BOARD OF FINANCE
DECEMBER 30, 2003
SPECIAL MEETING
1. CALL TO ORDER
The Special Meeting of the Board of Finance was called to order at 6:02 P.M. in the Main Meeting Room at the Simsbury Town Hall. The following members were present: Chairman Paul Henault, Peter Askham, Candace Fitzpatrick, Nicholas Mason, Kevin North and Michael Wade. Also present were Board of Education Business Manager David Holden, Finance Director Kevin Kane and other interested parties.
2. APPROVE MINUTES
November 18, 2003 Regular Meeting
Mr. Henault stated that there were some substantial lapses or gaps in some of the statements in the November 18, 2003 minutes. He recommended e-mailing the minutes to each member who would then review them to make sure they reflect what was actually said. Mr. Mason offered to correct any errors and share the result with the other BOF members. If all are in agreement, the revised minutes can be scheduled for approval at the next meeting.
3. DISCUSSION ON 2004/05 BUDGET CAP AND POSSIBLE ACTION
Mr. Henault acknowledged for the record that the BOF received a number of letters from residents, some of who were students and teachers, regarding the upcoming budget discussion. He thanked them for taking the time to write and express their opinions. He stated that their opinions are taken into consideration during the BOF's deliberations.
Mr. North noted that the sum of three factors - the cap, any contribution from surplus and capital expenditure requests that might be forthcoming - will ultimately drive the tax increase. He stated that there were $4.7 million worth of projects that were authorized last year which heretofore have not been funded. Assuming they get funded this year and bonded, that in itself will contribute to a 3/10 of 1% tax increase. That's with no net new capital expenditures. He noted that this was a worst case scenario but that it can't be ignored.
Mr. Mason stated he did not want to approve a number so low that it was unreasonable, but he added that increases up in the 6% and 7% range are unsustainable, and he called for balance.
Mr. Wade stated that he was still inclined to split the cap between the BOS and BOE and added that he would favor the BOE somewhat.
Discussion ensued on the possible cap percentages, amounts that might be used from Reserves and their effects on tax increases.
Mr. Askham brought up Meadowood, a non-budgeted item for the last few years, which the BOS has had to take through transfers. He stated that this was causing a hardship on their budget. He noted that there is still a revenue drop which puts pressure on the expenditure side. He expressed concern that this may not be the last drop.
Ms. Fitzpatrick stated that she would not like to see a tax increase higher than 4.25%, and although she does not want to use Reserves, she is willing to to help out the budget process and to keep the tax increase lower.
Mr. Mason stated that he would like to see a tax increase in the low 4s.
Mr. Kane presented his overhead display of "Projected Mill Rate" as he had at the December 16, 2003 regular meeting. Again, he worked with the Board to produce different scenarios by plugging in varying budget cap percentages for the BOE and BOS and varying amounts of surplus assumptions resulting in changes to the % increase in property taxes and the amount of appropriations. Discussion followed each new scenario.
Mr. North stated that he continues to be troubled about the concept of using Reserves. He asked, "Once you start this, how do you stop it?" Mr. Henault stated that for the previous revaluation, the BOF used $1 million of Reserves to plug the hole. Then they did not use surplus for other things, and the amount gradually leveled off. Mr. North stated that if $500,000 of Reserves is used to offset Operating and lower the tax increase, then there should be no new Capital expenditures for a year or two. He wondered whether the Town would be able to accept that.
Mr. North stated that the teachers' collective bargaining agreement that was entered into three years ago is limiting the Town's resources now.
In response to Mr. Henault's question, Mr. Holden stated that the BOE is not having any difficulty hiring entry-level teachers. But where they're having a challenge is losing teachers in the mid-range where Simsbury is $5,000 - $7,000 lower than some of the neighboring communities. He added that they are having to hire top level teachers in order to fill the science, math and specialty positions.
In response to Ms. Fitzpatrick's question, Mr. Kane answered that Reserves were at $5.8 million which is approximately 9% of last year's budget.
Mr. Askham stated that they have to be careful about incurring debt unless there is a pressing need until there is some debt relief in two years.
There were more scenarios produced and discussed.
Mr. Mason stated that they have to break the cycle from the past few years of high increases.
Ms. Fitzpatrick moved to approve an Operating Budget cap of 4.5% for the Board of Selectmen and Board of Education. The motion was seconded by Mr. Mason.
Mr. Mason stated that he prefers to keep the tax increase down with Reserves rather than increase the cap to 4.5% from last year's 4.25%.
Mr. North stated that he is inclined to repeat the cap they had last year although he was originally inclined to lower it. He added that, after hearing all the compelling arguments, he is predisposed to accede to a cap that is not greater than last year's.
Ms. Fitzpatrick stated, for the record, that it isn't easy sitting on the BOF after receiving letters from some constituents accusing the BOF of not caring about the school system, the children, the property values. She stated that she would support the use of Reserves only because she thinks that the public would bear the 4.29% tax increase. She added that she is not happy, though, because she feels the tax increase is too high and the schools are not getting enough money but it is necessary.
Mr. Wade stated that he is in support of the 4.5% increase. He warned that if people start to think that education in Simsbury is not at the level it was, it could have a spiral effect and drive away people.
Mr. Askham sited many areas which will affect the budget. He stated that 4.25% appears to be a reasonable number, but this is a very tough decision.
Mr. Henault stated that there are some things that justify additional money this year: Meadowood, pension, health insurance, additional square footage at the high school, Special Ed needs. He added that he would be extremely happy at 4.25%, but he will support 4.5%.
Mr. Askham stressed that everyone has to understand that whatever they decide upon, it is a cap and not a guideline.
There were more scenarios produced and discussed.
Mr. North stated that flexibility might be in order if someone would say there will be no Capital next year. He added that there could be another 1/2% to 1% tax increase imbedded in the Capital requests.
A vote was taken and carried unanimously.
Mr. Henault stated that he will talk to the chairmen of the BOS and BOE in respect to a rather conservative approach to Capital this year.
4. ADJOURNMENT
Ms. Fitzpatrick moved to adjourn the meeting at 7:18 P.M. The motion was seconded by Mr. Askham and carried unanimously.
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Paul Henault, Chairman Roxanne Farrell, Clerk
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