Town Posts

$2.5 Million Surplus

By Steve Bigham

Newtown’s recent trend of budget surpluses continued through the past fiscal year, although the leftover money is $800,000 less than it was a year ago. A recent audit reported a $2.5 million surplus.

A year ago, the town audit reported $3.3 million in “undesignated” funds.

So does this mean Newtown residents are being overtaxed? Not necessarily, according to Finance Director Benjamin Spragg. Budget surpluses are normal and come as good news, especially to the Legislative Council. The money is simply used to offset taxes the following year. Much of this year’s surplus stems from higher-than-expected revenue and less spending.

The Legislative Council had anticipated drawing down a $2.36 million surplus that has accumulated for the town over the past three years. The council never did spend that money, so it will once again be returned to the budget. Unspent funds totaling $137,000 from the 1999-2000 budget will be added to that to make up the gross $2.5 million surplus. A Town Charter provision mandates that all undesignated surplus be used in its entirety in the following year’s budget.

Not all the $2.5 million will go toward offsetting taxes. Using too much surplus in the following year’s budget can backfire, Mr Spragg explained. If the town puts the entire surplus into the budget at once and receives less money the following year, the town is forced to raise taxes simply to maintain the status quo. To avoid this, the Legislative Council often puts $600,000 in the budget and uses the remaining surplus to pay for large, non-recurring expenses that would likely cause the town’s tax rate to increase more dramatically year-to-year.

The town’s recently released annual report, compiled by Mr Spragg and staff, showed that general fund revenues for the 1998-99 fiscal year totaled $56,452,648 an increase of six percent from the prior year. Property tax revenues increased $3.8 million due to increased tax collections, sale of real estate tax liens and an increase in the tax rate. Current tax collections were 98.1 percent of the adjusted tax levy. Intergovernmental revenue increased $589,229 primarily due to an increase in state payments in lieu of property taxes. Investment income decreased $324,653 reflecting the decrease in capital financing funds available for investing. Other revenue decreased $179,000 as a result of receiving fewer unanticipated revenues. Licenses and permits increased $200,184 because of the growth in residential, commercial and industrial construction.

Other financing sources decreased by just over $1 million from last year because there were no transfers made from the reserve for capital and non-recurring expenditures fund.

General Fund expenditures (the annual town budget) and other financing uses for governmental purposes totaled $56,315,451, an increase of $4.2 million or 8.1 percent over the previous year. Public safety increased $520,450, primarily due to an increase in capital expenditures in the police and fire departments. Health and welfare expenditures increased $249. Planning & Zoning expenditures were up $124,715 due to the restructuring of personnel in the land use department. Public Works increased $311,540 as a result of increased road construction costs. Parks & Recreation increased $150,509 primarily due to an increase in capital expenditures. Education expenditures increased by nearly $2.3 million or 7.7 percent. Debt service expenditures decreased $379,379 because of the retirement of town general obligation bonds. Other financing uses increased $923,447 as a result of an increase in the amount that was transferred to the reserve for capital and non-recurring expenditure fund.

The accounting firm of Kostin, Ruffkess & Company, LLC of West Hartford audited the town.