MINUTES
SPECIAL MEETING OF THE
BOARD OF FINANCE
MAY 20, 2008
A SPECIAL MEETING of the Board of Finance was held on Tuesday, May 20, 2008 in the Council Chambers.
Those in attendance included Mayor Ryan J. Bingham, members of the Board of Finance Daniel Farley, Laurene Pesce, Mark Bushka, Thomas Scoville, Wendy Traub, and James Zeller, Corp. Counsel Ernestine Yuille Weaver, and Comptroller Alice Proulx.
Mayor Bingham called the meeting to order at 5:07 p.m., immediately following a regular meeting of the Board of Finance scheduled for 5:00 pm.
DISCUSS BUDGETS #200
On a motion by Mr. Zeller, seconded by Mrs. Traub, the board voted unanimously to discuss the city budgets.
Mr. Bushka asked Mayor Bingham where the City of Torrington stood with budgets of $116 million and revenues at approximately $42 million.
After lengthy discussions with the City Council, the Comptroller, and Department Heads, Mayor Bingham said his recommendation is for overall cuts, because cuts are what they need to make up the $9 million difference over last year. Revenues from the city, state and federal governments are less than projected, and they have devastated this budget.
Mayor Bingham said his recommendation is a $1.5 million cut across the board proportionately; one million from the Board of Education and $500,000.00 from the city on the expense side. On the revenue side, he is looking to use $1,168,000.00 for capital projects, a $1,250,000.00 withdrawal from the Fund Balance, and a $2,800,000.00 transfer from the Blue Cross Fund to offset the mill rate. That will leave us with a 1.5 mill increase, or a mill rate of 35.33.
Mrs. Pesce inquired which capital projects would not get done.
Mayor Bingham said capital projects include additional road work, the settlement from the refuse Hartford landfill closing, consultants for our pension funds, police cameras, and canvassing from the Registrar’s Office. Mayor Bingham said the recommendation was their best effort in dealing with what they were up against and having it affect everyone on both sides.
Mrs. Traub asked about the Blue Cross Fund.
Ms. Proulx said the funds are available because we budget for 125% of claims and whatever is not expended sits in the internal service fund. That’s a balance that’s available to the city while keeping it at the 125% level for the upcoming year.
Mr. Bushka asked where that would leave the Fund Balance.
Mr. Proulx said the impact for the Fund Balance for two years combined would be $4,761,000.00. We would be between $8 and $8.5 million. Based on a comparison of the budget going forward, it’s probably about 7%.
Mr. Scoville said he had checked previous minutes whereby they discussed the fact that they didn’t want the Fund Balance to go below 5%, because that was the lowest amount recommended by CCM. Should the Fund Balance drop to 7%, we’d still be above that level.
Mrs. Pesce asked Mayor Bingham if his reference to using funds from Capital Projects were all city related projects.
Mayor Bingham said yes.
Mrs. Pesce indicated that $900,000.00 in the Fund Balance was Vogel Wetmore money, and asked if that was money that was borrowed and never used.
Ms. Proulx said she was correct, however, it was money that was paid by the city in the first place. It may have had something to do retainage, but she wasn’t certain. Mr. Friday would know the answer to that.
Mr. Scoville said the recommendation to cut $500,000.00 from the municipal budget would create a budget increase of $1.4 million, or 2.83%.
Mayor Bingham added that the Board of Education’s increase would be 5.25%, or $3,121,165.00.
Mr. Scoville pointed out that they were talking about cuts to the “increases” in the budget. Many times those cuts are not portrayed that way, people think they’re cuts to existing budgets.
Mr. Zeller indicated that the significant shortfall has to be picked up by the taxpayers of Torrington. Although he would like to heed some remarks made by the City Council in regard to the Undesignated Fund Balance, it was his belief that this money has already been paid by the taxpayers and that they should probably get services for during their lifetime. He didn’t think they should make a practice of using funds from the Fund Balance, but this was a unique situation where he thought an appropriate amount from the Fund Balance could be used. Even with a 1.5 mill increase, they were asking the taxpayers to pay roughly 4.5% more than last year and they recognize at the same time that people are facing higher prices for food, gas, etc. The city is facing significant losses in revenues and
the question is where do we come up with the funds without unduly burdening the taxpayers?
Mrs. Traub said she was more comfortable with the fact that almost half of the Fund Balance being used is for capital projects. She thought it was important to note that they weren’t taking all of it to offset operating, that a big chunk of it will still be used for capital projects. She noted that taxpayers have mentioned in the past that the city shouldn’t get so far behind in capital projects that we end up re-building instead of doing maintenance. It’s incumbent upon the Board o Finance to look at both sides of the equation, including the consideration of the elderly on fixed incomes, young people who can’t afford their mortgages, who have lost their jobs, or lost wages, etc. The proposed cuts are proportional where everyone will feel the effects.
Mayor Bingham noted that these decisions are not easy ones to make. A $500,000.00 cut in the city budget will affect the way we do business in the city and it will have to be done responsibly. A special joint meeting will be scheduled to discuss the projected cuts. He noted that the Board of Finance has the opportunity to exercise their line item control of the budget, but he strongly advised against that until they have a better picture of where they can get a total of $500,000.00.
Mrs. Pesce suggested looking to employees and Unions to open negotiations across the city and Board of Education. Other communities have reached out and received some pleasant comments from their staff. It’s difficult for the taxpayers of the City of Torrington, many of whom do not have defined benefit pensions, especially when the private sector is looking at their cost of living increases and adjusting co-pays for insurance.
Mayor Bingham indicated that the Council and the Personnel Sub Committee have given him the task to develop a pension plan that will be equitable in the future to both, the city and the employee.
Mr. Scoville said many employers are laying off employees, cutting employees’ hours or pays, and looking at reduced benefits in order to stretch a dollar. It’s his belief that the taxpayers want to see the same thing happening to city employees.
Mrs. Pesce said the taxpayers don’t want to see fewer teachers, policemen or firemen; that’s not what she’s hearing. We need to look at the cost of government because it’s not an endless pot.
MOTION TO ADOPT CITY BUDGET #930
Mr. Scoville made a motion to adopt the 2008 - 2009 City Budget of $52,258,800.00. (This amount represents the proposed $500,000.00 cut). Mrs. Traub seconded the motion.
Mr. Bushka asked if it would be up to the City Council to identify the line items if the proposed budget cut was approved.
Mayor Bingham indicated that a special joint meeting of the Board of Finance and the City Council will be scheduled within ten days and he will make the recommended cuts. It’s up to both boards to approve them.
Mrs. Pesce asked what their obligation was to establish the mill rate today.
Mayor Bingham indicated that the matter could be tabled, but he didn’t believe it had ever been tabled in the past.
Mrs. Pesce asked if there would be any point in putting off this vote to have the Board of Education and the City come back to them with different numbers so the dip into the Undesignated Fund Balance might not have to be as great. That way, the Board of Finance would have a better idea of what they’re approving the money for.
Mayor Bingham said the Board of Finance will have that opportunity on the city side because a joint meeting will be held to approve any changes to the budget.
Mrs. Traub said she spoke with Frank Rubino, Chairman of the Board of Education’s Budget Committee, to see if they had met to discuss what they might be considering to cut, and he said the committee would wait until they found out what the cut was going to be.
Mrs. Pesce said she appreciated the comprehensible budgets that were presented by both sides. Otherwise, they wouldn’t know what they were voting for.
Mr. Scoville pointed out that the revenue is usually the missing piece during this particular meeting each year, but, because the revenue is very clear this year. He didn’t see any reason to prolong the decision.
Mr. Zeller asked if they were to approve the budget subject to the recommended cuts, would it be dependent upon the Board of Education and city departments to come up with that bottom line dollar number. Alternatively, they could wait until they see the cuts that were presented internally to adopt the budget. As long as there’s no procedural issue, they could accept the proposed number and move forward later with the expected cuts.
Mr. Bushka said he was a bit uncomfortable taking $5 million from our General Service Fund and Fund Balance. He thought the board should keep in mind that they may face a more serious issue next year and the funds won’t be available.
Mayor Bingham said the alternative to using those funds would be to raise taxes more than 1.5 mills, or cut expenses.
VOTE TO ADOPT THE CITY BUDGET# 1250
Having no further discussion, the board of Finance voted unanimously, by roll call vote, to adopt the 2008 - 2009 City Budget of $52,258,800.00. (This amount represents the $500,000.00 cut).
MOTION TO ADOPT BOARD OF EDUCATION BUDGET - CAPITAL #1270
Mrs. Traub made a motion to adopt the Board of Education 2008-2009 Capital budget of $468,494.00. Mr. Scoville seconded the motion.
Mr. Bushka noted that the board was proposing a $1 million cut from the Board of Education budget and asked if the Board of Finance approved their capital budget at $468,494.00, would it give them any leeway to take some of the million from the capital budget?
Mayor Bingham said that was separate.
Mr. Scoville asked if the motion should be to approve the total education budget and let them make that decision?
Mrs. Pesce believed they needed to be voted on separately.
Mr. Bushka said his point was that he’d like to give the Board of Education the freedom to reduce their capital as part of the $1 million dollar cut, if they think that’s appropriate.
AMEND MOTION #1370
Mrs. Traub amended her motion to include both Capital and Operational in the amount of $62,575,305.00, which includes the $1 million cut. Mr. Scoville amended his motion.
Mrs. Traub clarified her motion: To adopt the Board of Education’s 2008 - 2009 budget of $62,575,305.00 which includes Capital and Operational. Mr. Scoville seconded the motion.
Mrs. Pesce said her reason for wanting to keep the budgets separate was because they had already made significant cuts and she wanted to acknowledge those cuts and to support the capital budget as one piece.
Mr. Scoville stated that their job is to try to determine what is affordable. Both, the City Council and the Board of Education have done a great job in bringing their budget to this board, and, if they had the revenue, they would fund both budgets as presented. It will be a very difficult process for the Board of Education, and he thought it would make it a bit more plausible by including both, the Capital and the Operational budgets.
Mayor Bingham agreed that they should give the Board of Education the same opportunity as the city, to look at their budget as a whole and to try to spread it out in the best possible manner.
Mr. Bushka said it was not his intent for the Board of Education to cut programs and he hoped they could find ways to cut their budget without touching programs.
Mr. Scoville said he didn’t want the proposed cuts to be interpreted as though the Board of Finance wasn’t supporting the two new programs proposed by the Board of Education. They were merely saying they didn’t have the money this year.
Mayor Bingham said he knew it was incredibly frustrating for the Board of Finance to have to reduce any budget that they feel is right, but he also knows that they have to consider those people who have a difficult time paying their taxes, getting prescriptions or food for the table, etc. It’s not an easy time in Torrington, Connecticut, America, etc. The board needs to weigh all the options and ultimately what was proposed is the right thing to do because it balances city departments and taxpayers on funding what is not there, which is revenue. He said he appreciated the members who serve on the Board of Finance for making those tough decisions. They do a great job in presenting responsible budgets.
Mrs. Traub wanted everyone to understand that the proposed cuts are cuts from the increases. The Board of Education will still get a 5.25% increase, or an additional $3 million, which is still a decent increase compared to a lot of other towns. She agreed with Mrs. Pesce that the city should attempt to re-open Union contracts.
VOTE TO ADOPT BOARD OF EDUCATION BUDGET #1595
Having no further discussion, the Board of Finance voted unanimously, by roll call vote, to adopt the Board of Education budget of $62,575,305.00 which includes Capital and Operational.
SET THE MILL RATE #1640
Mr. Bushka made a motion to set the mill rate at 35.33, which is a 1.5 mill increase over last year. Mr. Farley seconded the motion.
Mrs. Traub asked what the mill rate would be if they didn’t use the $1,250,000 million from the Fund Balance to offset the mill rate.
Ms. Proulx stated that the mill rate would be 36 mills.
Mrs. Traub hoped everyone realized that it took the city a long time to get the Fund Balance to $12 million and that it’s already dwindled down to $8 million in two years’ time. If something devastating should occur within the city, we could literally be down to nothing. She realized that the taxpayers had already paid into the Fund Balance and that it should be used in hard times, but she didn’t want to get too overzealous because we don’t know what the economy will be like in the next twelve months.
Mayor Bingham indicated that part of the Fund Balance is being used this year to lessen the burden on city taxpayers and still be responsible for the future of Torrington.
Mr. Farley noted that there won’t be any Blue Cross funds next year to dip in to, plus the renovation of City Hall will undoubtedly add to the amount of taxes.
Mayor Bingham said we should try to develop Torrington as quickly as possible.
Mr. Zeller said that should be the case, where the city’s tax base is increased instead of increasing the mill rate from year to year. They should probably look at the budget from the opposite position of what tax revenues will we generate in the city at a given mill rate and add them to the revenues that we’re getting from the federal and state governments, and look at that at being our budget. To the extent that we can increase the property values in town, the taxpayers will be paying more if their assessments go up, but to keep increasing the mill rate isn’t a great practice. Obviously, it’s out of the Board of Finance’s control because they’re dealing with a budget that has many fixed factors by the time it reaches them. In a perfect world,
when a city is developed and it has a viable commercial, business and residential base, the taxpayers ultimately prosper and benefit. We should do what we can to accomplish those goals.
VOTE TO SET THE MILL RATE #1940
The Board of Finance voted unanimously, on a roll call vote, to set the mill rate at 35.33, which is a 1.5 mill increase.
ADJOURNMENT #1950
On a motion by Mrs. Traub, seconded by Mr. Scoville, the board voted unanimously to adjourn at 5:56 p.m.
ATTEST: JOLINE LeBLANC
ASST. CITY CLERK
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