Finance Director’s Work Earns Thanks From The Council

By Steve Bigham

The Legislative Council last week officially honored finance director Ben Spragg for his fine financial leadership over the years.

Earlier this year, Moody’s Investment Services awarded Newtown a new bond rating, upgrading it from an “A1” to an “AA3” – great news for a town that expects to float bonds in excess of $50 million in the coming years. In short, the improved bond rating puts the town in a much better position to borrow money.

“Assignment of the AA3 rating reflects the town’s healthy tax base growth and above-average wealth levels; stable financial operations supported by comfortable reserves; and favorable level of debt at an above-average rate,” Moody’s said.

It was the town’s first bond upgrade since 1982, Mr Spragg’s first year on the job in Newtown. His financial leadership, town officials say, has helped Newtown establish a track record that makes bond holders feel secure.

Legislative Council Chairman Pierre Rochman presented Mr Spragg with a plaque at the council’s September 6 meeting. He thanked Mr Spragg for his work and dedication to the town.

“It gives you a warm fuzzy feeling all over to know you’ve got someone that well qualified,” Mr Rochman said.

John Kortze, who has chaired the council’s finance committee for more than three years, called Mr Spragg an “irreplaceable resource for the town.”

“I think he’s extremely knowledgeable. He’s apolitical and he works with everybody famously,” said Mr Kortze, who believes Mr Spragg has just the right temperament to deal with the full range of personalities in town.

Many town officials also credit Mr Kortze for putting into place the mechanics to ensure the town’s strong financial footing. Under his leadership, the council has become much more aggressive in looking for new sources of revenue and established a Capital Improvement Plan (CIP) account.

“We’ve put together an overall plan and the finance committee has made recommendations to the full council addressing theses issues and the council has seen the merit of these and approved them,” Mr Kortze said. “We never had a plan before. We never looked back before. I think we’re more proactive rather than reactive.”

The improved bond rating means the town will save $86,000 on its most recent bond issue of $4.8 million. With $20-30 million in bond issues just around the corner, the town stands to save as much as $750,000.

  Last spring, Mr Spragg and First Selectman Herb Rosenthal journeyed to Wall Street for a meeting with Moody’s. They were there to convince the firm that Newtown deserved an upgraded bond rating. As part of his presentation, Mr Spragg pointed to the town’s capital reserve plan and current surplus picture. Also, the fact that Newtown has installed sewers shows that it has succeeded in planning and paying for major projects. The town’s sewer fund is now self-supporting, Mr Spragg pointed out.

Mr Spragg’s presentation also discussed the town’s current tax base and the potential for further commercial development on 36 acres off Commerce Park Road and at Fairfield Hills.

 The town’s finance director said an AA bond rating will yield the town lower interest rates, and because AA towns are seen as little to no risk, the bonds that they “float” are quickly purchased on the market. Because of this, Mr Spragg said he would not need to buy insurance.

Moody’s Report

In its report, Moody’s said it expects the town’s healthy taxable value growth (four percent annually since 1997) will continue, given ongoing residential and commercial growth. Moody’s anticipates that the town’s financial operations will remain stable given the trend of increasing property tax revenues, conservative fiscal management, and satisfactory reserves.

Moody’s report indicated satisfaction with the town’s general fund, which provides a one-year window of financial flexibility before it is used. The Wall Street firm credited the town management’s “prudent” budgeting approach, which has built the town’s reserves to $6.5 million or 11.49 percent of revenues.

 Moody’s was also impressed with the town’s capital and non-recurring expenditures fund, another source of long-term financial flexibility. That fund has increased to $3.4 million or 5.9 percent of the general fund revenues. Mr Spragg expects that figure to jump to $4.3 million this coming year.

Moody’s did not seem concerned by town plans to draw down this reserve by $700,000 in 2001 for tax relief purposes. This draw, Moody’s said, should not significantly hamper the town’s financial flexibility.

In its report, Moody’s also indicated that it believes the town’s debt burden of 2.2 percent is below average and will remain manageable despite sizable future debt plans.

 Moody’s rating scale has 10 different ratings: (from lowest to highest) BAA3, BAA2, BAA1, A3, A2, A1, AA3, AA2, AA1 and AAA.