the Finance Board to act favorably on the Business Incentive Program Application by TnT Expense Management. Their building plans have now been approved by the Planning & Zoning Commission. They are a growing company that wants to stay in Newtown.
The State is now in the budget process. Newtown does not fare as well as some towns in the Governor’s budget. We will actually lose approximately $200,000, however, by the end of the session, some of the programs where we see a reduction, i.e. Pilot and Pequot Funds may be replaced.
FINANCE DIRECTOR REPORT: None
NEW BUSINESS
2007/2008 Municipal Budget
First Selectman Rosenthal distributed his overview of the budget approved by the Board of Selectmen (attached).
Judge William Lavery and Ms. Kelly Urso, of the Library Board of Trustees were present. Judge Lavery reported that income is down and expenses are up. They are expecting a $9,000 increase in electricity in the budget for this fiscal year. The Board just had a 5-10 year plan for the Library prepared and once they adopt it, he would like to come to the Board of Finance to get advice on how to implement. They had approximately 700 surveys completed by residents and the one thing most agreed on is that they want to see the Library open more hours.
Ms. Urso distributed copies of the Asset and Revenue Summaries for the Library, along with other financial information which she went over and answered questions.
Mr. Kortze asked about the $750,000 that the Board of Selectmen is recommending to be put into the Capital Reserve Fund. Mr. Rosenthal advised that the Finance Director had proposed $1,050,000, which is all of the increase in surplus, based on conversations with Moodys. Selectman Bojnowski and Selectman Brimmer disagreed and voted to decrease the Cap Reserve deposit to $750,000. Mr. Spragg stated that when the surplus goes from $2.3 million one year to $3.4 million the next year, we are “raising the bar”. We have another $1 million to spend or to use to lower taxes. If the 2007 surplus then is a lot less, you will potentially have a large revenue “hole”. It is not a good long-range plan to use surplus to lower the
mill rate in a given year.
Mr. Portnoy asked about the request for a Traffic Enforcement Unit by the Police Department. Why don’t we take two or three of the current 45 offices and call them the dedicated traffic enforcement unit? First Selectman Rosenthal explained that the PD never has a full 45 because there are officers at the Academy for training, out on sick leave, on vacation, etc. We just had three officers leave for various reasons and now the three replacements will spend six months in the Academy. And we still have to cover the three shifts, 24/7. In addition, that 45 includes the Chief, Captain, Detectives, Sargeants, - we don’t have 45 patrol officers. The Board of Finance members asked to have someone present at the meeting next Thursday to
discuss the requested police vehicle replacements.
Mr. Gaston asked about the increase in Highway Department Equipment Fuel. First Selectman Rosenthal explained that we are currently bidding the fuel and bids are expected shortly. Public Works Director Fred Hurley believes we may be able to save $100,000 in that line item because prices have been coming down since the budget preparation began back in the Fall.
Mr. Portnoy asked about the health insurance. Mr. Rosenthal stated that the Finance Director is currently talking to our agent and the agent for the school system. We hope to have information in a couple of weeks. If we decide to change carriers, there is a substantial amount of administration needed to make that change. We are out to bid right now. Board of Finance members would like to have someone be at the meeting next Tuesday to give an update.
TnT Expense Management – Business Incentive Application
Mr. Torok moved to recommend to the Legislative Council the approval of the Business Incentive Application made by TnT Expense Management. Motion seconded and unanimously carried.
Having no further business, the meeting was adjourned at 9:15 p.m.
Jan Andras, Clerk
Attachment: First Selectman Budget Overview
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February 21, 2007
TO: John Kortze, Chairman, Board of Finance
Members of Board of Finance
FROM: Herbert C. Rosenthal, First Selectman
RE: 2007/2008 Municipal Budget
______________________________________________________________________________
Last week, I submitted the General Government budget for your review and action. The budget presented is in the amount of $38,559,719, an increase over the 2006/2007 Budget of $3,576,667 or 10.2%. Included in this amount is a deposit to the Capital Reserve Fund of $750,000 for future mill rate stabilization, our method of managing our surplus. Without this, our increase would be approximately 8%.
As was the case last year, the largest single line item of increase is Debt Service in the amount of $1,029,936 which is equal to approximately 3% of the increase. Thus, our operating budget is responsible for a 5% increase over last year’s budget.
Within the operating budget, four items or areas of increased expenditures; employee health insurance ($361,000), utilities and vehicle fuel ($150,000), Revaluation increase ($100,000), Parks and Rec. Dept. Capital ($156,500), outside organizations (Library $85,000, Kevin’s Community Center $50,000, Newtown Ambulance $80,000, and Health District $30,000, equaling $245,000) are major drivers of our operating budget increase. Combined they amount to $1,022,500 or 57% of the operating budget increase. Without these four drivers, the operating budget would have resulted in a 2.2% increase.
In the remaining areas of the budget, salary increases and three new positions amount to $838,000. There is one new program requested by the Board of Fire Commissioners, a Fire Response Program, for $125,000. When these salary related items, totaling $963,000 are removed, all of the remaining line items in the operating budget actually equal a decrease of $188,769 from the current year.
Once again, it took the Selectmen four meetings to consider agency requests that would have resulted in an increase of 17%. To reach the submitted budget, the Selectmen cut those requests by almost $2.4 million.
We believe that we have presented a responsible budget although it is much higher than we would have preferred due to the aforementioned budget pressures. The inclusion of the deposit to the Capital Reserve Fund makes it the highest increase we have ever presented. The budget will provide for essential services and provide for some expansion of services (such as the Police Traffic Enforcement Unit and Fire Response Program) to meet increased demands as evidenced by the added positions.
On the revenue side of the budget, we are once again facing a cut in the State Revenues in the proposed Governor’s budget. While education grants are up $322,010, non-education grants are down $510,790, thus the net loss is $188,780. Agency fee income is also down, $513,000. However, audit surplus or fund balance from the 2005/2006 fiscal year is up $1,051,426 from the prior fiscal year (that is why the Selectmen are recommending the deposit of $750,000 to the Capital Reserve Fund). Interest on investments is also projected to be up $300,000. The net result is a revenue increase of $588,178.
I will be available to supply additional information as needed to assist you in your deliberations.
jan
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