Quantcast

Norwalk looks to use $6M from ‘Rainy Day Fund’ to reduce budget’s impact on taxpayers

Norwalk Public Schools Chief Financial Officer Thomas Hamilton, right, helps Norwalk Director of Management and Budgets Angela Fogel, left, present the recommended 2019-20 operating budget, Monday in City Hall.

Updated, 9:30 a.m.: Copy edits

NORWALK, Conn. – Norwalk is planning a $6 million reduction in its fund balance, or “Rainy Day Fund,” as part of its 2019-20 operating budget.

If approved, the result would be a decline in most homeowner tax bills, in spite of expenditures increasing 3.3 percent overall, and a 4.2 percent increase on the Board of Education side of the budget. Homeowners in two districts would see a tax increase: East Norwalk would rise 6 percent and South Norwalk would rise 1 percent, due to the property revaluation.

Mayor Harry Rilling lauded everyone who worked on the budget and noted that the grand list fell by $1 billion in 2013, but it’s “starting to come back.”

“I believe that our grand list has increased by about 16 percent,” Rilling said at Monday’s Board of Estimate and Taxation meeting. 

“Any time you go through a reval after you’ve lost $1 billion and prices start to go up, it’s a bit of a shock,” Rilling said. “So, what we have done is we have tried to keep the operating budget as low as possible to use responsibly our fund balance so that we can still continue to maintain our triple A bond rating, but still giving back to the public the money in the fund balance that belongs to the public.”

An excerpt from the City of Norwalk proposed 2019-20 operating budget.

Norwalk has “historically has been extremely conservative in putting revenue assumptions together,” Norwalk Public Schools Chief Financial Officer Thomas Hamilton said, explaining the growth of the fund balance (Rainy Day Fund) to $60 million. That’s “fine to a point but when you have a $60 million fund balance it really is no longer necessary to build, sort of, that level of conservative revenue assumptions into the city’s budget year after year after year,” Hamilton said.

Hamilton, former Norwalk Finance Director, helped the City formulate its budget after the sudden resignation last month of Chief Financial Officer Bob Barron, working with Norwalk Director of Management and Budgets Angela Fogel.

“It’s a very challenging time when your staff is all in place. It becomes even more challenging when you have personnel issues and so on,” Rilling noted.  He thanked Norwalk Superintendent of Schools Steven Adamowski for allowing Hamilton to help out.

Rilling said he’d asked City department heads to keep their budgets flat, with increases only mandated by contractual increases.  “I think they have done a good job,” he said.

Rilling endorsed the BoE’s efforts to enact its strategic operating plan, “that has shown tremendous results so far,” and mentioned that he’s looking forward to increasing the credits high school students must meet to graduate so that they can be even more competitive in today’s world.

The total tax levy recommended is $331,965,622, a 3.3 percent increase from 2019-20. Education funding would increase $8 million; debt service is increasing $1.5 million, in accordance to the planned construction of new schools; the economic and community development department is increasing $1.3 million and the Norwalk Police Department expects a $1 million increase.

The budget represents a “cooperative proposal” between the BoE and the City, the Finance Department presentation states, based on:

  • $2.3 million from the Rainy Day Fund for one-time NPS expenses
  • Recommended education expenditures increasing 4.2 percent from 2018-19
  • It’s expected that the BoE will “implement current year cost reduction carry over” of up to 1 percent, as allowed by state law
  • The BoE expects to cut $1.8 million from its recommended 2019-20 budget

 

Adamowski plans to implement a hiring freeze and pay current employees stipends to cover the work that’s needed, BoE member Bruce Kimmel said.  “We would like to see what we can do to really control spending and see what kind of money we have at the end of the year,” Kimmel said.

The increase in Economic and Community Development is partially due to the recent reorganization of City administration, which transferred some Department of Public Works employees there, thereby reducing DPW wages by $337,305.

The current budget calls for a nearly $3 million use of the Rainy Day Fund, but it’s looking like that won’t be necessary, Hamilton said, because building permit revenue is already about $200,000 more than anticipated and “something big hit” with $1 million recorded in early February.

The recommended use of the fund balance is projected to leave a “healthy” Rainy Day Fund that is 13.3 percent of forecast revenue, within the BET’s policy aimed at maintaining a Triple A bond rating, Hamilton said.  He noted  that the City’s financial advisor agreed that there’s room to bring the fund balance down because “the reval alone would be reason” and “the ‘Board of Ed’ is in midst of historic investment on schools.”

“Approximately 90 percent of the Operating Budget is funded by local taxes,” a late Monday press release from Norwalk Communications Manager Joshua Morgan said. “The City’s recent property revaluation showed the Grand List increased by 16.6 percent. Residential properties, excluding apartments, went up 10.7 percent, while commercial properties increased by 32 percent. As property values increased, a subsequent decrease in the Mill Rate was possible. As proposed, the Mill Rate is decreasing by 10 to 11 percent across the six taxing districts. The end result means most single-family homeowners will see a decrease in their taxes based on median assessed values.”

The Fourth Taxing District, comprised of homes that are on the City’s sewer system, will see a median decrease in tax bills of $290, Hamilton said, during the meeting.

A chart included in the presentation shows that a Third Taxing District median tax bill would increase by $390, and the Second Taxing District median would go up $51.

BET Chairman Ed Camacho, who is also the Chairman of the Democratic Town Committee, asked if there’s an indication that assessments will be reworked, as it looks like the Third Taxing District is “out of line.”

“There is obviously a process,” Hamilton said. “If the taxpayer or property owner feels that their assessment is wrong, that they have been over assessed or their assessment is not consistent with like-properties, they have a right and should go to the Board of Assessment Appeals. I don’t think we know yet how many people are going to the Board of Assessment Appeals. The deadline for filing a request for going to the Board of Assessment Appeals is Feb. 20 so it’s very soon, and we’ll have to get some information certainly in terms of the number of people who are applying to the Board of Assessment Appeals. That will tell the City something… then we’ll have to see how that process plays out.”

2019-20 budget recommendation 19-0211 Norwalk CT20190211_21340988

10 comments

Lisa Brinton February 12, 2019 at 5:21 am

It must be an election year 🙂 Creative accounting at its best. As for growth in the grand list – that will be appealed away.

Perhaps the mayor should take a page out of Gov. Lamont’s letter, (also published today) in reference to the state’s Rainy Day fund,

“Although we could use that surplus to balance next year’s budget, our fixed costs – the true culprits behind our continued deficits “

“we cannot allow the fact that we are expecting a surplus and the likelihood of a significant deposit to the Rainy Day Fund lull us into a false sense of security and sap the urgency we need to confront our fiscal crisis head-on.”

Here are some Norwalk fixed costs statistics: Under this mayor, NPS added 500 students to the rolls – a growth of 5%. The poverty rate, as measured by free and reduced lunches grew by 10% – from 47% in 2012-13 to 57% this year. For a little more perspective, when my children started school in the mid 2000’s, the poverty rate was 23%.

Despite this administration’s development ‘growth’ and tax credits, we still can’t fund our school system without dipping into the Rainy Day fund.

This administration has lost or given away millions and millions in taxpayer money due to poor management and bad land use decisions over the past five years.

I hope folks are able to see through this charade, because this taxpayer does!

Roger February 12, 2019 at 7:58 am

Why not just make Oak Hills whole? It will cost far less than this $6million or the $13million for the BofEd.

Lisa Brinton February 12, 2019 at 8:05 am

Roger, You raise a good point. I don’t necessarily have a problem using the Rainy Day fund to address a ‘one time’ capital’ budget issue – but using it for operating expenses to cushion the tax blow ‘or lower taxes’ during an election year is a joke. The BOE budget crisis will resume next year and as it has since my children started in 2004.

Norwalk Lost February 12, 2019 at 11:19 am

Why is the mayor masking the BOE budget with the rainy day fund? This was never its intended purpose as even the mayor stated last year. Bob Barron was always against setting this precedent but now it’s par for the course in Norwalk where the school’s finance chief can gladly step into the finance director’s role despite the blatant conflict of interest. What an election year gimmick to say the least. I would hope voters see through this financial charade before the sticker shock is truly felt with next year’s property tax hike. Recall, last year was an off year election and taxpayers were slapped with a 4% hike. The city is accelerating its glide path trajectory towards a Bridgeport solution.

Barbara Meyer-Mitchell February 12, 2019 at 12:44 pm

As the article states, the $2.3 million from the rainy day fund to be used for Norwalk Public Schools is being used for one time expenses, not for operating costs that will recur next year.

Patrick Cooper February 12, 2019 at 12:58 pm

In these strange days of politics, there appears to be little downside to telling – well, not the truth. For all the folks who would universally lambaste our current US president for his transgressions, one must wonder why they give the local guy a pass? Oh, I know, you can’t say “that” – you should say – he misspoke, or to borrow from Roger Clements – he “misremembered”.

Well, what other commenter’s here have said – are typically challenged by the nameless posters – who demand “links” to back up the statements. So, follow this.

Mayor Rilling has been dogged since he took office for his failure to grow the grand list. It appears that criticism really irked him. Because you can’t spin math. Or can you? I notice he is almost giddy happy to state his claim (he probably wanted it printed in a WWII level font) – but here it is for all to see:

“I believe that our grand list has increased by about 16 percent,” Rilling said at Monday’s Board of Estimate and Taxation meeting. 

Thanks’ to NoN – we got a breakdown. KEY part: “commercial properties increased by 32 percent”

Notice the comment by Lisa Brinton – this growth “will be appealed away.” Why does she say this? Does anyone remember this – from just a year ago?

https://www.nancyonnorwalk.com/2018/02/barron-attributes-norwalk-property-assessment-appeals-partially-for-5-grand-list-growth/

This is when our prior CFO Bob Barron had to explain why there was no growth. Because there were 30.3 million in losses by appeals (not including the court costs).

“Gains in Norwalk’s grand list are partially cancelled out by losses, Finance Director Bob Barron said. Barron said he talks to Tax Assessor Michael Stewart and the city has lost “millions of dollars in assessed values” due to court cases that challenged assessments.”

A key section of that story:

Norwalk Power LLC sued Norwalk in 2014, appealing a Board of Assessment Appeals decision to uphold the valuation issued by Stewart and calling the valuation of equipment and the property “grossly excessive, disproportionate and unlawful. ”A judgement was rendered in April.

Further – it went on to say there were some huge losses -read for yourself – including “18 six-figure losses listed”.

Grossly excessive, disproportionate, and unlawful. Again, residential property increased by 10.7%, commercial by 32%. Question: Is Michael Stewart still the tax assessor?

I’ve heard the definition of insanity is doing the same thing over and over and expecting different results. A corollary to that is – it is insane to believe a man who says two things – completely contradictory to one another – about the same topic. In politics – it is the dreaded “flip-flop”.

Which brings us to the rainy-day fund. Just one year ago – we were having the same budget arguments – an annual rite of municipal governance. Only difference? Bob Barron. Again, on the record – was our mayor – who said”

“A fund balance is something that cities need to have,” Rilling said. “Yes, we have healthy fund balance but that’s because we have been very responsible in our budgeting. We have been very responsible in putting money away so that we have it if we need it. It’s not a wise decision to draw down on the fund balance for an ongoing expenditure.

https://www.nancyonnorwalk.com/2018/03/rilling-stands-by-norwalks-caution-regarding-rainy-day-fund/

Agreed – it is not a wise decision to draw down on an emergency fund for an ongoing expenditure. Do you think we could get him to explain – what changed? Other than an election year?

To give them an out – as Ms. Meyer-Mitchell quickly re-directs, 2.3 million is for 1x costs. But the drawdown is 6 million, right?

The grand list growth is an illusion. Property values have not increased – ask the relator who can’t sell your home. Another illusion? That out of control city hall spending won’t hit your checkbook. The whole city should misremember to pay our taxes. You get what you vote for.

Bobby Lamb February 12, 2019 at 4:42 pm

It must be Tuesday, Lisa Brinton is complaining again. Does this lady ever have anything positive to say?

Mike Mushak February 12, 2019 at 5:05 pm

Awesome news!

-Grand list up and taxes stabilized (thanks Mayor Rilling and city staff.)

-Schools getting better with more investment and renovations (thanks BoE).

-Streets getting repaved and safer (thanks DPW).

-New sidewalks and crosswalks going in (although we can always use more, but again thanks to DPW for doing the best they can with existing resources).

-Parks and ballfields getting better (thanks Park and Rec).

-Walk Bridge replacement, along with replacement of other obsolete rail bridges in Norwalk on nation’s busiest rail line, moving forward with planned disruptions decreasing with good planning (Fort Point St. won’t be closed as once expected, and other detours being improved. Thanks DOT and DPW).

-East Avenue south of 95 (including exit 16) becoming a much more attractive and safer Complete Street soon with street trees, historic lights, buried utilities, renovated train station, and better traffic flow for all users (thanks DOT, DPW, and Third Taxing District).

-Norwalk’s amazing list of world-class cultural institutions always improving and expanding, including the Maritime Aquarium, Stepping Stones, Lockwood-Mathews Mansion, Center for Contemporary Printmaking, Mill Hill, Norwalk Historical Society Museum, and the Wall Street Theater (thanks to all the volunteer boards and staff.)

-Obsolete Washington Village replaced with beautiful new mixed-income project and surrounding streets rebuilt (thanks Redevelopment, Housing Authority, and DPW.)

-Ryan Park being rebuilt (thanks Redevelopment).

-SoNo Collection to open in October bringing 2500 new jobs and increased tax revenue, and a world-class shopping experience (thanks Redevelopment, Brookfield Properties.)

-New school to be built in South Norwalk, Columbus school to be renovated, and Norwalk poised to be first district in state with K-12 International Baccalaureate (IB) Program (thanks BoE, Common Council, Mayor Rilling).

-Libraries improving and expanding (thanks to the Library boards and staff).

-Norwalk’s downtown and transit-oriented areas being redeveloped with new businesses and housing choices including more affordable housing for expanding population (thanks Redevelopment, private investors).

I’m sure I can go on with this list of positive things about Norwalk, but let me just summarize and say Norwalk is a great place to live, work, play, and raise a family, and only getting better!

(Full disclosure: I currently serve as a volunteer on the Planning Commission, and am optimistic for Norwalk’s future, as so many who serve on our volunteer boards and commissions are. I just wanted to give a different and more positive perspective than the usual dozen or so commenters here on NoN, many who hide behind fake names or who have political aspirations, and who tend towards the “glass half-empty” worldview as they obsessively trash-talk our city, where even good news is met with predictable negativity often to the point of absurdity. There is plenty to be grateful for here in our beautiful city of Norwalk, and plenty of great things to look forward too as we reinvent ourselves for the 21st century and for future generations.)

Debora Goldstein February 13, 2019 at 9:36 am

Mr. Mushak’s promises with regard to East Avenue are premature. I will observe that the TTD has not rendered any decisions with regard to some of these items. Having a majority of Democrats on this body does not mean decisions will sail through.

East Norwalk WILL however accept everyone’s thanks for taking up the brunt of the tax impact for the recent increases in the costs of city operations.

It has yet to be determined whether they will willing to subsidize further improvements on top of the 20-30% tax assessment increases AND the Walk Bridge disruptions AND the impacts from increased density.

Leave a Reply

Your email address will not be published. Required fields are marked *

*

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>