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.”
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.”