The Board of Finance held a regular meeting on Monday, December 8, 2008 in the Conference Room of 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, Martin Gersten, Joseph Kearney, Michael Portnoy, Harrison Waterbury.
ALSO PRESENT: First Selectman Joseph Borst, Financial Director Robert Tait, Board of Education Secretary Kathy Fetchick, one member of public, two members of press.
VOTER PARTICIPATION. Bob Merola, 22 Ashford Lane, reported that the Fairfax, Virginia school district teachers voted to give back their 5% raises and that another district in that area increased its class sizes by 3-5 students.
COMMUNICATIONS. Schools Superintendent Dr. Janet Robinson advised Mr. Kortze that the portables need to be ordered in January.
MINUTES. Upon motion of Mr. Gersten, the minutes of the regular meeting of November 24, 2008 were unanimously accepted as presented.
FIRST SELECTMAN’S REPORT. Mr. Borst reported that the Board of Selectmen had moved Open Space to priority #3 in the Capital Improvement Plan (CIP) and approved bundling the funds. Mr. Borst reported that a Municipal Management Bulletin from CCM stated that the State Board of Education voted to reduce funding by 10% in 2009-10. They will continue grant caps. He said that our Public Works Department separated their capital request into roads and bridges; he would like to keep the request for bridges and if any cut is made, it should be to the roads. He would like to see a 0% increase in capital funding. He noted that the Chief of Police is attending the next Board of Selectmen’s meeting to discuss the Police request for radio enhancement.
FINANCIAL DIRECTOR’S REPORT. Mr. Tait reported to the Legislative Council last week on the state of the Town’s economy. He said that revenues are more of a concern than expenditures. He noted that tax collections for July and August were .9% less than the last average. In the prior year we collected 41.3% in January and February and after January he will have a good idea if there will be a shortfall. In the past we have sold tax liens to make up a short fall and in the past year we took in $300,000 to $500,000 in these sales. The rate in STIF, the State agency that we invest in, was 4.8% last year, 3.3% in March 2008 and is now 1.8%. He estimates a $250,000 shortfall in that account. The Town Clerk conveyance fees were budgeted this year at $625,000 but he estimates that we will collect $225,000. He
said that on the expenditure side, debt service has a positive variance of $1.6 million because we did not bond the High School. On February 1 we will bond $5.4 million and this will not affect the current budget. For the 2009-10 CIP the first interest payment will be in the next fiscal year. Last year we received $5 million in State aid and $3 million in Board of Education grants; these grants may be cut by 10-12%. He noted that the Departments gave back $1.3 million in the prior fiscal year, which indicates to him that they do not have an if you have it spend it mentality. He distributed and discussed “Town of Newtown 2008/2009 BUDGET SUMMARY BREAKDOWN” (Attachment A to original minutes). He noted that the Town breakdown is 27% of the total budget and the Board of Education is 63%, debt service is 10%. He said that the budgeted percentage for collection of taxes is 99% including sale of tax liens and we get 1% from prior year taxes.
Mr. Kortze asked Mr. Tait if he still expects us to get dollar for dollar when we sell the tax liens, to which Mr. Tait replied that he does. Mr. Kearney asked how we came to use the tax lien company which Mr. Tait will research. Mr. Kortze asked Mr. Tait to present at the next meeting how much does the Town have to make up in so far as loss of revenue is concerned and would he quantify this amount, including the pension increase that the Town has to pay. Mr. Portnoy suggested that the Board of Education consider cutting the number of teachers’ professional development days, to which Ms. Fetchick said that this has been discussed before.
Mr. Tait distributed “Town of Newtown CIP Projects to be Bonded February 1, 2009” (Attachment B to original minutes). He said that he will bond $5.4 million over ten years with a large principal payment up front of $1.5 million and that the first year’s payment will be next year. He said that he feels that the rating agencies like this $1.5 million payment in the first year. He said that $3.5 million was taken out for the High School but that $2 million was left in.
Mr. Borst will ask the Chairman of the Pension Committee to attend a meeting before the budget season begins to discuss the amount of increase that the Town will have to pay. Mr. Tait distributed “Town of Newtown CIP Project Time Table.” (Attachment C to original minutes). He also distributed “Town of Newtown Capital Improvement Plan Town Wide 2009-2010” (Attachment D to original minutes). He used a percentage of increase of 5.25%. The delay in the High School resulted in a 15% cut in the first year in the CIP.
Mr. Gersten moved to set the bar at a proposed increase of 5.25% overall, which is the general process as suggested by Mr. Gaston and Mr. Portnoy to use a rolling average of the last four years and this year’s projected increase. This does not speak to the departments, boards and commissions as to what this year’s operational budget should be.
Second by Mr. Portnoy and unanimously carried.
Mr. Gaston moved to use as a guideline for this Board a rolling five year average where we use the last four years and estimate the upcoming year’s budget as the fifth year’s average. Second by Mr. Kearney and unanimously carried.
Mr. Kearney moved that we adopt a CIP that would remove 15% of the capital projects over the next five years and encumber a proportionate amount and leave it up to the Board of Selectmen and Board of Education to make that determination. Second by Mr. Portnoy for discussion. After discussion about whether to cut specific items instead, Mr. Kearney withdrew his motion and Mr. Portnoy withdrew his second.
Mr. Kortze moved to adopt a Capital Improvement Plan that will remove in year 2009-2010 item #8, Maintenance Facility – Interior Renovations at a cost of $700,000; in year 2010-2011 to reduce item #4, New Recreation Center – Phase I from $5,000,000 to $4,000,000; in year 2011-2012 to reduce Hawley School HVAC by $500,000; in year 2012-2013 to reduce Replace Funspace Playground from $500,000 to $300,000; and in year 2013-2014 to remove Item #4 Police Building Design at a cost of $800,000. Second by Mr. Gaston. Mr. Kortze said that these actions would bring us closer to the 9% guideline consistent with the Board of Finance’s goal in increasing overall indebtedness. Motion unanimously carried.
Mr. Kortze noted that the Board of Finance has a Plan B if the High School is pushed out. Discussion followed about where the Board of Finance think in general we should be for the upcoming budget. Mr. Kortze feels that 5.25% is a planning tool, not a figure for the budget. He said there should be reductions elsewhere to make up for the increases and that the budget should be flat. He noted that for the last three years we questioned staffing with the Board of Education in so far as new teachers based on need and on what we face in the future. He said that we do not have line item authority and are now stuck with the worst case scenario. Also that we have not used attrition for the last four years and what will happen when revenues change? New home construction is down and there will be a gap there that we will have to
make up as well. Mr. Portnoy suggested that the budget requests for next year be 95% of this year’s budget. Mr. Kortze will write a letter to the Legislative Council explaining both sides of the debate, whether to use specific numbers or 95% of the present budget and that the majority of the Board of Finance is in favor of 95%.
ADJOURNMENT. Having no further business, the meeting adjourned at 9:32 p.m.
Ann M. Mazur, Clerk
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