Town Posts

$2.7 Million Surplus

By Steve Bigham

Newtown posted a $2.7 million surplus this past fiscal year, up $200,000 over the year before, according to a recent audit report. The fiscal year ended June 30.

A year ago, the town ended the year with a $2.5 million surplus. Two years ago, the town audit showed a $3.3 million surplus.

Budget surpluses are normal and come as good news, especially to the Legislative Council, which each year struggles to reconcile the needs of the town with the needs of the taxpayer. Surplus funds are used to offset taxes the following year.

Much of this year’s surplus stems from higher-than-expected revenue and less spending.

The Legislative Council had anticipated drawing down a $3.35 million surplus that has accumulated for the town over the past three years. It actually used $578,000. That left the town with an undesignated fund balance of $2.7 million, which will be used for fiscal year 2001-2002.

A town charter provision mandates that all undesignated surplus be used in its entirety in the following year’s budget.

Not all the $2.7 million will go toward offsetting taxes. Using too much surplus in the following year’s budget can backfire, explained Newtown Finance Director Benjamin Spragg. If the town puts the entire 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.

The town’s latest annual fiscal report, compiled by Mr Spragg and staff, showed that general fund revenues for the 1998-99 fiscal year totaled $60,052,007, an increase of 6.4 percent from the prior year. Property tax revenues increased $3.47 million due to increased tax collections, sale of real estate tax liens, and an increase in the tax rate. Current tax collections were 98.2 percent of the adjusted tax levy. Intergovernmental revenue decreased $85,869 primarily due to a decrease in state payments for school building grants.

Investment income decreased $21,385, reflecting the decrease in capital financing funds available for investing. Other revenue increased $136,651 as a result of receiving fewer unanticipated revenues. Permits and licenses increased $6,392 because of the growth in residential, commercial, and industrial construction.

General Fund expenditures (the annual town budget) and other financing uses for governmental purposes totaled $60,629,918, an increase of $4.3 million or 7.7 percent over the previous year.

Public safety increased $30,346, primarily due to an increase in capital expenditures in the police and fire departments.

Health and welfare expenditures increased $53,049 due to increased levels for the Children’s Adventure Center and library.

Planning & Zoning expenditures were up $22,431 due to the restructuring of personnel in the land use department.

Public Works increased $974,691 as a result of increased road construction costs. Parks & Recreation increased $166,113 primarily due to an increase in capital expenditures.

Education expenditures increased by nearly $2.9 million or 9 percent.

Debt service expenditures decreased $374,210 because of the retirement of town general obligation bonds in the prior year.

Other financing uses increased $98,070 as a result of an increase in the amount that was transferred to the reserve for capital and non-recurring expenditure fund.

The accounting firm of Kostin, Ruffkess and Company, LLC, of West Hartford audited the town.