"[W]e could be looking at a 5.49 percent increase in taxes for next year," Mao said. "In other years, I have been confident in the Board of Finance’s ability to trim the budgets back, but this year I am not as optimistic."
Increased costs for special education, higher enrollment in Darien Public Schools and some other factors lead Mao to expect a tax increase, she said.
This is Mao's State of the Town address, as prepared (without changing words, minor editing changes have been made here by Patch, and subheadings have been added in boldface; Mao's own subheadings are presented here as sub-headlines):
Madam Moderator, Members of the RTM, Board and Town Officials, Fellow Citizens and Taxpayers
Good evening, every one! Welcome especially to all the new citizens of Darien who have joined our community in the past year.
As Chairman of the Board of Finance, I have the honor of addressing you each December to report on the State of the Town.
I am pleased to report that Darien’s financial health remains strong, and that during the past year there have been no surprises in the results of the budget and in the management of the town’s financial assets. We are enjoying the benefits from the investments in the Town’s hard assets over the past several years. I think you will agree the town is looking good!
The general environment we find ourselves in today includes a lot of the same factors we have been living with for the past several years. Connecticut’s economy is still not growing much, and the outlook for the state’s budgets are not very positive. But here in Darien, things are brighter.
So where is Darien now?
Just a couple of bullet points on how we are doing currently:
- First, the Town Departments ended FiscalYear 2013 with a small surplus of about $100,000 on their $41 million dollar share of the total budget of almost $121 million dollars. Revenues for Town Clerk fees and building permits were higher than expected. Moreover, the Town has been able to keep a tight control on expenses, and we commend the Board of Selectmen, Town Administrator Karl Kilduff, and all the Heads of Departments for their leadership in managing to tight budgets.
- Second, The Board of Education was able to come in under its adjusted budget of about $80 million dollars, and actually returned $367 thousand dollars to the Town.
- Third, The Board of Finance issued $5.5 million in new debt this summer at an all in cost of 2.2 percent, taking full advantage of our Triple A credit rating. The funds raised were for the Mather Community Center, tennis courts and the Intervale Road Drainage project.
In rating the bonds, Moody’s Investors Service stated that Darien has a “sound financial position supported by formal financial policies and long-term planning”. The rating recognized the town’s low debt burden and “satisfactory” pension funding.
Moody’s believes the town debt burden will remain below average despite additional borrowing plans “due to the town’s phased-in borrowing schedule and favorable payout of principal.” “Amortization of existing debt is favorable at 87.3% of principal retired within 10 years, above state and national averages. “
By June of 2014 when the next fiscal year begins, Darien’s debt will be just under $ 87 million dollars, well under the Board of Finance’s policy maximum of $100 million.
Current Year—FY 2014
We are on track to meet our current year’s budget forecasts except for the Board of Education.
I do not need to tell you how disheartening the current situation is in town with the findings of legal violations in the delivery of services to some Special Education students.
In order to put the Board of Education back on the track to appropriately solve the problems uncovered, we taxpayers are all going to have to spend a great deal of money.
I do not have a final tally yet on what all the costs will be, but I would not be surprised if costs end up being upwards of $1 million dollars.
The expenses include the investigations, the interim superintendent and staff, legal expenses, and increased expenditures on out-of-district placements, which I am told amount to more than a million dollars just in the last few months.
We do not have any control of these expenses, but more important, I sincerely believe we are morally obligated to pay them without protest. When I spoke to Investigator Sue Gamm this summer, I pledged my support, and that of the Board of Finance, to make right the problems in Special Ed, acknowledging to her that we knew it would be expensive, but also the right thing to do.
Next Year’s Budget—Fiscal Year 2015
As we turn to next year, one other concern is on the minds of taxpayers, and that is the Tax Revaluation that the Town has just concluded. The Grand List—that is, the value of all the taxable properties in town, has shrunk in total value by about 4 percent.
However, the adjustments to any one property or house may have declined by more than 4 percent, or also may have actually increased in assessed value. It looks like, and I caution you that this is anecdotal, that some of the houses under 1.5 million in prior assessed value may have actually gone up in value. This is due to the increases in selling prices for houses in this price category. On the other side, some homeowners have told me that their houses, valued at more than $2 million dollars, have declined more than the four percent average decline. These assessments are reflective of fair market values as of October 1.
While the mil rate is likely to go up, your individual taxes will go up or down depending upon your property’s relative value to the whole, not because the mil rate is higher. I will leave it to our Tax Assessor to fully explain mil rate calculations as we could spend all night on it!
Next year's budget
We have adopted a five-year plan as required, but I think we should focus on the estimates for next year’s budget.
The overall Town and BOE spending is forecasted to grow about 5.1 percent to $132 million dollars. These increases are mainly due to increasing personnel expenses, Special Education, and possible enrollment growth. Included in these numbers is only a slight increase in debt service for Fiscal Year 2015, but there are several new capital projects being discussed such as additions and renovations to schools, which could change the outlook.
As always, the key drivers of operating expenses are personnel expenses. These include both raises and possible additional hires, and estimates for health care costs still increasing by ten percent per year.
We have been conservative in estimating revenues, but should interest rates pick up a bit, we could have some upside in the earnings on our Fund Balance, which remains healthy at $17.4 million dollars.
Summing all of this up, we could be looking at a 5.49 percent increase in taxes for next year.
In other years, I have been confident in the Board of Finance’s ability to trim the budgets back, but this year I am not as optimistic. We will look to all of you for help, and especially for the input of the several committees of the RTM who work on budgets.
Thank you for your attention tonight. I look forward to your comments and invite any of you to contact me at any time should you have questions about our financial picture.
And a final thank you to Jayme Stevenson, our First Selectman, and to all who work as volunteers on Town Boards and Commissions. I am honored to serve with my fellow Board of Finance Members; Vice-Chair Jon Zagrodzky, Clerk Dave Lopiano, Gwen Mogenson, Jamie McLaughlin, Frank Huck and Bruce Orr.
RTM Members, and all of you here and at home, I assure you that Darien is financially sound, and is for sure a great place to live!