Minutes of the Special meeting of the legislative Council held on Thursday, March 26, 2009 in the Auditorium at the Newtown High School, 12 Berkshire Road, Sandy Hook, CT. Chairman Rodgers called the meeting to order at 7:40 PM
PRESENT: Joseph Hemingway, John Torok, John Aurelia, Gary Davis, Jeffery Capeci, Francis Pennarola, Joseph DiCandido, William Rodgers, Jan Brookes, Patricia Llodra, Daniel Amaral, Po Murray
ALSO PRESENT: First Selectman Joseph Borst, Finance Director Robert Tait, 37 members of the public, one member of the press.
Mr. Rodgers opened the meeting by reading a legal opinion from Town Attorney David Grogins in regards to advisory questions being on the ballot.
The two questions proposed are as follows:
1) If you voted no on the budget do you think that the education budget should be increased? Yes or No.
2) If you voted no on the budget do you think the town budget should be increased? Yes or No.
Having been presented with the questions above, Mr. Grogins spoke to elections division of the secretary of states office. According to Mr. Grogins, he reviewed state statutes as well as the town charter. He then took the matter to the office of the Secretary of State.
The secretary of states office indicated that there is no authority in state statutes for advisory questions and they generally do not favor advisory questions on the ballot.
Furthermore, they stated that these are generally questions of local law.
Mr. Grogins stated that he is primarily concerned with proposed form of the questions. In essence, the questions ask the voters to consider the education and town budgets separately and the town charter specifically states that the voters be presented with on unified budget.
Therefore, in Mr. Grogins opinion, the questions in the form above violate the letter and spirit of the charter and are illegal.
PUBLIC PARTICIPATION:
Kevin Fitzgerald, 24 Old Farm Hill Road, supports idea of an advisory question.
LeReine Frampton, 6 Pebble Road,
Shed light on the particulars of adding questions to the referendum.
According to Mrs. Frampton, every question must begin with the word “shall” and everyone must get the same ballot. The ballots are sealed for two weeks.
A tally will tell how many yes and how many no’s, but not who voted for it.
Robin Fitzgerald, 24 Old Farm Hill Road, expressed her belief that “yes” voters for the proposed budget have a valid point. So yes voters should be allowed to comment.
DISCUSSION AND POSSIBLE ACTION: Review of the proposed 2009/2010 as presented from the Board of Finance and possible use of the newly created right to add local questions to referendum.
Board of Finance Report
According to Chairman of the Board of Finance John Kortze, the Board of Finance has presented its budget with a .8% increase overall. Addressing concerns about fixed costs right down the line, where we are in comparison to previous year’s general fund and surplus, and what we can and can’t do.
Mr. Kortze began by addressing what he called the three pieces: the Board of Selectman, Board of Education and the General Fund & Revenues.
1) The Board of Selectman. The Board of Finance has line item authority on the Board of Selectman. The Board of Finance’s primary goal at the last selectman’s meeting was addressing fixed costs – unions, salaries – with essentially some level of freeze or some level of savings.
2) The Board of Education. With the Board of Education, the issue is the fixed costs and that is why the Board of Finance unanimously voted on the $1 Million reduction.
3) The Rainy Day Fund. There has been lot of discussion about a rainy day fund and that is a misnomer, a rainy day fund is for savings. Critical issue this year the Town is drawing from the general fund not the surplus.
Mr. Kortze addressed several questions the first was if they were drawing from revenues to the general fund. He said the Board of Finance is recommending moving $2 million from the general fund. The next question was why the general fund was down if there was $8 million last year and $12 million this year. Mr. Kortze said the reason was because the Town combined the accounts. The other question he addressed was why the Town was drawing from general fund not the surplus. He said if you do the math year over year it has not increased it is flat on the down side.
According to Mr. Kortze, every dollar moved this year must be made up next year. The critical question should we grab more money and add it back in.
To offset the hurt, he stated that the Board of Finance incorporated LOCIP funds (must be for certain capital items), used $100,000 from open-space and $50,000 from park and recreation
Mr. Kortze stated that there are funds in the non-reoccurring account. There are things earmarked for that account like a fire engine, there is a little money left, but cautions against using the money.
The Board of Finance recommends adding $250,000 to pension but with a caveat to consider any new information they didn’t have.
To shed some light on the subject, Mr. Kortze presented the following facts about pensions:
- Lost $5 million, but its less than rest of market lost
- Assumptions in pension of 5% salary growth over time
- $1.1 million of fund is over funded on the town/teacher side and the police portion is under funded by $900,000 – so Town is about $1 million over-funded
- Assumed rate of return that is 8% - it’s hard to get 8% in this environment and its impossible if you only have 30% in cash.
According to Mr. Kortze, the recommendation was based on June of last year a lot has happened since last year, but their recommendation is to add $250,000.
In regards to donations to charities and civic organizations, Mr. Kortze believes it is critical we support them, but the premise of board of finance is if you going to ask for public funds we need to know the whole picture. He urges people to ask the library and Edmond Town Hall about the process. Furthermore, he recommends that the Board of Selectman come up with a process where they can identify who it is, what they do for the town, and why.
Mr. Kortze stated that the Board of Finance uses many different tools.
One tool was a periodical standard for municipal financing which he distributed to members of the board.
As far as the quest for an AAA rating, Mr. Kortze stated that he doesn’t think they’ll get one because the Town of Newtown is being compared to towns of a very different fabric like Greenich, Darien, and Westport. He noted that Newtown doesn’t have a Route 7, a Route 1 and the industrial base to draw from, our budgets fail the first time – those are very critical in a rating and very critical in a AAA rating.
Mr. Kortze pointed out that the Board of Finance has line item authority on the Board of Selectman side, but not on the Board of Education side.
Additionally, he indicated that the majority of votes were unanimous and believes the Board of Finance has presented a responsible budget.
A responsible budget:
- With a .8% increase in a time when increases are non-existent.
- That takes into account all areas of the town
- That utilizes all options to soften the blow of reductions
- That can be presented to the public as is
- That we believe must pass on the first time
On behalf of the Board of Finance, Mr. Kortze asked for the Legislative Council’s support.
According to Rodgers, the Town was told to bolster general fund to improve the Moody rating. If the Town didn’t get the rating with bolstering the general fund than what’s the harm in using it.
Mr. Kortze noted that Newtown is there on accepted levels, slightly, but it’s the combination that brings us below the mark. By using it we’re drawing it down, he added. That’s why the Board of Finance recommended putting 2 million in and not 2.6 million like last year. It’s an A or B choice: curb spending or draw from the fund. Our recommendation is that we curb spending and draw some from the fund.
According to Mr. Kortze, the Board of Finance recommends taking $2 million from fund so they will have to make up $2 million instead of $2.5 million (a number they rounded off from $2.6 million for the purpose of discussion).
Below are the Board’s reasons:
1.) $2 million will have to be made up next year
2.) Have to make up $2 million next year but not $2.5
3.) That doesn’t include next year an operational requests and adding on to the High School and at 10% principal and interest on 20million that’s another million and a half to $2 million
Mrs. Llodra asked Mr. Tate what an example of bonding money over time would look like with a downgrade in the Town’s bond rating.
According to Mr. Tate, any upgrade in rating would give the Newtown 10 percentage points and assumes that any down grade would take away roughly 15 percentage points. So bonding 24 million over next year at 15% will cost $400,000.
Ms. Murray asked what probability of receiving a downgrade between now and next year.
Mr. Tate the town would have to have a negative rating and most likely it wouldn’t go down in a year. They would give you a warning first.
Mr. Torok wanted to thank Mr. Kortze and his board for their thoroughness and hours they put in.
Finance Sub-Committee Report
Mr. DiCandido said their purpose of the meeting March 20 was to discuss and question the budget with the Board of Finance.
Mr. DiCandido noted that the amount of the Board of Finance put into the Budget was enormous.
According to Mr. DiCandido, after a “long and spirited discussion” the sub-committee’s charge boiled down to 3 possibilities:
1) Decide to accept the budget as is
2) Make recommendations to cut it
3) Increase it from where it was.
Mr. DiCandido presented the sub-committees three motions as follows:
1) Ms. Murray moved the sub-committees commendation to the Legislative council to appropriate 1.5 million to general fund to revenue or relocation to $1 million to reinstated cuts to Board of Education budget by Board of Finance. Mr. Torok seconded and the motion failed 4-1. Ms. Murray voted in favor of the motion. Mr. Amaral, Mr. Capeci, Mr. Torok and Mr. DiCandido voted against the motion.
2) Ms. Murray moved the sub-committee recommend to the Legislative Council to appropriate $600,000 to the general fund to offset cuts made to the Board of Educations budget by the Board of Finance. The motion failed to get second.
3) Mr. Amaral moved the sub-committee recommend to the Legislative Council to move $600,000 to the budget with no specific line items for separation between town and Board of education. The Motion was seconded by Mr. Capeci and passed in vote of 4-1. Voting in favor of the motion were Mr. Amaral, Mr. Capeci, Mr. Torok, and Mr. DiCandido. Voting against the motion was Ms. Murray.
Mr. DiCandido noted that the third option of leaving the motion alone as it stands is mute.
Having been presented with all the information, Mr. Rodgers asked that the Council entertain a motion.
Mr. DiCandido moved to reduce either side of the budget further. The motion was seconded by Mr. Amaral but failed in a show of hands vote.
Mr. Davis moved to take $600,000 from the bottom line increase of the budget to restore the cuts made to the education budget. Ms. Murray seconded the motion.
According to Mr. Davis, this is the greatest economic crisis members of the council have seen in their life times. He agrees with trying to get a zero budget or even one with a 1% increase, but he is concerned that doing that would put a number of people out of work.
Mr. DiCandido expressed his concern that if you don’t cut spending in dire circumstances when will you ever.
Additionally, he stated that this year’s budget would be smaller than next years. Next year he believes there will be higher unemployment rate and adding on cuts high school expansion program and the pension fund.
Mr. Aurelia stated that the town customized the budget last year to help everyone. Everyone was happy. He added that this year the town doesn’t have that ability and he believes the town has sacrificed the right amount.
Mrs. Llodra wants to put more money into Board of Education budget. She believes the financial crisis is going to persist for some time and is very concerned about taking that money from the fund balance. To make it up will create incredible pressure it propels the tax burden into the future. Furthermore, she believes the Town can refund the bond issue which could generate $450,000 and says that might put back funds into the budget.
Mr. Hemmingway said he would like to add more into the Board of Education budget but isn’t sure $600,000 is the number and that it might be too much.
Mr. Amaral asked if this would affect their bond rating. Mr. Tate indicated that in Moody’s “right up” they anticipate the town’s position will remain satisfactory over the near term given its careful use of reserves. He added that “reserves” is another name for fund balance. Moody’s further indicated that as the budget increases the fund balance must increase as well.
Mr. Capeci said he wasn’t sure he would go against the Board of Finance has made some very good points they are the financial wizards who look at the numbers. Taking money from the fund balance will be taking a very severe step. He used the Town of Monroe as an example stating that they went down the road of cutting the budget back - year after year. The Town he noted. Couldn’t catch up and wound up losing their rating because of it. Additionally, Mr. Capeci called for parity between the town and school budgets. The town budget is significantly below what it was.
Mrs. Llodra stated it would be unfair that if any money could be found any where that it would be dedicated to one side of the budget that we typically look at that one-third, two thirds proportionality.
Ms. Murray thinks the Board of Finance Board of Selectman and Board of Education did their best to meet the needs of the economic situation. Over the last 10-years, the average school budget increase has been 7.5%, currently it is .23%. The average town budget increase is 4%, currently its well below 0%. Feels stimulus money for some of the road repair can be used to do that work done and since $800,000 was removed from Board of Selectman’s budget, the federal money could be used to off set some of Board of Selectman’s cuts. The overall budget increase is 5.9%, currently it is .83% that is a traumatic decrease that will create a lasting negative consequence for the town as we attempt to approve future budgets.
Mr. Rodger’s asked that the council bear in mind the advisory question and how that factors into their thinking.
According to Mr. Pennerola, agree with part of what Mr. Dicandido says that next year will be worse than this year, however he does feel they should consider an increase. Furthermore, he added that the average taxpayer would have an increase of $107 and the median taxpayer would experience an increase of $96 based on $1 million budget increase. If you cut that in half and just increase budget by $500k, it’s roughly about $50 a taxpayer; and for most people that $50 is deductable by 30%, so the average increase per taxpayer would be about $35.
Mr. Pennerola indicated that any monies would be allocated in the typical one-third, two- thirds manner.
After a lengthily discussion, the vote on the second motion failed 2 to 10. Mr. Davis and Ms Murray for the motion. Mr. Aurelia, Sr., Mr. DiCandido, Mr. Torok, Mr. Pennarola, Mr. Hemmingway, Mrs. Llodra, Mr. Amaral, Mrs. Brookes, Mr. Capeci and Mr. Rodgers against on the motion.
Mr. Pennerola moved to increase the Board of Education’s budget by $335,000 and the Town budget by $165,000 for a total of $500,000 and raise the amount to be raised by taxation by $500,000. Mr. Hemmingway seconded.
As a point of interest, Mr. Capeci asked how the increase would affect the mil rate.
According to Mr. Tate the current budget mil rate increase is .8%. If the Town added $500,000 to the budget the mil rate would increase 1.73%; if they added $700,000 it would increase 1.59% and if they increased the budget by $600,000 the mil rate would increase 1.48%.
Mr. DiCandido expressed his concern indicating he had gone over the numbers and the student population is down 189 students from the peak projection made in 2006-2007. The number of students dropped from 5765 students to 5576 students and the staffing increased from 719 to 733.
He added that everyone wanted money being put back into the budget and even with the degradation of the school system the budget has gone up 106% in 10 years. It takes a lot more effort to get back to square one than it did to get where we are today. How can you get back to square one if you couldn’t do it with doubling the budget?
According to Newtown School Superintendent Dr. Janet Robinson, the Newtown had years of 195 student increases not long ago and have had to increase teachers. Population comes and goes over the years. Over the last two years, she said. The school has not hired new teachers only hired fractions of people and they are shifting elementary teachers to the high school to meet the needs.
Dr. Robinson stated that the Board of Education cut over $5 million from the school budget - out of the requests that came in - music, art, PE will be cut this is not moving forward.
Furthermore, she said everything has gone up – fuel cost for transportation and heating the buildings. Outstanding moral among the staff has saved the school – doing well with very little.
In addition, the Dr. Robinson added that Newtown is not a blue ribbon school and is on probation, but noted that the probationary status is not because of the quality of education but for the lack of space.
The third motion was defeated 7-5 following a roll call vote. Voting for the motion were Mr. Torok, Mr. Pennerola, Mr. Davis, Mr. Hemmingway, Mrs. Llodra, Ms. Murray, and Mrs. Brookes. Voting against the motion were Mr. Aurelia, Mr. DiCandido, Mr. Amaral, Mr. Capeci and Mr. Rodgers.
Mr. DiCandido moved to accept on the Board of Selectman side a budget of $37,335,099 and on the Board of Education side $66,181,990. Mr. Hemmingway seconded.
Ms. Murray voiced her belief that the previous motion by Mr. Pennerola was a sound motion and that the budget will not pass as it is.
In regards to the Board of Education budget, Mr. Torok expressed his concern that they are well under funded. He pointed out that there are 15 insurance cases. “That is a huge number - seven digit hits when you’ve got 15 cases.”
In addition, he voiced concern about the schools were “squeezing” the buses.
Mr. Torok said he would like to get the budget from .83 to .999 of a percent and asked Mr. Tate what that would be.
According to Mr. Tate, the difference will be around $200,000
Mr. Torok asked that the motion be amended by $200,000 or 4.99% allocated one-third, two-thirds.
The motion was passed 11-1 following a roll call vote. Mr. Amaral voted against the motion. Mr. Aurelia, Mr. DiCandido, Mr. Torok, Mr. Pennerola, Mr. Davis, Mr. Hemmingway, Mrs. Llodra, Mrs. Brookes, Mr. Capeci and Mr. Rodgers voted for the motion. Ms. Murray “reluctantly” voted for the motion.
Following the motion council members discussed several items of concern regarding the contract with DeMarco and indicated it was up for renewal in a couple of months.
Mr. Rodgers said he would like to carry the issue until the Council’s next meeting April 1 and discuss the Advisory Questions.
Having no further business, meeting was adjourned at 10:20 PM
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