Council Proposes Tax Increase Of Just Under One Percent

By John Voket

After a move to have no tax increase, which failed by consensus, and several motions to restore additional funds to the 2009 budget proposal, the Legislative Council struck a compromise that would hold a tax increase to less than one percent, while restoring enough spending to theoretically save one town and three teacher jobs.

That action, taken March 26, sealed the bottom line that voters will consider in an April 28 referendum, while some additional internal financial aspects and a decision on using ballot questions were held off for deliberation until April 1 (see related story in this edition).

In the end, if approved by taxpayers, the 2009 budget would include a net restoration of $200,000 in a one-third, two-thirds proportional split between the town and school budgets. That nominal restoration would bump a 2009 tax increase to 0.99 percent.

After almost two hours of questions and answers from several town and school officials March 26, several points of information, including the mislabeling a so-called “rainy day fund” and the financial consequences of taking more money from the town’s fund balance to lessen the tax impact, were clarified.

Finance board Chair John Kortze illustrated that his board already recommended to take $2 million from the fund balance, despite evidence that such a practice in neighboring Monroe resulted in two recent bond rating downgrades.

Mr Kortze explained that due to rapidly diminishing revenue sources bringing money in, the town does not have any surplus money, so the finance board reluctantly chose to apply $2 million to ensure a tax increase would remain under one percent.

He said the town has an either/or choice: “Curb spending or draw from the fund.” Mr Kortze reminded the council that several trusted financial advisors, as well as the bond rating agency itself, has advised Newtown to “get away from the practice.”

Responding to suggestions about increasing the fund balance allocation from $2 million to $2.5 million or more, Mr Kortze said the allocation will have to be made up in the 2010-2011 fiscal year, already saddling taxpayers with a two-thirds of a mill tax increase before an approximate $2 million increase in debt service for the high school expansion, and any tax dollars applied to increased operating or contractual costs.

Additional Cuts Failed

Joe DiCandido, chair of the council’s finance subcommittee, which is charged with making a final recommendation to the full council, first moved a $600,000 additional cut beyond the nearly $1.9 million reduction already recommended by the Board of Finance.

Mr DiCandido said the logic behind that recommendation would deliver a zero-percent tax increase to the voters for consideration at an April 28 referendum, but that proposal failed by consensus.

Councilman Gary Davis then moved a $600,000 restoration of funds to be taken from the fund balance to restore part of the $1 million cut by the finance board to the school budget.

Countering, council Vice Chair Francis Pennarola said with the dim likelihood of rapid economic recovery in 2009, he would rather see a restoration of funds coming from taxation versus the fund balance, and illustrated that restoring a half-million dollars would cost the average taxpayer between $35 and $50 more.

“I think it’s money well spent,” Mr Pennarola said, before the vote on Mr Davis’ motion failed 10-2.

Mr Pennarola then moved a $500,000 restoration spilt proportionately between the town and school district, with the stipulation of raising that extra money by taxation. Councilman John Aurelia asked School Superintendent Janet Robinson how many teacher positions could be restored with that proportional $335,000 giveback, and she replied that each teacher position is roughly budgeted at $50,000.

But it was quickly determined that a $500,000 restoration would raise taxes by about 1.37 percent, a level with which many of the council members seemed uncomfortable.

One Percent Matters

Council Chairman Will Rodgers said he believed holding the increase to less than one percent would have some significance to taxpayers weighing a Yes or No vote come referendum.

“That is enough to sink the budget [vote],” Mr DiCandido agreed.

Mr Pennarola’s motion to restore the half-million dollars failed to get a super majority vote required by Charter, so it failed even though it received a 7-5 affirmative vote.

Mr DiCandido then moved to accept the bottom line recommended by the Board of Finance, which would deliver a 0.83 percent tax increase for voter consideration, and that measure failed by consensus as well.

Councilman John Torok then recommended an amendment calculating the approximate restoration that would bring the proposed tax increase to the 0.99 percent, which Town Finance Director Robert Tait said would be about $200,000.

That seemed to be the magic number as a first pass roll call vote yielded a 9-2 split in favor with council members Dan Amaral and Joe DiCandido opposed.

The council tabled discussion on placing advisory questions on the ballot, which would attempt to gauge why voters either passed or rejected the first budget proposal. That measure was defeated April 1 in a 10-1, with Po Murray casting the sole vote in favor of an advisory question.