In it, Mr Bittman suggested that some divisiveness that has erupted during the current budget process resulted from a lack of understanding or clarity about why savings the town achieved through refunding bonds — which were predominantly underwriting school district projects — was not shared equitably with the district to increase revenue.

“I would like to understand the Legislative Council’s position on our planned use of debt service savings,” Mr Bittman wrote. “Our improved bond rating helped us to reduce our debt service by $716,000 in the proposed budget. However, rather than move that to the reserve, or use it to lower taxes, or allocate it equitably between the town and the schools, the town is using that exclusively to increase their spending.”

Addressing that assertion, First Selectman Pat Llodra and Finance Director Robert Tait said they also hoped to clarify a number of other key points on budgetary issues that are circulating in anticipation of the May 18 budget referendum vote.

The finance director said Mr Bittman’s concerns about the bond savings assume that those savings generated revenue or cash influx to the town side of the budget. But the savings, he explained, applied across the entire municipal budget — benefiting both town and school sides, and that those savings offset revenue shortfalls.

“The savings does not represent cash,” First Selectman Pat Llodra added.

“Because of the current financial climate, revenue estimates are not being fulfilled,” Mr Tait said. “So the bond savings offset those revenue shortfalls so we didn’t have to dip into reserve funds.”

Mrs Llodra said the $716,000 Mr Bittman referred to represents a bill the town and its taxpayers were going to have to pay through increased taxation or use of a fund balance.

“These savings mean we didn’t have to raise taxes or dip into the fund to cover that. We spend less, but there were no cash infusions as a result of those bond refunding savings,” Mrs Llodra said. “That is especially important to understand in times of falling revenues.”

Mr Tait said the town is still using $1 million from the fund balance to offset a greater overall increase in taxation.

Hidden Growth

Mr Bittman contended that by removing the debt service savings as revenue on the town side of the budget proposal, “we are allowing the town budget to grow 2.8 percent — but it is being hidden under reduced debt service.”

“I do not understand or agree with the decision to spend it all on the town side,” Mr Bittman said, “and then claim that the town side budget is only growing by a paltry $58,000. This is not very transparent.”

Mr Tait countered that all the fine detail is evident in both the budget summary, which has been updated regularly and posted for public review on the town website, but also in the prereferendum legal ad that appears in The Newtown Bee.

“We couldn’t possibly hide anything,” he said. “We have provided fine detail to every line in the Board of Selectmen’s side of the budget document.”

Mrs Llodra said some of the confusion may be rooted in the fact that while the town side of the budget includes all debt service, regardless of whether it is for town or school-side projects, the savings from the recent refunding of bonds is applied to the overall budget package.

To further illustrate the give and take of bond-related action, Mr Tait said the 2010-2011 budget proposal contains a debt service increase of $1 million exclusively for school projects, but that debt service cost is not tagged against the school district’s budget.

“We will work to not pass on that increased debt service cost to taxpayers next year by better managing town resources,” Mrs Llodra vowed. “I’ve never in my 40 years here ever seen an increase in school district debt being applied to the back of the Board of Education budget.”

She and Mr Tait also defended the decision to limit the application of fund balance underwriting for the purpose of reducing taxation next year to just $1 million, when some in the community are calling to maintain the current year’s allocation of $2 million.

“Newtown is on an upward trend despite global economic circumstances, because our financial practices are so much more disciplined than other towns in the state,” Mrs Llodra said. “Other towns’ bond ratings are going down because they are overextending their fund balance.”

Mrs Llodra added that those downgrades haunt town taxpayers for the length of their bond initiatives, typically 20 years.

“It costs more for today’s citizens, and the next two generations will continue to pay for today’s decision to dip into the fund balance,” she said.

Pay To Participate

Mr Tait said he also wanted to share some information that was recently requested by a local resident regarding the “pay-to-participate” program in the schools. He assured residents that while it is the town that maintains the fund into which school program fees accrue, those funds are used exclusively to pay bills associated with the extracurricular school programs. He also noted that those funds have annually fallen below the costs associated with those school programs.

“The fees go into a fund that offsets expenses with that revenue,” Mr Tait said. “And those expenses have traditionally been more than the fund has taken in.”

When that happens each year, Mrs Llodra added, the shortfall is not assessed against the school district, but is offset by taxation communitywide.

Mr Tait said pay-to-play funds belong in the general fund because the expenditures are coming out of the general fund, whether they are from collected fees, or taxpayers offsetting the shortfall after all those fees are retired.