Newtown is well on its way toward meeting a nine percent fund balance goal by the end of fiscal year 2015 as a result of unforeseen revenue surpluses and curtailed spending by various town departments in the fiscal cycle that ended June 30, 2013.
Finance Director Robert Tait has been reporting on the fund balance progress during recent meetings with the Boards of Selectmen and Finance. He told The Bee this week that unaudited revenue enhancements and savings combined to infuse the fund by $916,963 – bringing the account to $9,296,713 or 8.76 percent of budget.
Providing proof that Newtown is committed to increasing its fund balance to between eight and 12 percent of its overall budget is crucial to the community maintaining its near perfect bond rating.
More importantly, Mr Tait said the continued building of the fund will help prevent Newtown from slipping in its rating like several neighboring communities have in recent years because they have either failed to maintain an adequate fund balance ratio, or they are tapping the fund to offset increasing taxation.
“With this news, when we go to the ratings agencies in February  ahead of our next bond offering, it should bring a favorable response,” Mr Tait said. “We are doing everything we promised to do in previous visits.”
Town officials are so concerned with increasing the fund balance because both Moody’s and Standard & Poor’s have previously informed the town in writing that it is a key point on the spreadsheets that their underwriters are watching closely.
Referring to the last Moody’s ratings report on Newtown from 2012, the finance director said there is an expectation the town should reach a ten to 12 percent fund balance ratio “over the medium term,” which is an approximate four- to six-year window.
In addition, the town can show ratings agencies that it has reeled back its capital spending ratio from ten to nine percent of the overall budget.
According to documentation he reviewed with the Board of Finance on October 24, the town used a surplus of $365,275 in unanticipated or unbudgeted revenues. Those revenues came primarily from a $126,000 increase in state grants from the Mashantucket Pequot fund; $78,000 from a public school transportation grant; a $50,000 increase from police salary reimbursements and a federal stimulus grant to improve Castle Hill Road; and a $50,000 rebate from the town’s Workers Compensation carrier.
“You know, you try and do a revenue budget, but if you receive more during the year than you expected, you have to look at it as good news,” Mr Tait said, adding that the town typically budgets for $100,000 in unanticipated revenues.
Savings in the spending column have come from myriad sources, many just a few hundred or a few thousand dollars. But the town also saved nearly $133,000 because several major public works projects were halted by the storms of late 2012, and much of the cleanup work occupying town highway crews were reimbursed by federal disaster grants.
Parks & Recreation saved almost $43,000 by delaying filling three open full-time positions, and other nominal amounts in a lifeguard and gate attendant salary lines. Another $46,200 was saved from unspent town contingency funds.
Another $67,000 was saved when a position in emergency communications was not filled; $22,592 was saved in the police salary line because officers out on short-term disability were not reimbursed through payroll; the Board of Fire Commissioners only spent 98 percent of its requested budget, leaving almost $26,000; and another $6,500 was saved from a canine control officer who was out on short-term disability.
Senior Services also saved almost $10,000 by delaying filling a staff position at the Senior Center.
Finance Board Chairman John Kortze was also pleased, saying the development will shed good light on Newtown’s financial practices and policies when officials go out for new capital project bonding next February. He also noted that the all but about two percent of the fund balance increase last fiscal year came from unanticipated sources, and not from local tax increases.
Mr Kortze also took aim at critics who complain that the town should be minimizing its fund balance as a means to reduce taxation.
“I don’t think some people understand how much money the town had to draw from its fund balance this year,” he said, noting that primarily due to expenses stemming from post-12/14 recovery, the school district drew down $1.1 million from the fund balance before it was reimbursed by grants.
On the town side, Mr Kortze said that temporary emergency fund balance draw down amounted to $1.5 million.
Mr Tait said 99.6 percent of the 2012-13 budget was expended.