Budgeting

In The Borough

To the Editor

Many thanks to John Voket and The Bee for the coverage of last week’s borough meeting in which the budget proposal for FY 10-11 was finalized. It’s good to see the borough’s financial matters getting greater public attention, as they affect a significant number of Newtowners. And kudos to the borough’s leaders as well, who in the last couple of months have agreed to present more complete financial information in the annual borough budget notice, and to establish a policy of providing public notice if they make a special appropriation amounting to ten percent or more of the budget. Previously the borough charter permitted amending total expenditures without limit and without notice.

I would like to offer a few points of clarification concerning statements made in Mr Voket’s article. The $70,000 “Special Revenue Fund” reserve account, which became a point of contention in the meeting, is not included in the data presented about the borough’s cash-on-hand balances going back to 2002. As Mr Voket points out in his article, that data shows that in each of the last three years, the borough has retained well over a year’s worth of operating cash at the end of the fiscal year. His research with two other boroughs in Connecticut also highlighted the disparity between their much-reduced reserve practices and Newtown’s, and both the Stonington and Litchfield boroughs are more complex organizations that provide more services than does Newtown.

Although Mr Voket quotes the borough’s auditor as using a personal “rule of thumb” for suggesting that the borough should retain a full year’s budget in the bank, the reasons he cites (“uncollected property taxes, litigation, etc”) are certainly open to discussion. The borough’s average property tax collection rate over the past 13 years is 97.4 percent, making that revenue stream essentially risk free. Considering the threat of litigation, perhaps borough officials could rest less nervously (the KKK/ACLU not withstanding) if the borough invested in a liability insurance policy instead of sitting on a hoard of taxpayer cash. Unfortunately, no discussion of these points was permitted at last week’s borough meeting.

Finally, although much was made in both the meeting and The Bee’s article about how low the borough’s mill rate is against historic standards, it should be noted that is because the mill rate is multiplied by the assessed property value to determine the borough tax — and, after the 2007 reassessment, these values are surely at their all-time high in Newtown. Happily borough taxes don’t move steadily upward as the town taxes seem to do. However, average borough tax collections in FY 05-09 were 35 percent higher than those in FY 00-04. As Mr Voket says in his article, “…the borough still reaches into the pockets of its residents” to sustain its operations. We understand that…I spoke at the meeting for those residents who are simply requesting that the borough reaches a little less deeply in this difficult economic year. Thanks again to The Bee, and special thanks to those who joined me in support at the meeting.

Sincerely

George (Nick) Schmidt

12 Old Castle Drive, Newtown                                       April 19, 2010