Getting A Grip On The Costs Of Growth

The people who run this town have quickly turned from peering intently into the hearts and minds of voters in their quest for election to peering intently at long columns of numbers in their quest not to betray the trust conferred on them by those voters on November 4. The numbers add up to nearly $60 million and they are included in the staggered (some would say staggering) columns of the town’s Capital Improvement Plan (CIP) for the next five years.

The CIP is one of the diagnostic tools used by the Legislative Council and the boards of education, finance, and selectmen to predict and protect the financial health of the town in the near future. Operational costs such as salaries and benefits, insurance, fuel and utility costs come due and payable like clockwork year in and year out. Capital costs, like road repair, school construction, and park improvements, are sometimes subject to discretion. We put them on the shelf –– on layaway, if you will –– and take them off when we can afford them, or can afford to borrow for them as usually happens in municipal finance.

The CIP is useful, however, only to the extent that the numbers on that plan are relatively predictable and stable. It is important to know, for example, that the projected $2.4 million recreation center at Fairfield Hills still costs $2.4 million when the town plans to start paying for it in 2007/2008.

So when the Board of Finance learned at the end of its meeting Monday night that the projected cost of a proposed high school “academy” at Fairfield Hills had risen from $17 million to $23–25 million just since the board’s last meeting in October, some board members blanched. The academy is on the CIP in the year 2006/07 at a time when the town’s projected debt bumps up against the town’s self-imposed debt limit of ten percent of expenditures. The project will be mostly funded by local borrowing, though more than a third will be paid for by a state grant. Borrowing the extra money for the extra cost will could push the town’s debt over the ten percent limit and threaten its credit rating, which in turn could increase the cost of all its borrowing and start a great unraveling of Newtown’s best laid plans. More likely, it would jeopardize other projects, such as renovations at the police department or even the town’s nascent initiative to acquire open space. So much for planning.

Newtown’s big problem is that it cannot seem to draw a bead on how fast it is growing. That growth manifests itself quickly in the schools, and the expenses associated with education in Newtown are increasingly catching budgetmakers by surprise. Last month, the Legislative Council had to appropriate $400,000 for new classrooms at the high school that no one anticipated just last year in the 2003/04 budget deliberations. And now, in a fortnight, the cost of a $17 million academy increases 35 to 47 percent.

Clearly, Newtown’s Board of Education in consultation with the town’s other budgetmaking authorities has to review how it projects the school district’s growth and costs. Whatever method it uses now is not working. When numbers are this fluid, the Board of Finance and the Legislative Council may as well resort to consulting a Magic 8-Ball® in formulating financial plan for the town… Question: Will Newtown’s tax rate ever stabilize? Answer: Insufficient Information.