NORWALK, Conn. – The challenges Norwalk officials face in making ends meet in this “wealthy grand list community” are laid out step by step in a report prepared by Attorney Thomas Mooney last summer.
While leaders of the state legislature’s Education Committee cited Norwalk’s grand list as the reason for reversing the proposed change to the Educational Cost Sharing (ECS) formula, Mooney’s 68-page report to an arbitration panel spells out real estate values that are out of whack with local incomes. Real estate values have also declined significantly since 2008, meaning less revenue for the city, the report states, adding that it is fortunate that property revaluation is done every five years and the ax hasn’t dropped yet.
This is all spelled out on pages 8 to 13 of the report you can find here, a report that is often referred to by NancyOnNorwalk reader and frequent comment/letter writer Peter Berman.
The report states:
• Norwalk’s proximity to New York City, in wealthy Fairfield County, makes the housing prices out of whack: While the median price of owning a home is 32 percent higher than the state average, the median household income in Norwalk is only 6 percent higher than the state average. (Page 10)
• “Norwalk’s relatively high property values, however, have little to do with the ability of its taxpayers to pay higher taxes, as demonstrated by its low ranking in median household income as well as dramatic losses in median household income statewide,” the report states. (Page 11)
• “Even when Norwalk is compared with wealthier towns with far less poverty, Norwalk’s ECS aid is still a fraction of the amount these communities receive on a per capita or per student basis.” (Page 11, under a chart that supports that statement.)
• Taxpayers therefore pay a disproportionate share of educational costs, compared to similar communities. “A full 93 percent of Norwalk’s education budget is funded from local Norwalk taxpayers, while other District Reference Groups (DRG) H communities contribute, on average, 74 percent of the cost of education in their relative communities.” It adds that the 74 percent figure is skewed by Norwalk and Stamford, as three DRG H communities contribute less than 50 percent of the educational cost through taxes. (Page 12)
• Home values declined 11.7 percent between June 2011 and June 2012, according to Zillow, the report states. That was the worst in Fairfield County, and the 13th worst out of Connecticut’s 169 municipalities, it states. Commercial property values have also declined. The property at 535 Connecticut Ave. sold for $25.6 million in 2006, and $11 million in January 2012, the report states. (Page 12)
• In fiscal year 2005-2006 the city collected more than $6.5 million in property taxes. Collections in 2011 were $2.2 million. “The city has lost 18 percent in annual taxes due to assessment losses after tax appeals between 2011 and 2012,” the report states. Town clerk recording fees dropped 49 percent between 2006 and 2012, the report states. Interest income dropped 81 percent between 2007 and 2012, the report states. Intergovernmental revenues were 15 percent of total city revenues in 1991 but only 5.6 percent in 2012, the report states.
• Although the equalized mill rate has been historically high, the city has been forced to raise property taxes for the reasons outlined above, the report states. (Page 13)
The report goes on to describe the problem of increasing pension contributions, expected to go up $8.1 million in the next (then five) years, and detail the recent history of BOE budgets as it begins to make its pitch to the arbitration panel to change the Norwalk Federation of Teachers (NFT) contract.
It’s a “perfect storm of challenges,” Mooney states on page 57.
The panel went on to award a hard wage freeze in the first year of the contract, 2013-2014. There will be a general wage increase the following year, and a reopener of wages and longevity in the third year of the contract.
The decision and award states in its conclusion, on pages 28 and 29, “It is clear that Norwalk’s salary structure, with its ups and downs, is quite unusual and has not evolved over time in a particularly rational manner … The Panel suggests that the dysfunctional nature of the current salary structure, and longevity benefits, the generosity of which is unprecedented in the state, are worthy subjects of negotiations in the reopener.”
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