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.
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