Following the Board of Selectmen’s unanimous passage of the latest municipal Capital Improvement Plan (CIP) a week earlier (the school district develops its own CIP), the proposed package of projects and estimated costs were presented to the Board of Finance, October 9.

Much of the discussion between First Selectman Dan Rosenthal and finance board members present keyed in on proposed funding in the plan for the future development of a permanent memorial for those killed during the Sandy Hook tragedy in 2012.

Finance officials were also keen on discussion about the expansion of the CIP from a five- to a ten-year outlook and about the longer term plan beginning to shift away from bonding in favor of heavily fortifying the town’s capital non-recurring account.

Since he took office, Mr Rosenthal, along with Finance Director Robert Tait, has been developing ways to reduce Newtown’s dependence on bonding — reserving that option for projects like buildings and other major municipal investments that are planned to last far beyond the average 20-year bond payback cycle.

Mr Rosenthal explained that while a ten-year CIP is currently drafted as a tool to illustrate this proposed shift in financial practices, it has yet to be codified by elected officials. The finance board is scheduled to review the local CIP Policy in the coming weeks, however, and Chairman James Gaston said that expanding the plan’s scope from five to ten years could be part of that discussion.

Opening his presentation, the first selectman verified that the next five years’ proposed capital borrowing totals approximately $35.4 million, well within the town’s current debt service policy.

Mr Rosenthal said his long-term plan is in reaction to the likelihood that interest rates are going to begin edging upward. As a result, he and Mr Tait have created a proposed CIP in which debt service costs begin dropping off in years three through ten and arrive at a fractional amount of today’s interest costs by year ten.

The proposal also accounts for doing no capital borrowing in year six and taking the amount that would have been dedicated to debt service and shifting it through the municipal operating budget into the capital non-recurring account to begin building a system where big ticket purchases and projects with shorter self lives are saved for — creating more of a “pay as you go” practice.

We can’t rely on borrowing,” Mr Rosenthal said, adding that he understands the shift would represent a fundamental change in the way Newtown underwrites most of its capital projects, including many the first selectman believes would not outlast the typical 20-year time frame of a bond repayment.

“It requires discipline,” Mr Rosenthal said, “but I think we can do it.”

‘Set The Bar High’

Mirroring what he told his fellow selectmen October 1, Mr Rosenthal told finance officials that when it came to placing new projects and sustaining already proposed projects on the latest CIP, he “set the bar high.”

At the same time, he acknowledged that in the short run, Newtown must continue bonding to catch up on road and transportation infrastructure programs that have gone underfunded in recent years.

He made a similar case for fortifying and upgrading public safety projects, from the proposed new police headquarters to a pricey, updated emergency communications system and several new pieces of fire apparatus.

“The priority for borrowing next year is still on road infrastructure,” the first selectman said, pointing to how strongly voters supported that program in last April’s budget referendum.

Looking at the long game, Mr Rosenthal pledged to bond less for roads in favor of increasing annual operating budgets to meet what he and Town Public Works officials believe should be a fixed $3 million annual expenditure for road repairs, maintenance, and bridge replacements.

In regard to fire apparatus, Mr Rosenthal said fire officials are able to develop some savings by refurbishing apparatus in good condition as well as considering the acquisition of used vehicles when and if appropriate.

He said keeping the town’s stock of front line fire vehicles up to date should take priority over elective projects that were requested by various departments.

Hearing that in certain areas of town, fire scene commanders need to relay on cell phones to reach Newtown dispatchers (versus radios) spurred him to prioritize a proposed $6.8 million Motorola radio replacement program for years two and three in the CIP.

To possibly reduce that number, the first selectman is planning to issue a request for proposal to determine if a major cellular carrier would construct a required new communications tower on land the town has set aside for such a project near the Oxford and Monroe town lines.

Permanent Memorial Project

Turning to the new CIP line for the planned Newtown/Sandy Hook Permanent Memorial, Mr Rosenthal told the finance board that since selectmen ratified a final design, the process to estimate a true project cost begins.

He said a $250,000 placeholder has been escalated to $4 million split over two fiscal cycles beginning in 2019.

Acknowledging that the spending authorization is ultimately the decision of voters, Mr Rosenthal said that while the project could come at a measurably lower number, he “didn’t want to put a small number and then [see it] come in at a higher number, and we can’t pay for it.”

Finance Board member Steve Hinden brought up the subject of mitigating public costs by fundraising, saying he believes there would be a substantial local response and national response if a memorial fundraising campaign was initiated.

Mr Rosenthal suggested a wait and see approach as the project and its potential costs take shape, reminding the finance board that there is still $200,000 in a designated fund from donors going back to just after the tragedy occurred and another $250,000 appropriation in the CIP this year that could secure any design contract that is required.

The first selectman said he would certainly “not return a donation,” but suggested that officials should not “assign too much hope to fundraising,” saying in part that it “doesn’t do justice to the project.”

Capital Non-Recurring Option

Mr Hinden then asked about whether Mr Rosenthal had developed a formal principle that defines “pay as you go” versus bonding.

Mr Rosenthal replied that if capital spending serves generations, then it should be considered for bonding, saying projects like the proposed police headquarters and certain school projects are good examples.

“But for things where the lifespan is under 20 years, it makes sense to use capital non-recurring,” he said. “We are already doing that for fire apparatus. We can do creative things like saving for a fire truck and not paying for a bond with interest [over a time frame] that equals the life of the apparatus.”

Mr Rosenthal believes by eventually lowering municipal debt service to under 8.5 percent of the total operating budget, it will produce a positive offset in excess of “$1 million we free up so we can do the smart thing.

“Saving for things in capital nonrecurring is hard,” the first selectman admitted, adding that it requires a shift in financial practices as well as the public mindset. Mr Rosenthal also said such a plan is predicated on having “no surprises — unforeseen things that require us to shift money.”

“Our ability to borrow, even with a great bond rating, may not be reliable as rates go higher,” Mr Rosenthal said.

He said in the spirit of transparency and sound financial practice, the shift to budgeting for capital nonrecurring allocations does mean putting more of a responsibility “on the taxpayers of the present instead of taxpayers of the future.”

Finance Board Vice Chair Sandy Roussas supported the idea in theory, adding, “I’ve gone on record saying capital non-recur is the way to go on projects” or items with shorter life expectancy.

Mr Hinden said capital non-recurring investments and debt service in annual budgets, “could be a hard sell to taxpayers.” The first selectman replied, “if it’s pinned to the plan, you have to identify projects and make sure it can be managed.”

Closing the meeting, Mr Gaston encouraged his board members to take the needed time to review the latest CIP, and if specific questions develop, or there is a need to call in certain department head, to let him know.

Mr Gaston said he is inviting the school board and administrators back in for an October 25 meeting. Mr Rosenthal said selectmen plan on making final suggested changes to the CIP Policy on October 15, and they would be forwarded to the finance board directly for their input and consideration.