Confusion About How Newtown Approves Projects

To the Editor:

Based on letters in recent editions and other comments I have heard, it appears that some members of the public are confused about town budget and bonding matters. The confusion centers around the differences between special appropriations for borrowing, i.e., borrowing resolutions; bonded indebtedness, i.e., bond issues; and debt service, i.e., interest and principal payments for the town’s long and short term debt obligations. Traditionally, large, non-recurring projects such as the proposed Grade 5/6 School, the potential purchase and redevelopment of Fairfield Hills, and other large capital purchases have been authorized through special appropriation requests after the annual budget has been approved. Once approved by the voters the appropriations are often funded by the issuance of bonds.

Several years ago the Legislative Council decided to include principal and interest payments in anticipation of special appropriations for proposed capital projects in the debt service portion of the annual budget along with the principal and interest payments due for previously issued debt. The debt service of the annual budget approved in April, 1996 included principal and interest payments in anticipation of the special appropriations for the additions to Newtown High School and Hawley School which were subsequently approved by the voters at a June 1996 referendum. The reason for this change was so that taxpayers would know the impact on the mill rate of proposed projects before they were asked to vote to approve them rather than be surprised after project approval with an increase in the next annual budget, as had been the prior practice.

That is the situation this year. The 2001-2002 budget submitted to the council by the Board of Selectman includes funds in the debt service account to cover the first principal and interest payments for bonds to fund the 5/6 school construction, Fairfield Hills purchase/municipal space and recreation projects, and transmitters and radios for police, fire, EMS and other departments in the events that the projects are later approved by the voters at town meetings or referenda prior to the end of the 2001-2002 fiscal year. The discussion that took place at the February 13 council finance subcommittee meeting, referred to in a letter by one misinformed observer, was about the size of the debt service account in the annual budget request, not about the resolutions to authorize the actual projects, their number, form or timing. That will come later. If any proposed project is not approved by the voters then the corresponding funds will not be borrowed, the debt service will not be used for principal and interest payments and the unspent funds will become part of the audited surplus that can be used to reduce taxes in the next fiscal year.

Voters need to remember that when they vote to approve the annual budget that includes debt service to fund projects, they will be asked to vote again at a later date to approve the actual projects and to authorize the borrowing to fund them.

Sincerely,

Herbert C. Rosenthal

First Selectman

45 Main Street, Newtown                   March 7, 2001