Date: Fri 08-Jan-1999

Publication: Bee

Author: STEVEB

Quick Words:

audit-surplus-town-finance

Full Text:

Town Posts $1.17 Million Surplus

BY STEVE BIGHAM

Newtown continued its recent trend of budget surpluses during the 1997-98

fiscal year. A recent audit reported $1.17 million in leftover cash.

So does this mean property owners were overtaxed by the town last year? Not

necessarily, say town officials. They reminded taxpayers that budget surpluses

are normal and always come as good news. The report indicates the surplus was

due to higher-than-expected revenue and less spending.

According to Finance Director Ben Spragg, any remaining money is simply used

to offset taxes the following year. For the upcoming budget, residents will

have an especially nice cushion.

"We'll be putting $3.3 million in the 1999-2000 budget as revenue to offset

taxes," Mr Spragg explained. "The Legislative Council had anticipated in the

'98-'99 budget to draw down the $2.3 million (in existing surplus) fund

balance. But it did not draw down that money so it will be returned."

Not all of the $3.3 million will go toward offsetting taxes. Using too much

surplus in the following year's budget can backfire, according to Mr Spragg.

If the town puts all of the 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 rest of the surplus funds to pay for large,

non-recurring expenses that would likely cause the town's tax rate to increase

more dramatically year-to-year.

The report showed that general fund revenues for the 1997-98 fiscal year

totalled $53,273,203, an increase of 7.5 percent from the prior year. Property

tax revenues increased $2.38 million due to increased tax collections and an

increase in the tax rate. Licenses and permits increased $132,079 because of

the growth in residential, commercial and industrial construction.

Investment income decreased $419,734, reflecting the decrease in capital

financing funds available for investing. Other revenue increased $369,772 as a

result of energy grants received for equipment installed during building

construction and other anticipated revenues. Other financing sources increased

$960,000 due to transfers in from the reserve for the capital and

non-recurring expenditures fund.

General fund expenditures for governmental purposes totaled $52.1 million, an

increase of six percent. Health and welfare expenditures increased $125,377

(15 percent), planning & zoning costs went up $49,267 due to the increase in

staffing, and public works rose by $1 million due to an increase in road

repairs.

Educational expenditures increased $1.4 million (5.2 percent).

The audit report includes other information on the financial status of the

town. It showed property taxes accounting for 75 percent of the general fund

revenue. Taxes were collected at a rate of 96 percent.

New housing starts continued to be strong, according to the report. Newtown

ranked second in the state for the most new home building permits issued

during the calendar years of 1995 and 1996. In 1997, Newtown ranked fifth. As

of June 30, 1998, Newtown issued 141 permits for new homes compared to 80

issued over that same period in 1997. The growth in residential construction

is accompanied by several commercial and industrial construction projects, as

well, the report said.

The annual audit was conducted by Kostin, Ruffkess & Company of West Hartford.

The audit is available for public perusal in the town clerk's office in town

hall.