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Barron predicts insurance fund to alleviate 18-19 budget woes

Norwalk Finance Director Bob Barron talks to Board of Estimate and Taxation members Monday in City Hall.

Correction, 4:47 p.m.: Norwalk Finance Director Bob Barron said Tuesday that draw would be from insurance fund.

NORWALK, Conn. – Expect another draw down from the insurance fund surplus, Norwalk Finance Director Bob Barron said Monday to Board of Estimate and Taxation members.

The 2017-18 operating budget features a $5.5 million draw from the city’s insurance fund surplus and it looks like another $2-3 million can be used for 2018-19, he said, in presenting a review of the city’s 2016-17 audit.

“I expect to be able to draw down an additional $2-3 million to provide tax relief, depending how the year goes,” Barron said, explaining that “tax relief” means that the mill rate can be kept lower than it otherwise would be.

The switch in health insurance for city and Board of Education employees, from a city-funded self-insurance to the state plan, Connecticut Partnership 2.0, is also making money available, he said.

Barron said he thought that the Board of Education balanced its 2017-18 budget with its insurance fund and expects to have $3 million to use in upcoming years.

The audit, for the fiscal year ending June 30, shows an unassigned fund balance of $51,248,747, which is 13.6 percent of revenues, he said. That’s up from the 13.3 percent in 2015-16.

The fund balance is often called the Rainy Day Fund. The BET has a policy of keeping its Rainy Day Fund at the median of other Triple A rated Connecticut municipalities and finished the year just above that mark, he said.

Norwalk ended 2016-17 with $9 million in its fund balance, is drawing down $5.5 million this year and expects to have $3.5 million available at the end of 2017-18, within the guidelines of the BET policy, he said.

Keeping to the targeted median fund balance of other Triple A cities has a new wrinkle, as municipalities across Connecticut are dealing with cuts in state funding.

“For us, the cuts from the state were offset by increased revenues and increased building permit fees,” Barron said, pointing out that Norwalk’s budget has been funded 90 percent with property taxes, 5 percent from other revenue and 5 percent from state funding – a state funding percentage that is lower than most other communities.

“I am really anxious to see the other triple as in the state whose reliance on fund balance is much greater,” Barron said. “Maybe it’s 20 or 30 percent of their budget.”

Mayor Harry Rilling said, as he has for the last three years, that he thinks the fund balance belongs to the city residents and should be used to keep the mill rate increases relatively low.

“We’ll be looking at that very carefully but also with a cautionary note, that we don’t know what is going to happen next year with the state budget and how that is going to affect us with any unfunded mandates,” Rilling said.

The state has kept Norwalk’s Educational Cost Sharing funding flat for years, although it’s supposed to be a certain amount of money per student and the school population has grown, he said.

“There’s a lot of variables, a lot of things happening that we have to make sure that we are responsible,” Rilling said. “…We can’t afford to keep raising taxes and have people move out of Norwalk, because Norwalk is, I believe, the only city in the state of Connecticut right now where we have seen an increase in our population. We want to make sure that we don’t lose that.”

The audit, by RSM US LLP, states that 2016-17 ended with revenues $100,000 higher than planned and expenditures $7.9 million lower than planned.

“The $2.0 million lower than budgeted state aid and other grants along with a $0.7 million lower than budgeted interest on investments was totally offset by a $2.2 million greater than planned property tax collections and $0.6 million greater than planned permits and fees,” the audit states. “The less than planned expenditures were made up of a $2.5 million contingency that was unspent due primarily to unsettled contracts most of which are reserved for use in FYE 2018; $2.3 million worth of unspent Board of Education appropriations most of which are reserved for use in FYE 2018; $1.2 million unspent wages due to vacancies in many city departments; $0.7 million of unspent tax revaluation appropriations; and $1.2 million of other miscellaneous unspent appropriations.”

FY 17 audit summary a

FY 17 audit balance pages

Original story: 

NORWALK, Conn. – Expect another draw down from the “Rainy Day Fund,” Norwalk Finance Director Bob Barron said Monday to Board of Estimate and Taxation members.

The 2017-18 operating budget features a $5.5 million from the city’s fund balance and it looks like another $2-3 million can be used for 2018-19, he said, in presenting a review of the city’s 2016-17 audit.

The audit, for the fiscal year ending June 30, shows an unassigned fund balance of $51,248,747, which is 13.6 percent of revenues, he said. That’s up from the 13.3 percent in 2015-16.

The fund balance is often called the Rainy Day Fund. The BET has a policy of keeping its Rainy Day Fund at the median of other Triple A rated Connecticut municipalities and finished the year just above that mark, he said.

Norwalk ended 2016-17 with $9 million in its fund balance, is drawing down $5.5 million this year and expects to have $3.5 million available at the end of 2017-18, within the guidelines of the BET policy, he said.

“I expect to be able to draw down an additional $2-3 million to provide tax relief, depending how the year goes,” Barron said, explaining that “tax relief” means that the mill rate can be kept lower than it otherwise would be.

The switch in health insurance for city and Board of Education employees, from a city-funded self-insurance to the state plan, Connecticut Partnership 2.0, is also making money available, he said.

The Board of Education balanced its 2017-18 budget with its insurance fund and expects to have $3 million to use in upcoming years, he said.

Keeping to the targeted median fund balance of other Triple A cities has a new wrinkle, as municipalities across Connecticut are dealing with cuts in state funding.

“For us, the cuts from the state were offset by increased revenues and increased building permit fees,” Barron said, pointing out that Norwalk’s budget has been funded 90 percent with property taxes, 5 percent from other revenue and 5 percent from state funding – a state funding percentage that is lower than most other communities.

“I am really anxious to see the other triple as in the state whose reliance on fund balance is much greater,” Barron said. “Maybe it’s 20 or 30 percent of their budget.”

Mayor Harry Rilling said, as he has for the last three years, that he thinks the fund balance belongs to the city residents and should be used to keep the mill rate increases relatively low.

“We’ll be looking at that very carefully but also with a cautionary note, that we don’t know what is going to happen next year with the state budget and how that is going to affect us with any unfunded mandates,” Rilling said.

The state has kept Norwalk’s Educational Cost Sharing funding flat for years, although it’s supposed to be a certain amount of money per student and the school population has grown, he said.

“There’s a lot of variables, a lot of things happening that we have to make sure that we are responsible,” Rilling said. “…We can’t afford to keep raising taxes and have people move out of Norwalk, because Norwalk is, I believe, the only city in the state of Connecticut right now where we have seen an increase in our population. We want to make sure that we don’t lose that.”

The audit, by RSM US LLP, states that 2016-17 ended with revenues $100,000 higher than planned and expenditures $7.9 million lower than planned.

“The $2.0 million lower than budgeted state aid and other grants along with a $0.7 million lower than budgeted interest on investments was totally offset by a $2.2 million greater than planned property tax collections and $0.6 million greater than planned permits and fees,” the audit states. “The less than planned expenditures were made up of a $2.5 million contingency that was unspent due primarily to unsettled contracts most of which are reserved for use in FYE 2018; $2.3 million worth of unspent Board of Education appropriations most of which are reserved for use in FYE 2018; $1.2 million unspent wages due to vacancies in many city departments; $0.7 million of unspent tax revaluation appropriations; and $1.2 million of other miscellaneous unspent appropriations.”

12 comments

Sue Haynie January 9, 2018 at 6:20 am

Mayor Rilling, another way to provide tax relief is to not hire nice-to-have but unnecessary City staff, like a Communication Director and Assistant to the Mayor. With salary/benefits, that’s $250K+/year of tax relief right there.

Go after illegal apartments as efficiently as the City goes after defaulting property taxpayers. That’s tax relief.

Figure out a fix for POKO. That’s tax relief.

US Blues January 9, 2018 at 9:58 am

It’s incredibly insane that the mayor needs an assistant… to do what, help with the ribbon cutting?

Lisa Brinton Thomson January 9, 2018 at 11:44 am

Well said Sue. I also have concerns over drawing down the Rainy Day Fund as the FIRST GO TO item in this budget cycle. The election may be over, but the issues are not. Norwalk continues to spend more than it brings in. Where is the city’s Strategic Plan that dovetails with the school system’s strategic plan? Will the POCD be worth the paper its printed on, in light of the pace at which spot zoning changes are considered before TOD studies are completed? How long will POKO pull down the value of Wall Street and every homeowner’s property value (and corresponding tax revenues) because we don’t have a real downtown? These are just some of the elephants in the room that must be addressed this budget cycle.

Drawing down the Rainy Day fund sounds status quo to me and it while it may buy some votes, it doesn’t address the root causes of our expenditure and revenue problems. One example, I’ve repeatedly mentioned is this mayor showing residents he’s willing to treat illegal apartment landlords with the same ruthless efficiency the city treats property owners with back taxes. Illegal apartments are a triple revenue loss to the city coffers in terms of 1) additional school enrollment without corresponding tax revenues and 2) increased safety liabilities and lawsuits 3) blight.

Another example related to the mayor’s ‘comms manager’ versus ‘grants position’ is to have the grant writer aggressively go after private and foundational grants rather than simply ‘maintaining’ federal or state ones, or trying to take two unrelated positions (comms manager and grant writer) and make them one. It all seems very mediocre to me.

The state financials are going to be in trouble for years to come. Drawing on the Rainy Day fund is not a long term strategy. In the absence of a strategic city plan, I look to the new Common Council to do right by Norwalk and not party or personal ‘loyalties.’ It’s not working in DC and it won’t work here. We need fresh thinking and new ideas in order to deal with this year’s budget and those that follow, otherwise it’s just one step forward and two steps back.

cc-rider January 9, 2018 at 12:41 pm

“Go after illegal apartments as efficiently as the City goes after defaulting property taxpayers. That’s tax relief.”

This is right on the money. Beef up the weak blight ordinance while you are at it.

Patrick Cooper January 9, 2018 at 3:22 pm

@Lisa Brinton Thomson – right on!

The issue is revenue versus expenditure. Why is it somehow a better deal to reach for my savings account rather than my checking account? Your spending more than your generating. That’s literally 1st grade arithmetic. Fix that. But short term is always where the true politician’s run – and there you have it: Harry’s kind of leadership. Kick the can down the road – raid the rainy-day fund when the sun is shining (but clouds are on the horizon). Mr. Barron – am I wrong, or do you work for Norwalk? It sure seems like you work for Harry.

No time now to dig into the links – but the mind-numbing mumble shuffle of the numbers is quite clearly why a propaganda expert is high on Harry to-do list.

As for illegal apartments, it’s a perfect “low hanging fruit” issue – and it shines an uncomfortable light on city hall priorities. Why not enforce those ordinances? Have we ever received an answer? We sure enforce collection of property taxes. These are not unicorns or sasquatch – every taxpayer in this city sees them every single day, and they dot every neighborhood – with excessive clusters in South Norwalk, East Norwalk, and especially around the Hospital. We understand the triple whammy – loss of tax revenue – extra infrastructure & services required, and of course blight. It is truly one of the “elephant’s in the room” – because everyone knows they are there – and yet – why will our mayor not address this – much less make a real commitment to do anything about it? Deeds, not words Harry. Remember – this is not about illegal immigration or poor or minorities – this is about law breaking landlords. The “cash” economy.

Also – not to pick on a novice, but it sure seems purposeful to put Eloise Melendez in charge of the ordinance committee – and not once have I heard her make this a priority. Why? Seriously – why? Noise impacts 100 yards of Washington Street – this issue touches every corner of the city.

Elections have consequences – and Norwalk chose to put Harry back in the cat-bird seat. You get what you asked for. So, for the “other 45%” – all we can do now is urge our common counsel to protect the city and its taxpayers. I implore you – ignore the mayors myopic thinking and short term political gain gimmicks for thoughtful, strategic long term solutions that addresses our core issues. If we don’t have the revenue – we must cut expenses. A good start would be the “comm” position Harry wants to do his spinning.

Donna Smirniotopoulos January 9, 2018 at 6:36 pm

@Patrick Cooper, as much as I like the checkbook/savings account analogy, I see this as Mom & Dad stealing out of your piggy bank. Those monies are ours, as the mayor says. If so, why do Barron and the BET feel free to raid the piggy bank? If your parents stole your newspaper money to pay the gas bill, you’d rightly feel yourself cheated. When the City approves spending out of the rainy day fund, taxpayers should have the same response.

The City cut checks to nearly 4000 people last year. Start economizing there. Make city workers more accountable and more efficient. While some departments are understaffed, others are not. Some on the payroll can even earn overtime pay while rubbing on their cell phones. With all the staff, you’d think the city could spare a few people to track down landlords who rent illegally.

EverMindful January 10, 2018 at 7:17 am

Good Luck Lisa! The voters of Norwalk threw out the Few Republicans on the the CC, because the top of the R’s ticket was lame. Mr. Bonafont, and Mrs. OToole-Giandurco served this city masterfully and were tossed like trash to the curb. Both of these individuals fought to protect the taxpayer and their city. However the political machine ate them up.
With no political check on the Dem’s in this city now, the Mayor can spend as he sees fit.

Does anyone think that Dr. Adamoski and the BOE is watching? Did you see thier budget for next year? I’m sure a request for more money and a larger budget is coming.
You get what you VOTE for.

John Levin January 10, 2018 at 8:04 am

Wow. Y’all are up early!

Seems to me that using reserve funds to “provide tax relief” is really ill-advised, and seeks to void budget accountability. I would urge our city’s leadership to avoid taking this step – raise taxes or cut spending, either one is better. Confront reality, don’t dodge it.

Al Bore January 10, 2018 at 8:07 am

I am sure we can resolve all of Norwalk’s problems if we just build another 10,000 apartment units. Question does anyone in Norwalk’s city government think? Answer NO absolutely not! On to a different subject I agree with @EverMindful, there was no top of the republican ticket yet again and we will pay a heavy price for that over the next two years. So much wasted money in Norwalk on just about everything city related. The home owning taxpayers of Norwalk will foot the bill as they always do.

Education101 January 11, 2018 at 2:21 pm

The saving grace here is the oversight by Mayor Rilling and Finance Director Barron. Quite simply, the city’s education spending is unsustainable. Per The Hour this week, “Norwalk schools chief proposes $9.3M budget increase . . . The recommended budget includes roughly $3 million to cover the district’s salary obligations, and a $5.2 million increase for what is essentially the superintendent’s wish list.” A wish list … really!#? Where is the discipline and common sense here from the 250k per year superintendent. Please begin demonstrating fiscal prudence/economies of scale and rightsize spending in line with the the avg taxpayer . The perennial increases “for the sake of the children” can no longer go unchecked and hopefully will be materially revised downward. Also, enough of touting anecdotal improvement advertised on social media. It’s time to put up third party verification that school rankings have actually improved and halt the spin. Please stop the BOE from using the ECS excuses and play the hand that is being dealt.

Donna Smirniotopoulos January 11, 2018 at 5:29 pm

The additional 5.3 million in the superintendent’s budget is not his wish list. It’s spending needed to help the NPS achieve agreed-upon goals.

Using reserves to avoid tax increases is popular until folks realize it’s all their money anyway. I would like to know how and where these monies are held. Norwalk has well in excess of what it needs to maintain AAA bond rating.

Remember the mayor’s oversight contributed to the Firetree mess. I guess it depends on one’s definition of “oversight.”

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