School Bd And Council Renew Annual Debate On Capital Spending

By Steve Bigham

Just as Newtown’s taxpayers were recovering from the sticker shock of a $70 million budget, the Board of Education has presented another $824,500 request – for capital projects. That cost was not reflected in the school board’s operating budget, which itself rose to $39.9 million, a 14.5 percent increase.

The issue renews what has become an annual debate between the Board of Education and the Legislative Council. The school board believes the funding should come from the town’s capital and non-recurring expenditures account because the items are one-time expenses that should be paid over a period of time – such as a new roof on a school. The five capital projects range in price from $109,500 to $240,000.

“The town’s Capital Improvement Plan (CIP) – the way it is defined – any projects that exceed 0.15 percent of the previous year’s budget should be on the CIP,” noted School Business Manager Ron Bienkowski. “Multi-year capital improvement plans are funded outside the operating budget because they are more expensive than a normal operating budget can substantiate.”

However, some council members are suggesting that the school’s capital projects be funded within the operating budget since every year projects of similar size and cost are requested by the school board. The projects, they argue, are a regular part of maintaining the school system, with its numerous buildings and fields.

“They are suggesting we borrow the money. My reaction to this is that if someone tells me they need this, then it should be in the operating budget,” noted council chairman Pierre Rochman. “True, they are different items every year, but the request is always there, so I believe it should be in the operating budget.”

Such a move would raise the total budget request for 2000-2001 to $71 million, representing a tax rate increase of more than five mills.

“When we borrow, that’s for permanent things,” council vice chairperson Melissa Pilchard said. “Technically, the Board of Education is not supposed to pull anything out of its operating budget. It should be the responsibility of the Legislative Council. We couldn’t possibly borrow one million dollars each year under long-term debt when it’s basically routine maintenance.”

Mr Bienkowski said capital projects included in the normal operating budget are often the first things cut. Many of them never end up getting done, he said.

“I don’t understand the idea of having a capital improvement plan if everything gets kicked into the operating budget,” he said. The school board wants to find a way that it can count on this capital improvement funding being there each year.

Those capital items totaling $824,500 are: repaving projects at four schools ($240,000); repainting projects at three schools ($109,500); installation of modular classrooms at Sandy Hook School ($150,000); conversion of Board of Education offices to four classrooms ($125,000); Middle School fire code update ($200,000).

 

Smoke And Mirrors

Faced with a large budget request, the town’s budget-makers have given serious consideration to alternative financing methods. Over the years, the council has attempted to maintain an average tax rate increase of about one mill. However, that does not appear to be possible this year, especially with a debt service budget of about $9 million. The council would need to cut more than $6 million in order to reach the one mill increase level. Some council members are considering the possibility of a two-mill increase.

“I don’t know how we’re going to get it to two mills by any stretch of the imagination,” noted Mrs Pilchard. “You can do smoke and mirrors by long-term borrowing, but it doesn’t change the fact that all that money has to be borrowed in the first two years. You can play some games, but the interest has to be paid.”

Mrs Pilchard believes the town may need to “bite the bullet” over the next two years to avoid having to pay for many years to come.

Originally, the council thought it could fund $50 million in capital spending – the purchase of Fairfield Hills, the construction of a 5/6 school, new ball fields and major repairs to Edmond Town Hall – through five $10 million bond issues and the rest on short term notes. The problem, according to council members, is that many of the projects need to be done during the first two years, and that method would result in an automatic tax increase of at least one mill for five straight years.

“Do you want to do two years, then it’s done, or do you want to chop a dog’s tail off an inch at a time,” Mrs Pilchard said. “We don’t know what the interest costs will be over five years and it sends us way over the Moody’s Investment Services standards for debt.”

The council subcommittees began budget deliberations this week and were expected to wrap things up next week. The finance committee is also expected to meet after failing to find an agreeable meeting date this week.

The council will reconvene March 8 to begin discussions on the full budget.