Monday's annual State of the Town Representative Town Meeting heard Board of Finance Chairman Murry Stegelmann address the affects of the economic downturn on the past, present and projected financial condition of Darien.
"Despite the fact that financial crises have surfaced in every possible manner, I am pleased to report that the current financial condition of the Town of Darien is strong by comparison,"Stegelmann began.
"We ended the June 30, 2009 fiscal year with a deficit of $1.5 million in our general fund."
Unlike last year, which ended with a surplus of $600,000, 2009 ends in a deficit of $1.5 million. The excess in expenditures reduced the general, "rainy day" fund, bringing it to 14 percent of expenditures, but still within town guidelines. Only two expenditures exceeded the budget: an energy saving project at the schools, and retiree health care liabilities.
Property taxes are fairly predictable, and represent 90 percent of the town's total revenue; other revenue items are more capricious. As real estate sales have decreased, so too have conveyance tax revenues (down 61 percent). Building permit revenues have also dwindled (down 39 percent). Interest income on cash balances were 38 percent lower than the previous fiscal year.
The good news: reimbursements from the State were up by $60,000.
CURRENT BUDGET YEAR:
"I think that the meteorological term which would most closely describes our current situation is not 'rainy day' but 'monsoon'."
The real estate market is no longer booming, but conveyance taxes have stabilized at a new, low level. Building permit revenues continue to decline, and special education expenditures continue to rise. The biggest revenue shortfall is interest income on cash balances.
"The result of the projected spending increases, weak non-tax revenues, and a flat grand list yield a projected mill rate increase of 8.79 percent."
Stegelmann said the Board of Finance's current five-year capital plan assumes "business as normal," and is therefore not an accurate or "acceptable" financial forecast.
"The overall expenditure increase projected for next year is 7.2 percent, a large increase in good times, let alone during uncertain economic times."
Board of Education expenditures comprise 64 percent of the budget, the result of increased enrollment. Those numbers should level off simultaneously in the future.
All capital projects above $100,000 and under purview of the Board of Selectmen have been deferred. This includes spending on Weed Beach and the Police Station.
Last May, the Town began to pay off post-employment benefits estimated at $4.4 million for fiscal 2009 and fiscal 2010.
"In the revenue section, we are projecting that real estate conveyance tax revenue will increase next year and building permits will be weak."
As the real estate market picks up, interest income will start to recover, despite running substantially behind budget.
"This year, we are forecasting a relatively flat Grand List."
Annual reevaluation of the Grand List (tax roll), typically shows an increase of one percent. Last year the Grand List jumped from $6.5 to $8.5 billion. This year, as the town still has a number of outstanding assessment appeals (some for large amounts), the Grand List is likely to remain flat.
In our last reports, we heard from Board of Education Chairman Kimberly Westcott and Planning and Zoning Commission Vice Chairman Joseph Spain.