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Norwalk’s first-pass budget: lowest spending hike in 3 years

Norwalk Finance Director Tom Hamilton presents his recommended 2014-15 operating budget to the Norwalk Board of Estimate and Taxation Monday in City Hall.

NORWALK, Conn. – There will be no smoke and mirrors when it comes to Norwalk’s city operating budget if Finance Director Tom Hamilton’s recommended spending blueprint is any indication.

Monday night, Hamilton delivered to the Board of Estimate and Taxation a budget that calls for a 2.9 percent hike in spending – the lowest such increase in three years, he said – with corresponding a 3.6 percent tax levy increase, driven primarily by settled wage increases and a shrunken grand list primarily due to the state-mandated revaluation.

By the numbers, according to Hamilton’s document: The recommended FY 2014-15 budget is $318,480,145, representing an expenditure increase of $9,052,196 or 2.9 percent. The combination of the Tax Assessor’s preliminary 2013 grand list decrease of 7.7 percent (2013 revaluation of assessed values as required by the state mandated 5-year revaluation cycle) and proposed mill rate increase of 12.2 percent yields a total tax levy increase of $10,167,419 or 3.6 percent.

Hamilton reminded everyone that the revaluation played out differently across the districts.

“Basically the first district, especially in the second district, and the third district that the median single family taxpayer will see a reduction in their taxes. The fourth district, the median is more or less flat. The fifth district is going up and the sixth district is going up.”

The bottom line for taxpayers? Hamilton’s proposed budget would mean the taxes next year on the median single-family 4th Taxing District home would increase by $74 – about 1.2 percent.

The budget fully funds the Board of Education request minus $1.2 million to add to the insurance reserve fund.

“I believe it’s not necessary for the Board of Education to budget for the margin in Fiscal Year 14-15,” Hamilton said Monday night. “… I don’t think it’s necessary every single year to keep socking away $1.2 million into that margin. It’s really intended to cover catastrophic kinds of claims or adverse claim experience. The Board of Education does buy stock loss insurance so they are capped at certain thresholds, so it’s sort of an insurance policy, but I don’t think we need to have $10 million sitting there.”

Over the past few years, the municipal budget process has been clouded by a $4 million error discovered in the school’s insurance budget that had to be corrected, and by uncertainties over state aid. Last spring, the Board of Education found a surplus in its books that was snapped up by the city to satisfy the debt.

There is nothing quite so complicated this year. Hamilton said the state aid picture is clearer.

“Last year, they didn’t know what would happen as they had to make their budget before the legislature finalized what the city would get from the state,” Hamilton said. “It turned out that we ended up getting more than we anticipated, to the tune of $979,000, so we are now building that into next year’s budget on the assumption that state aid will remain flat.”

That might not be the case, Hamilton said, but in a good way.

“There is some modest good news in terms of the budget that the governor released as well,” he said, pointing out that this budget was put together before Malloy’s proposed state aid plan was announced. “It appears that the governor’s budget has about $385,000 in additional aid compared to what we built into our budget.”

Hamilton said it was not clear how much of that money will go directly to the schools and how much, if any, will go to the city. Last year, when Malloy said he would increase aid directly to the schools and trim aid to the municipalities, then-Mayor Richard Moccia said he would cut the city’s BOE budget to make up for the city’s loss.

This year, that does not appear to be part of the equation.

Hamilton pointed to increased delinquent tax collections as a factor in keeping the budget under control.

“Next year will be a non-tax sale year,” he said. “… In the years that we do a tax sale we find there is a significant uptick in the amount of delinquent payments that are made and an uptick in interest and penalties on delinquent payments and also an increase in the current collection rate. So all of those things get factored into our budget when we have a tax sale. Since we do them every other year we increase those numbers one year, decrease them the next.”

He also took the opportunity to throw a bouquet to tax collector Lisa Biagiarelli. “Our tax collector does a phenomenal job. Our collection rate is the best of any of the 10 largest cities in the state. So there’s less money to collect and therefore less delinquent revenue that’s out there.”

In his written budget notes, Hamilton talked about the economy and its effect on Norwalk in recommending using the city’s fund balance to offset some of the tax burden:

“This Great Recession has caused myriad financial difficulties for the city. The city’s grand list grew only 1.2 percent from 2008 to 2012 and, due to a 5-year state mandated revaluation cycle, the preliminary grand list for 2013, which is used for this recommended fiscal year 2014-15 budget, has shrunk by 7.7 percent from 2012. The uncertainty of funding from the state, which is dealing with its own budget challenges, places the majority of the increase of costs to run the city on the mill rate charged to its taxpayers. Therefore, I recommend that the city provides some cushion to the budget by drawing down its fund balance reserves by $1 million dollars to partially offset the mill rate increases caused by its flat revenues and rising expenses. In the context of the current economic environment, it is clear that city government must continue to constrain spending in order to limit property tax increases.”

Hamilton called his recommended plan “austere” and said holding the line was “a major challenge, given the fact that the city faces structural employee related expenses which are rising in certain key areas: mandatory pension contributions are increasing $1.9 million or 19.3 percent, wages and salaries for settled contracts, reserves and new positions total $1.5 million or 3.1 percent, and Workers Compensation costs are increasing $1.1 million or 28.5 percent.”

Hamilton said that the uncut departmental requests totaled $322,091,248 and would have required a $13.8 million or 4.9 percent increase in the tax levy.

“Mayor Rilling advised me that he could not support a tax levy increase of 4.9 percent,” he said. “In formulating my recommendations, my objective has been to maintain essential services, and reduce the tax levy to a level that is affordable to Norwalk’s taxpayers.”

Despite the lean budget plan, there are some improvements that made the cut:

The funding of one additional Police Officer and two unbudgeted Fire Lieutenants added in FY 2013-14.

The establishment of a Fire Cadet program.

The opening of the libraries on Sunday afternoons from Columbus Day to Memorial Day.

The funding for the purchase of eight fully outfitted 2015 Police SUVs and two Detective Bureau vehicles.

Fully funding the required contribution for pensions as required by the city’s charter level funding year-over-year for the contribution to the Other Post Employment

Rilling said the fire cadet program will reflect a similar police program.

“The reason we want to do that is because the police cadet program has drawn in a very diverse group of young people who have expressed interest in becoming police officers. This will hopefully assist the fire department in recruiting a diverse group of young people who may grow up and then want to join the fire department.”

The addition of Sunday library hours reverses some cuts made in 2008. The restoration came up at January’s Mayor’s Night Out, and was pegged to student needs during the school year.

The Norwalk Municipal Employee Association agreed in collective bargaining to reduce those hours from the former double time to time and a half, Hamilton said.

Rilling said he had spoken to Chris Bradley and she thinks she can keep it open on Sundays through the middle or end of June, so that young people doing final exams or term papers to use the library on Sunday.

Monday night’s presentation begins a process that continues with departmental reviews and, on Feb. 20, a public hearing held by the Common Council’s Finance Committee. That will be followed by more departmental meetings and discussions, with a BET public hearing scheduled for Wednesday, March 19, at Concert Hall.

Comments

14 responses to “Norwalk’s first-pass budget: lowest spending hike in 3 years”

  1. anonymous

    Summary, new cars for police, spend money on Cadet program to help fire department increase diversity since they can’t do it on their own, give back library hours that were taken away, give raises to all Norwalk employees, increase benefits to all Norwalk employees, increase mill rate and taxes for property owners, lower grand list and lower housing values. Priceless.

  2. Taxpayer Outrage

    Lowest tax hike in three years! It would have been even lower if the previous Republican mayor and Republican led council hadn’t approved all those contractually required raises in the union contracts. Gee, where’s the Tea Party in Norwalk?

  3. anon

    When we we get some ‘respect’ for homeowners.

  4. Piberman

    What is striking in Mayor Rilling’s budget is the absence of innovation, outsourcing, consolidation or any evidence of managerial innovation or excellence. Yet annual raises for a long tenured team of questionable abilities. Rather than crowing about a smaller increase a decrease in spending would demonstrate managerial competence. In retaining the same “team” and avoiding using professional search teams for replacements Mayor Rilling will be no more successful in bringing credible municipal management than previous mayors. We expected much more. Early in his tenure Mayor Rilling’s budget is demonstrating its “more of the same old” for a declining City.

  5. Taxpayer Fatigue

    “We expected much more” – Really? How is that you “expected so much more” from Rilling when you didn’t support him during the campaign? Your stated over and over that Rilling would “give into the unions” and to NEON and cause huge increases in our taxes. How many letters to the editor did we read from you saying this? All you did was defend the same failed policies of the Esposito/Moccia/Republicans and take every opportunity to take pot shots at Rilling during the entire election season. And now you are disappointed at the “absence of innovation..” and that he somehow has let you down? How exactly has he let you down since you clearly didn’t support him in the first place? If anything, you should be jumping for joy that the tax increase isn’t any bigger than it is as none of your prognostications about Rilling have come true.

    Those of us who supported Harry are frustrated at the slow pace of change of this new administration, but changing course after 20 plus years of bad management is going to take time. Plus, the Republicans still hold the majority on the council and we have a “strong council/weak mayor” form of government. Your buddies still have to agree to everything and they don’t want anything to change. They are more than happy to keep raising our taxes for mediocre schools, ineffective employees who never have performance reviews, and failed redevelopment policies…

  6. the donut hole

    Circling the drain, year by year. Let’s see if Rilling’s new BET decides to pay for this modest $10 million increase by raising our taxes or raiding our rainy day fund to make it look good in the short run.

  7. Piberman

    To taxpayer fatigue:

    Raising taxes/spending by 3 to 4 percent is no cause for celebration. Over the past two decades per capita City spending is up more than 50 percent while per capita incomes are up only about 10 percent. Reversing the City’s decline, eg stagnant property values, requires holding spending flat if not reducing spending. Using Mayor Moccia’s team will not achieve that goal.

  8. Oldtimer

    Every so often Berman sounds like he might know what he is talking about. Can’t help wondering why his good friends in the Grand Old Party didn’t draft him to run for mayor and get us back on track.

  9. MarjorieM

    Taxpayer fatigue, don’t bother arguing with Berman. He knows everything and is very happy to spend his entire life telling us over and over and over and over how he knows EVERYTHING!

  10. Taxpayer Fatigue

    I actually don’t disagree with him – spending should be held flat or decreased. The problem he has is that he does not understand how our city government works (or doesn’t, as the case may be) – the power primarily rest with the majority party in power who has the council if they choose to use it. The mayor is hamstrung by all the bad deals his predecessors made with regard to staffing and needs at least two terms to undo it, as well as gain control of all the commissions through appointments. In Norwalk, we have also transferred all the power to the finance director for the capital and expense budgets – what he says, goes, and all the other commissions and council just rubber stamp his recommendations. Fortunately, our finance director is competent, but he isn’t the one who will take a hard line on no increases in the budget. And to be fair to him, he isn’t the one negotiating and approving all the increases in union contracts – ultimately, that is the BOE with regard to the teachers and the council for everyone else.

  11. anonymous

    Hamilton says it’s a 2.9% tax increase. Correct me if I’m wrong, but it sounds like it’s actually a 3.2% increase since Hamilton says he is drawing down $1,000,000 from the rainy day fund balance to offset the tax increases. Norwalk is taking money out of its savings account to pay for this years operating expenses, artificially keeping the increase lower than it really is.

  12. piberman

    Taypayer Fatique

    Cogent analysis. The rubber stamp BET has forfeited its mandated responsibility to over see fiscal affairs. Appointing the discredited former NEON Board Chair to the BET illustrates the problem in spades. Our neighboring towns appoint citizens with major league financial experience to their Finance Boards and/or elect same. Reducing City spending requires much more capable managers – not long tenured folks doing the same old receiving annual raises for undisclosed “efforts”. When is the last time anyone recalls another town “stole away” a Norwalk administrator ?

    There’s no secret formula for success to anyone who has had major financial management experience in reducing budgets. It begins with “show me what you can do with 5% less”. Then asking for 10%. And, thinking about consolidations, outsourcing, innovations and good old fashioned management. Long time residents are hard pressed to see any major improvement in City services save the higher tax bills.We pay the same managers ever higher salaries for the same outputs.

    Honoring high pay previously negotiated contracts is not a major hurdle. Our City contracts do not preclude winning down the labor force. I’ve read many of the contracts. We don’t guarantee union employment but we do agree to salaries and benefits, etc. Managers in the real world and in well run cities get paid for doing more with less routinely. Otherwise why pay them fancy salaries. And, the only time I can recall in the last 3 decades
    when our City pressed hard during arbitration was last year against the NFT. What was the secret of success ? Three top notch BOE members hiring the best school attorney in the state. No surprise that the NFT called for a new City government.

    The shame of it is is that Mayor Rilling comes into office with unimagined advantages. First, the BOE is well run – something we haven’t seen in decades. Second, as a newcomer he’s far less beholden to political grandees. Unfortunately he’s keeping the same team, using “old boy network” rather than professional search and making some utterly appalling appointments such as the former NEON Board Chair to the BET.

    Lets hope Mayor Rilling understands what every serious and successful senior manager knows – – success comes from hiring the best people you can get. Not doing it all by oneself. Inheriting an acknowledged weak and dysfunctional team and then keeping them in place guarantees failure.

    In closing no set of figures better illustrates how Norwalk is spending its way to Bridgeport than by noting that over the past two decades our per capita city spending has risen by about 50% while our per capita incomes have only risen by about 10%. That’s why our properties are stagnant and new comers are mostly transient renters who now make up one-third of our City.

  13. Taxpayer Fatigue

    I agree with you regarding the BET appointment and some of the others. How many years was Doug Hempstead on NEON’s board of directors? That will be a good campaign issue for the next election…

    The big problem with our taxes was and is our schools. The majority of the proposed increase is from your “well-functioning” BOE. Again, the Council majority will set the spending cap and the BOE will recommend and get whatever they want. And we will still have mediocre schools with mediocre test scores. The rest of the City’s budget is small potatoes compared to the BOE. Parks and Rec and DPW’s budgets and staffing have been reduced to bare bones, while we routinely fully fund the Police and most of the Fire department requests.

    As far as the Economic Development director goes, look at who has the real decision-making authority. Look at the Redevelopment Agency’s agenda from last night – they are the ones who have to approve the search approach and they have final say on who gets hired, not the Mayor.

    Again, I agree with most of what you say, you just need to direct your criticisms to the people who actually have the decision-making responsibilities for the issues you bring up and for the most part, it isn’t the mayor. Unfortunately, Norwalk doesn’t have a lot of people with financial talent living here – they are all smart enough and successful enough to live in the surrounding towns – just as most of the city’s employees live somewhere else.

  14. Piberman

    Taxpayer Fatigue

    Again you’re on target. The BET is a party to BOE contracts. If the BOE drops the ball the BET is our safety net. Mayor Moccia had the same BET Chair for 8 years. So we know where the problems arose. Reading BET minutes is enlightening. Mostly 30 minute document pass through with little discussion.

    Norwalk is well supplied with serious financial talent. Last year Wayfair Comm.,publishers of the Fairfield Westchester a Business Journal hoisted a CFO awards dinner in Norwalk. Hundreds attended including many Norwalk based small, medium and large firm CFO’s. The meeting Chair works in Norwalk.

    Second, as a Board member of Financial Executives Int’l (FEI), CT Chapter, we have many Norwalk based members. FEI is the largest CFO group in the nation.

    There is no shortage of top flight financial talent both working and living in Norwalk. The problem is that both political parties bend over backwards to avoid encouraging such talent from participating in our civic discourse. The backgrounds of BET appointees make the point clearly.

    As you have pointed out our mayors prefer the City be run by the Finance Heads w/o any interference from the BET or anyone else who knows a balance sheet. Our surrounding towns eschew that myopic approach. And so do comparable sized entities be they government, non-profit or profit.

    Both parties are responsible for our spending excess relative to our incomes. With a new team Mayor Rilling can set us on a new course of affordable City spending.. But only with a new team.

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