The Board of Finance held a special meeting on Wednesday, March 4, 2009 at 7:00 p.m in the Lecture Hall of the Newtown High School, 12 Berkshire Road, Sandy Hook, CT. Chairman John Kortze called the meeting to order at 7:05 p.m.
PRESENT: John Kortze, James Gaston, Michael Portnoy, Joseph Kearney and Harry Waterbury
ALSO PRESENT: First Selectman Joseph Borst, Finance Director Robert Tait, Selectman Paul Mangiafico, Judge William Lavery, Peter Marshall, ten members of the public and one member of the press.
VOTER PARTICIPATION:
Lori Capozziello, 123 Toddy Hill Road, Sandy Hook spoke representing the fundraising campaign “Donate To Skate”. Mrs. Capozziello stated that the campaign is supported by the Newtown Parks & Recreation department and asked the Board of Finance to keep the allotted funds already approved by the Board of Selectmen in the budget. She stated that skateboarding is ranked third place with kids between the ages of 6-18, making it more popular than baseball. Mrs. Capozziello asked the Board to review all the information and to recognize the importance of providing a skateboard park in Newtown for the safety and well being of the skate enthusiasts and their families.(Att. A)
Bob Merola, 22 Ashford Lane, Newtown stated that the town has had a 25% budget increase over the past few years, from $84,000,000 to $105,000,000. Mr. Merola finds that an exorbitant increase and asked the Board to consider a goal of $100,000,000 suggesting the town side budget be decreased by $500,000, the Board of Education even more. Consider restraint and additional financial responsibility.
Ruby Johnson, 16 Chestnut Hill, Sandy Hook thanked the Board of Finance, in particularly Mr. Kortze, for allowing questions to be submitted and noted that her questions have been answered. Mrs. Johnson quoted Abraham Lincoln, “With public sentiment, nothing can fail, without it nothing can succeed.” She continued speaking of Fairfield Hills and prevailing wages by saying an attempt to prevent compliance with the prevailing wage law will “come back to haunt us.” Ms. Johnson encouraged the Board to look at the portion of the budget that talks about $200,000 to Peter D’Amico for his borrowing of money; the town will pay that money back to the bank via Mr. D’Amico. She thinks this is an inappropriate financial arrangement. Ms. Johnson believes that
the town can work to reduce the costs of management of Fairfield Hills.
Paul Mangiafico, 15 Kent Road, Newtown assured the Board of Finance that the Board of Selectmen did not take the budget process lightly and spoke as both a member of the Board of Selectmen and as a private citizen. He sited many examples of the changing economy, (see Att. B), as the basis for the approach and objectives in the budget compilation stating that this “economic and continually deteriorating situation demanded that government scale back its spending significantly.” The Board of Selectmen is presenting a budget that reduces spending by $1,433,331 or 3.63%. Mr. Mangiafico stressed that he believes the Board of Selectmen have done all that could be done and the proposed budget is acceptable as is.
Tom Murtha, 102 Boggs Hill Road, Newtown was invited by the Board of Finance to speak about the pension. He is on the Pension Committee, an advisory Board to the First Selectmen. No more than 60% is invested in equities, 40% in fixed. The goal is to have an annual return of 8%, as of June 30, 2008 they were at 7.92%. The actuary calculates what should be contributed to the pension to stay fully funded and takes out a rate of return. The contribution increase is due to the lower return (under the 8%) and the amount of people in the pension. Since 6/30/08 there has been a loss of 20% or $5,000,000. The actuary believes an additional 1%, or $250,000 should be contributed. The pension committee didn't ask the Selectmen for more money in the budget. Mr. Kearney
stated that if the economy continues to falter there will be significant underfunding of the pension. It cost the town more money when the rate of return is lowered. (Att. C)
Judge William Lavery spoke representing the C.H. Booth Library Board of Trustees and asked the Board of Finance to give the library what was allotted by the Board of Selectmen, which is the same amount requested last year. Judge Lavery explained the trustee will be changed from Bank of America to Chase. Income is down. Judge Lavery explained that when times are bad the business of the library goes up. He also praised "The Friends of the Library", stating the library couldn't exist without them.
Peter Marshall is the Treasurer and Financial Vice President of the C.H. Booth Library Board of Trustees. He stated the reduced budget of 3% represents a decrease in the expenditures not withstanding the increase use of the library. There will be a decrease in fundraising income and investment income. The budget has been reduced in terms of audio visuals, programs, administrative expenses and in about twenty different areas. Salary increases of 3% were eliminated and the board hopes to reduce contractual services. Mr. Kortze asked if the library has given any thought to additional stress if the economy doesn't turn around. Mr. Marshall responded that 73% of the budget is personnel and it would mean a reduction in hours. It is difficult to cut the maintenance of the library as
the older part of the building requires work. Mr. Marshall stated the library is handing out job hunting packets (Att. D) and the reference library is active. General Electric issued a grant to the library and was particularly impressed that the library is helping residents research for jobs. Mr. Gaston stated that he's seen the increased activity at the library and is satisfied with what the library has done with the budget. Mr. Kortze praised the library for being on time with complete information regarding the budget each year.
COMMUNICATIONS: Mr. Kortze acknowledged he and the Board of Finance received emails regarding the budget. There have been a number in favor of the budget, in favor of the educational budget and a number in perspective of the difficult times not wanting to see an increase. There were ten emails following the Public Hearing, the majority mentioned being concerned about coming to a Public Hearing and two that went to the Public Hearing but decided not to speak because they felt in the minority. Many of the emails were in favor of the budget as presented, specifically the Board of Education.
First Selectman Borst stated that at each monthly Department Head meeting he tells the department heads to treat their budgets as they do with their home budgets and watch the spending. The Selectmen budget is 3.63% less than the 2008-2009 budget. The estimated revenues for 2009-2010 would be $2.4 million less than 2008-2009. The reduction represented reductions from state grants, interest earned due to declining interest rates and a reduction in fees relating to building. A flat budget would still produce a budget with a tax increase of 3%. The Selectmen cut one staff secretary in the Selectman office, one part time OS agent, one part time office assistant in Land Use, one truck driver, one unfilled parks maintainer position, one unfilled part time receptionist in the senior
center and one assistant building official in building for a net of three full time and three part time positions. Mr. Borst complimented Bob Tait on work done on the budget.
Revenues:
Bob Tait, Finance Director reported earned interest has decreased by $100,000. He explained in normal years revenues are expected to stay the same. This year there are reduced state grants and interest revenues and fees are affected. When revenues go down taxes need to be increased. Bob could not report on the amount Newtown will receive from the stimulus package because they haven't come out yet. The town anticipates a shortfall in revenues of $2.4 million inclusive of all town aid and Board of Education.
Bridges, Road and Lake Zoar Authority:
Mr. Borst reported that bridges would be the priority prior over the roads if the bridges and roads budget is cut and no stimulus money is received. He also stated that larger projects would be completed by outside contractors; smaller projects would be completed by the Public Works Department. Mr. Borst reported that the Lake Zoar Authority budget has been decreased from $38,175 to $25,425 and replied to the board’s inquiries by stating there would be Lake Zoar Authority representation at the next Selectmen budget deliberation to answer questions.
Building Department: In response to Mr. Kortze's inquiries about staffing Mr. Borst reported there was one assistant building inspector hired during his term. He anticipates one more reduction in personnel. Staffing levels are similar to last year and at the least we can work with; layoffs would mean a reduction of services. Mr. Tait reported that personnel is down three full time and three part time positions: one in the highway department, one in Parks &Recreation, one in the Selectman office, one part time in the senior center, two part time positions in land use and one park maintainer. Mr. Kortze questioned the amount of staff in the building department in this environment, even with the high school addition. He asked that more documentation be provided
for the next meeting to justify a full department when the work flow is dramatically decreased.
Land Use/Economic Development: Mr. Gaston stated the Land Use Department is doing a considerable amount of work and receiving grants. He noted that Danbury has cut the Economic Development position to a part time position. One part time position plus the Land Use department can be doing the same work. He stated he thinks it would be more appropriate to combine the two departments so that one person is doing grants; the economic director should be within Land Use so they can work together. Mr. Borst disagreed. Mr. Borst agreed to have a representative from Land Use and Economic Development at the next meeting.
New Town Hall: Mr. Tait reported that operational money budgeted for the new Town Hall is based on August 2009, explaining there is an overlap between Kendro monthly lease payments, the early termination fee and the New Town Hall operational costs. If there is a delay in getting into the new Town Hall the money would go to Kendro rent.
Medical: Mr. Tait reported that "medical benefits" has been changed to "employee benefits" and there is a 9% increase in medical costs. He said the benefits include medical, life insurance, long term disability and offsets to medical, such as employee cost share and outside agency cost share. There was a 5.7% increase in premiums. The number in the budget book is $3,083,750 using the 5.7% increase. Mr. Tait noted that the Board of Education has a different package with a similar increase.
Newtown Youth Academy Lease: At the request of Mr. Portnoy, Mr. Borst reported that the town agreed to have parking available when the Newtown Youth Academy opened for business. Being unable to do this, Attorney's Fran Pennarola (NYA attorney), David Grogins (Town Attorney) and Peter D'Amico (owner of NYA) agreed Mr. D'Amico would finance the demolition of Greenwich Hall and put in the parking lot. To do this, Mr. D'Amico borrowed the money from Newtown Savings Bank at a rate of 6.9%. Mr. Borst and Mr. Tait agreed to give the bank the town business for a lower rate of 6%, because the Town would be eventually responsible for payment. The destruction of the building and the construction of the parking lot will be bonded, through the normal channels of approvals. If the
town refuses the bonding resolution, the Town is responsible for the money. Mr. Portnoy expressed concern that the First Selectman could authorize $3 million borrowing without going through the normal channels of bonding. Mr. Gaston stated the project would qualify under the Capital Improvement Plan and questioned why it wasn't presented for recommendation to the Board of Finance to then go to the Legislative Council. Mr. Borst was unable to answer the question.
Fairfield Hills: Mr. Tait reported that if the maintenance of Fairfield Hills was not contracted out the fee, payroll and administrative costs, totaling approximately $40,000 would be saved. Chief Kehoe reported that police can patrol the grounds as they do other commercial and public buildings. Mr. Tait reported that security at Fairfield Hills currently costs $156,000 to be decreased to $110,000 next year.
Salary: Mr. Tait reported there are five unions with the town; two have contracted increases of 3% and 3.5%, all other need to be negotiated. Mr. Borst reported that the unions agreed to open their contracts provided all unions open. Mr. Kortze urged Mr. Borst to approach the unions. Mr. Tait will find out what savings would occur if the town employees agreed to a salary freeze. Ms. Fetchick, Board of Education secretary, as a member of the public, stated that all the unions, with the exception of the teachers union, have agreed to some kind of concession. The administrators have agreed to a pay freeze and the teachers are being furloughed six days. In answer to Mr. Gaston's question Ms. Fetchick stated that the teachers furlough is part of the teacher’s contract. The executive committee of the union agreed not to open the contract. The teachers did not have the opportunity to vote. Ms. Fetchick reported that the furlough is 3% of the salary line, or over $900,000, while a
salary freeze would be 4.9% of the salary line. The Board would like to know if the two town contracts that currently contain a pay increase would be willing to open their contract.
Pequot Grant: Mr. Tait reported that state reductions to this grant were to be across the board proportionately, but Newtown received less proportionately. Mr. Tait will follow up with the Office of Policy Management.
Fire: Mr. Kearney requested more information on the Fire Commission request for help from the town for insurance cost for volunteers.
Misc. Organizations: Mr. Kearney would like audited organizations to show the audit and financial statements when requesting money from the budget.
First Selectman Borst reported the Land Use Agency received a $50,000 grant for the study of affordable housing. A LoCIP grant was also received for $204,000.
Mr. Kortze reported that questions were received after the Public Hearing and they have been answered by the First Selectman. The Board of Finance will facilitate the answering of questions and try to get them to the correct people.
ADJOURNMENT: The meeting was adjourned at 9:40 p.m.
Susan Marcinek, Clerk
Attachments:
A: Lori Capozziello handout
B: Paul Mangiafio handout
C: Pension
D: Library job hunting packet
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