Proposed Budget Described by Town Administrator

I am pleased to forward the Town Administrator’s Proposed Budget covering expenses that come under the Board of Selectmen’s purview for the fiscal year beginning on July 1, 2013 and ending June 30, 2014 for the Board of Selectmen to review and consider.

Annually, the budget document is the single most important policy document acted upon by the Board of Selectmen in that it allocates resources and sets priorities for the upcoming year.  The Board’s goal setting exercise created the policy starting point for this document to develop a responsive and sustainable financial plan for the 2013-14.

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Goal: Through prudent management and leadership, provide the most cost effective services possible.

Objective: Approve a Town operations and capital budget that is within the economic feasibility of the taxpayers and, to the extent possible, maintains levels of service that are acceptable to the majority of taxpayers

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We find ourselves striving to retain and improve the quality of Town services and facilities while minimizing overall increases in the tax burden.  We have been challenged in determining the appropriate balance between operating requirements, level of services, community demands and expectations, and taxes during uncertain economic times.  Over a series of budgets the Town has done more with less, we did less with less; unfortunately, these approaches do not lend themselves to sustainable budgeting.  Like the boy with his finger in the dike, we can hold back the water for a short period of time, but a real fix needs to be made. 

On a positive note, locally, there appear to be signs that a new normal is establishing itself after the depth of the financial crisis in 2008-09.  After flagging, applications and permits have come back at a new (albeit lower) level in the Planning & Zoning and Building Departments.  Town Clerk revenue is back up with increased real estate transactions.

Despite improvements in non-tax revenue, resources will continue to be limited.  Board of Selectmen must view the budget as a priority-setting process—one where limited resources are allocated. 

Spending focuses on core services—the essentials expected from the Town—and represent one set of choices.  For all costs, which include debt and capital, this proposal reflects appropriations totaling $43,125,586 which is an increase of $2,875,232 or 7.14% over the FY 2012 budget.  This budget reduced the Department Requests by $433,922 in the General Fund budget and $1,176,450 in the capital plan to limit budget growth. 

Expenditure Comparison FY13 vs. FY14

Revised 2012-13

Proposed 2013-14

Increase (Decrease)

Town Government

     Operating & Personnel Svcs

$27,852,612

$29,505,517

$1,652,905

5.93%

     Transfer Capital

    2,056,932

    2,827,751

    770,819

37.47%

Total Town Government

$29,909,544

$32,333,268

$2,423,724

8.10%

Debt Service

     Sewer Debt

$ 546,691

$ 684,286

  $137,595

25.17%

     Town Debt

   559,532

1,634,904

1,075,372

192.19%

     Education Debt

9,234,587

8,473,128

   (761,459)

(8.25%)

Total Debt Service

$10,340,810

$10,792,318

$451,508

4.37

TOTAL

$40,250,354

$43,125,586

$2,875,232

7.14%

As a funding plan, the Board of Selectmen should take note of the challenges, goals and objectives, and priorities which went into this document.  The Board may wish to reprioritize and develop a different set of choices however the outside influences the Town must respond to are unchanged  Factors shaping this budget are described below.

OPERATING EXPENDITURES:

The operating budget focuses on the core, vital services of the Town and makes critical investments in people and systems which will improve municipal operations.  The Town cannot continue to hold the line on new initiatives which deliver a return on the tax dollars invested.    

• Utilities and Commodities.  Electricity and natural gas costs are assumed to be flat going into FY13-14.  Electricity will be bid during the summer of 2013 with a change in rate to take effect in January 2014.  The long term forecast for electricity and natural gas (which fuels most northeastern power plans) suggests a flat to a slight decline in cost.  Petroleum products however are assumed to increase.  As a result, heating oil and gasoline costs will be higher than the current year.
• Facility Management.  With recent investments to the Town’s portfolio of facilities, it is clear that a change is needed in how facility maintenance is carried out and planned for.  The complexity and variety of facilities have extended beyond the ability of our current approach to respond.  Organizationally, the responsibility for facilities needs to be pulled out of individual silos and centralized.  This budget includes funding for a facility management company to provide high level planning, capital budgeting, scheduling and maintenance oversight as well as direct supervision of local staff.
• Healthcare.  At this point in the budget development process, the budget assumes a 25% increase in premium over the prior year.  This increase is in response to poor development experience from the 2011-12 coverage year and part of 2012-13.  We are continuing to work with our agent and carrier to secure the best renewal rate possible.
• Workers Compensation and Package Insurance.  Both Workers Compensation and Property/Liability coverage are proposed to increase in FY13-14.  Part of the increase is a function of the pressures on CIRMA – our carrier.  The demands of the insurance pool require additional funding to respond to premium increases to the carrier’s re-insurance.  Experience-based losses unique to Darien put further upward pressure on the premium.  Workers Compensation is again predicted to increase.  Despite improvements to risk management in some departments and changes in staffing, poor experience in the past still haunts the underwriting of our policy.
• New Buildings.  This budget needs to carry forth the full costs of operations for the new Police Department building, Weed Beach improvements, and anticipated costs for operating the Senior Center in the Town Hall Annex rather than on the Edgerton site.  Each of these facilities has their own unique operating challenges.  Where staffing is needed to keep these facilities operational, this budget looks to use part-time employees and contractors rather than carry the cost of full time hires.

 Summary of Operating and Personnel Expenses

Revised FY13

% of Total

Proposed FY 14

% of Total

Increase(Decrease)

Personnel

     Full Time

9,991,825

35.86%

10,401,337

35.25%

409,512

4.10%

     Part Time

505,221

1.81%

591,361

2.00%

86,140

17.05%

     Seasonal

366,639

1.32%

361,472

1.23%

(5,167)

(1.41%)

     Overtime

547,463

1.97%

613,215

2.08%

65,752

12.01%

     Contractual

475,418

1.71%

522,626

1.77%

47,208

9.93%

     Insurance

2,999,026

10.77%

3,480,981

11.80%

481,955

16.07%

     Retiree

1,991,417

7.15%

2,134,442

7.23%

143,025

7.18%

          Subtotal

16,877,009

60.59%

18,105,434

61.36

1,228,425

7.27%

Risk Management

813,563

2.92%

887,651

3.01%

74,088

9.11%

Grants

71,975

0.26%

71,975

0.24%

0

0.00%

Library

3,436,334

12.34%

3,540,413

12.00%

104,079

3.03%

Utility/Fuel

1,322,530

4.75%

1,415,488

4.80%

92,958

7.03%

Solid Waste

1,040,194

3.73%

962,012

3.26%

(78,182)

(7.52%)

Equip/Building Maint.

550,445

1.98%

605,670

2.05%

55,225

10.03%

Road Maint.

1,032,225

3.71%

1,133,597

3.84%

101,372

9.82%

Operating Supplies

1,092,242

3.92%

1,167,522

3.96%

75,280

6.89%

Operating Services

1,204,089

4.32%

1,240,755

4.21%

36,666

3.05%

Contingency

412,006

1.48%

375,000

1.27%

(37,006)

(8.98%)

TOTAL

$27,852,612

100.00%

$29,505,517

100.00%

$1,652,905

5.93%

Budget Cost Centers

Activity

FY2012-13 Revised Budget

FY2013-14 Proposed Budget

Percent Change

General Government

2,928,420

2,894,595

(1.16%)

Community Environment

  606,620

   620,662

2.31%

Protective & Emergency

7,833,712

8,287,277

5.79%

Public Works

4,465,345

4,603,072

3.08%

Human Services

1,319,989

1,361,699

3.16%

Library

3,249,087

3,347,826

3.04%

Parks & Recreation

1,216,602

1,315,628

8.14%

DEBT SERVICE:

Debt service is proposed to be funded at $10,792,318 which is an increase of $451,508 or 4.37% compared to FY2012-13.  Debt service is comprised of payments needed to retire debt issued for school facilities ($8,473,128 or 78.5% of total debt service), sewer facilities ($684,286 or 6.3% of total debt service), and town purposes ($1,634,904 or 15.2% of total debt service).

The largest driver in the portion of the budget is the debt costs associated with the facility optimization project to relocate the Board of Education Central Office and the Senior Center.  This increase is cushioned by decreased debt service associated with investments made into Education facilities.  Cushioning the increase in town-related debt within in the declining Education debt was the policy intent of the Board of Finance in structuring recent bond issues.

The only new debt assumed in this budget is for a new storm water management project to address localized flooding issues in the Intervale neighborhood ($1,500,000 project cost), which the Board of Selectmen agreed should be a future funding priority. 

Debt Service Comparison

2013 Budget

2014 Budget

Difference

% of Total Debt

Sewer Debt

           546,691

           684,286

        137,595

          6.34%

Town Debt

           559,532

        1,634,904

     1,075,372

        15.15%

School Debt

        9,234,587

        8,473,128

       (761,459)

         78.51%

TOTAL

10,340,810

10,792,318

451,508

       100.00%

CAPITAL EXPENDITURES:

With appropriate restraint, critical investments in the Town’s infrastructure remain important.  Higher priority needs have been placed in a capital plan for FY2013-14.  Some significant priorities include:

• Important drainage improvements to Intervale Road.  Engineering for this project was funded in the prior fiscal year’s budget and it is ready to proceed.  If approved, this project would move forward in early FY13-14.
• Design of common service area.  This project would look to reconfigure the Planning & Zoning and Building Departments, at a minimum, to establish a common service counter for public contact and move some office areas to arrive at a more efficient layout which address some space needs.  An option to include the Public Works Department is also envisioned.
• Police vehicle replacement.  The Police Department is looking to replace five (5) vehicles in its fleet which increases the cost of this annual project over the prior year, which focused on four (4) vehicles. 
• NHFD apparatus floor replacement.  Last year, the Noroton Heights Fire Department raised a concern about the condition of the apparatus bay which was deteriorating.  Since this issue was flagged during the Board of Finance’s review of the FY2012-13 budget, the NHFD has been evaluating its options and the costs for a project.  The budget assumes $275,000 for this repair.
• Sidewalks.  Annually, the budget carries forth funding of $150,000 to repair or replace the Town’s existing pedestrian infrastructure.  New to this budget is a line item for the construction of new sidewalks.  This line item and funding request comes on the heels of the Board of Selectmen’s Sidewalk Policy and the priority rating system.  The capital budget assumes $120,000 for new sidewalk construction.
• Recreation facility repair, replacement and maintenance. The capital budget carries a number of recreation infrastructure projects.  Specifically, replacement of tennis courts at Weed Beach which are beyond the end of their service life is proposed.  Additionally, this year should have been the final year of repairs to the Weed Beach paddle tennis courts.  However, this project was increased to improve the electrical conduit on the courts which was discovered in assessing the facility following Hurricane Sandy.  Finally, re-grading of Hollahan Field is proposed.

Funding needed for capital improvement comes many from the General Fund.  The FY2012-13 budget provided $2,044,531 in funding for capital improvement projects.  The request for FY2013-14, which carries some deferred projects forward, seeks $2,821,311 in funding.  The proposed budget assumes an increase of $776,780 or 38% over the prior year.

MILL RATE:

To provide a context for the proposed level of expenditures for the Board of Education and Town budget, a draft mill rate has been calculated.  At this very early stage of the budget process, a mill rate calculation simply provides a reference point and is not a proposal for the rate of taxation. 

At the time of writing this message, the Grand List, which is the basis for property taxation, has not been completed before the statutory deadline of January 31.  Growth in the Grand List would reduce the potential tax levy described below as this calculation is based on the 2011 Grand List.  Most importantly, budget refinement still needs to be completed by the Board of Selectmen/Board of Education and the Board of Finance before the RTM finally acts on the town’s spending plan.

As important as the draft mill rate is for providing context for the expenditures proposed by the Superintendent of Schools and the Town, is the value of 1 mill. The value of a mill lays out the challenge for all budget reviewers as it quantifies the amount of reduction needed to impact the rate of taxation.  This calculation has also been provided.

Supt’s Proposed Budget

$83,239,646

Gross Grand List (Oct. 1, 2011)

$8,856,217,761

Supt’s Proposed Capital

$1,671,500

      Less:    Exemptions by Law       

($39,446,721)

Town Proposed Budget

$43,249,608

Net Grand List

$8,816,771,040

Total Proposed Budget

     $128,160,754

Adjust for Collection Rate (98.9%)

$8,719,786,558

       Less:     Non-Tax Revenue

($9,735,303)

Value of One Mill

$8,719,787

Amount to be Raised by Taxation

$118,426,451

The total proposed budget at this stage of development would require a mill rate of 13.58 mills to support the proposed expenditures.  This suggests an increase of 0.90 mills over the current levy of 12.68 mills.

With the value of a mill equal to $8,719,787, budget reviewers should keep in mind that further budget reductions must be made in increments of $87,198 in order to impact the rate of taxation.

CONCLUSION:

In closing, I would like to thank the staff that has worked with me during this budget process.  It is impossible to describe the effort and energy needed to produce a document such as this.  Without exception Town Department Heads were reasonable and demonstrate a clear understanding of the need to manage spending levels in the face of unique fiscal challenges.  They made a sincere effort to respond to our current economic reality, the goals and objectives of the Board of Selectmen and their efforts deserve to be recognized.  As a group, the Department Heads have had to manage continuous changes and the need to adjust as the town organization as we evolve in response to outside pressures and a reduction in available resources.    

As always, I hope you will find this proposed budget for FY 2013-14 to be a helpful starting point for policy decisions and setting funding priorities.  The revised budget format introduced this year should be helpful in better understanding Town operations.  I look forward to the opportunity to work with the Board as you review, refine and revise this document as well as ultimately implementing your decisions.

Respectfully submitted,

Karl F. Kilduff

Town Administrator