$2.6 Million Surplus Confirmed—

Audit Report Cites Finance Director For Excellence

By John Voket

Newtown’s most recent municipal audit was delivered this week bringing good news for the town, as well as kudos for Finance Director Benjamin Spragg. For the 12th year running, he was recognized for excellence in his financial reporting practices by the Government Finance Officers’ Association (GFOA).

In a transmittal letter attached to the final audit documents, the town’s independent auditing firm noted, “The GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the town for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2006. This was the twelfth consecutive year that the town has achieved this prestigious award. In order to be awarded a Certificate of Achievement, the town published an easily readable and efficiently organized comprehensive annual financial report.”

The accounting firm of Kostin, Ruffkess & Company, LLC, licensed to perform audits of municipalities within the State of Connecticut, audited Newtown’s latest financial statements. According to the transmittal letter accompanying the full report, the goal of the independent audit was to provide reasonable assurance that the financial statements of the Town of Newtown, for the fiscal year ended June 30, 2007, are free of material misstatement.

“The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation,” the cover memo stated.

The bottom line for taxpayers, Mr Spragg said, is the audit confirmed a total of $2,619,306 in surplus funds will be applied to the 2008-2009 budget to offset tax increases. While that may seem like a healthy figure, the finance director said the surplus actually demonstrates a decrease of nearly a quarter-million dollars from last year.

“Compared to the current year, we are down slightly,” Mr Spragg told The Newtown Bee Wednesday. “Our contribution this year was $3,363,961.”

The net impact to taxpayers was lessened somewhat by the move last spring to add $300,000 into the town’s reserve fund for capital nonrecurring expenses, he said. That appropriation brings the total revenue liability down to $444,000.

“While surplus revenue is down $744,000, we won’t be putting any money into the capital reserve fund for ’08-’09. So the difference of $444,000 is certainly more manageable,” Mr Spragg explained.

The other good news Mr Spragg saw when spreading out the spreadsheets, is the town’s surpluses have been extremely consistent, showing variations of no more than $1 million going back to 1998.

“Personally, I like to see that consistency,” he said, adding, that the town can better rely on revenue projections in the budgeting process with consistent surplus trends.

“We know what to expect based on last year’s projection,” Mr Spragg said.

The audit transmittal also pointed out Newtown’s presence in Fairfield County, its proximity to an excellent regional transportation network, its fine schools, public buildings, and wide range of recreational and housing opportunities all contributed to its continued growth and excellent financial condition.

New housing construction decreased from the previous year, however, with 39 new housing permits issued compared to 53 issued in 2006. Commercial permits remained the same for the both number of projects and in value of the permits issued.

In both fiscal years, ten commercial permits were issued at a value of $5,554,325 for fiscal year 2007 compared to a value of $3,799,999 for fiscal year 2006. The local labor force remained near full employment, and the annual average unemployment rate was 2.9 percent in 2007.

The transmittal noted that property taxes, which account for approximately 86 percent of the general fund revenue, have provided a reliable revenue source, with collections consistently at or above 98 percent. Current tax collections were 99.1 percent of the adjusted tax levy.

The town’s per capita income of $37,786 and median family income of $99,192 are above the state’s high averages, while housing prices are competitive relative to Fairfield County norms, the report indicated.

For the year ended June 30, 2007, the town’s long-term debt increased by a net of $2,754,427, due to the issuance of $9,460,000 in bonds net of payments made for the outstanding issues. At the end of the current fiscal year, the town had total bonded and note debt outstanding of $75,122,562. Of this amount $75,122,562, less $6,209,179 to be funded from state grants, comprises debt backed by the full faith and credit of the town and $9,623,984 is wastewater operations debt for which the town is liable in the event of default by the property owners subject to the sewer assessment.