IN INFORMA RMATIO TIONAL NAL MEET ETING ING ON SUPPLEME PLEMENTAL AL TAX AX JANUAR ARY Y 10, 2018 8 Janua uary y 10, 2018 1
TOWN N OF OFFICIA FICIALS LS BOARD RD OF OF SELECTMEN BOARD RD OF OF FINAN ANCE CE Clyde G. “Bud” Knorr, Jr ., First st James Persano, no, Selectman man Chairman irman Timoth othy y Ge Geib, Vice Chairman irman Ka Kathl hleen n A. Devlin, n, Selectman man Thomas as Mazzoli Timoth othy y Potr otrik ikus, us, Selectma man Michae ael l Pa Park rker William iam Salka FINAN ANCE CE DEPARTM RTMENT Joseph Tolisano ano Michae ael l Marinaccio, naccio, Chief f Financial nancial Of Offic icer er Bri rian an Wissing singer, , Assis istan tant t Finance nance Director 2
INFORMA ORMATIONAL TIONAL ME MEETING NG ON ON SU SUPPLE LEMENT MENTAL AL TAX Meet eting ing Over vervi view w Moderat derator Bud Knorr orr Informa ormational tional Pr Present esentation ation Micha hael el Marinacc inaccio io Publi blic c Commen mments ts Audie ience nce Boar ard Commen omments ts Various ious Member mbers Wrap ap-up up Bud Kn Knorr orr 3
ST STATE E AID SH D SHOR ORTF TFALL ALL State Aid d FY2018 10/25/1 /17 by Redu ductio ion Type e of Gran ant Town wn Ad Adop opted ed State Adop Adopted ed in Budget Budget State Aid id Mohegan n Pequ quot ot $ 1,594,26 $ ,267 $ 1,594,2 ,267 $ - PILOT $ 858,63 ,635 $ 715,90 ,904 $ 142,73 ,731 Muni. ni. Rev. Shari ring ng $ 203,969 3,969 $ - $ 203,969 3,969 Muni ni. Assi sista tance nce $ - $ 614,7 ,776 $ (614,7 ,776) Speci cial Educ ucation ation $ 1,895,05 $ ,056 $ - $ 1,895,05 ,056 ECS & Transp. nsp. $ 4,511,83 $ ,832 $ 5,643,55 ,551 $( $(1,131,7 ,719) Revenue nue Shortf tfall ll $ $ 9,06 063,75 3,759 9 $ 8,56 568,49 8,498 $ 495,26 ,261 1 Mill l Rate e Imp mpac act 0.59 • State aid in Town’s adopted budget based on Governor’s proposed budget • Legisl slat ature ure reached ed budg dget et compr mpromi omise se without hout Governor ernor in Octob ober 2017 No munici icipal al aid estim imat ates es from legisla slatu ture e availa ailable e prior to State e final budg dget et • • From July to Octob ober er Governor ernor runs State e on Executi cutive e Order • State e adopted ed budge get t results ts in a revenue nue shortf tfal all to Town of $495,26 261 • Town initiat iates es budge get t cuts ts tota otalin ing g $498,00 000 0 or a 0.59 mill equiv quival alen ent 4
ST STATE E AID SH D SHOR ORTF TFALL ALL State Aid d FY2018 10/25/1 /17 11/1 /17/20 /2017 Ad Additio ditional al by Redu ductio ion Redu ductio ion Type e of Grant ant Town wn Ad Adopt opted ed State Ado Adopted ed in OPM in Aid d Budget Budge get State Aid id Holdb ldbac acks Mohegan n Pequ quot ot $ 1,594,26 $ ,267 $ 1,594,2 ,267 $ - $ $ 1,594,2 ,267 $ - PILOT $ 858,635 8,635 $ 715,90 5,904 4 $ 142,73 2,731 1 $ 655,209 ,209 $ 60,69 695 5 Muni ni. Rev. Sharin ring $ 203,96 ,969 $ - $ 203,96 ,969 $ - $ - Muni ni. Assi sista tance nce $ - $ 614,7 ,776 $ (614,7 ,776) $ 566,2 ,276 $ 48,500 Speci cial Educ ucation ation $ $ 1,895,05 ,056 $ - $ 1,895,05 ,056 $ - $ - ECS & Transp. nsp. $ $ 4,511,832 ,832 $ 5,643 43,55 ,551 $( $(1, 1,131,7 ,719) $ 5,152,49 ,492 $ 491,059 ,059 Revenue nue Shortf tfall $ 9,063,75 $ ,759 $ 8,568,49 ,498 $ 495,26 ,261 $ 7,968,2 ,244 $ 600,25 ,254 Mill l Rate e Imp mpac act 0.59 0.72 • On 11/17/1 7/17 Govern ernor or stuns ns legisl islat ators s and Town offici icial als s with h a round of new municipa cipal aid budge get t cuts s These se cuts ts comes es on top of previous ous reducti ctions ons experie ience nced d in the State e budge get t • adopted ed less s than a month th earlier er • Funds ds being ng withheld held are known as “holdbacks’’ that will not be sent out • Holdbacks acks result t in an additi tion onal al revenu nue e shortf tfall all to Town of $600,254 54 or a 0.72 mill equiv quivalent alent 12% reducti ction on in State e aid to Town results ts in a $1. 1.1 million ion revenue nue shortf tfal all, to • date or 1. r 1.31 mill equiv ivalen ent 5
ST STATE E BUD UDGET T OU OUTL TLOO OOK K Stat ate e Comptr ptroller oller has certi tified ied that t the Stat ate e budget t alrea ready dy in a • $208 million llion deficit it Even n with h mun unic icipal ipal aid cut uts s and nd holdbacks backs alre ready ady made • Stat ate e deficit it estim imat ate conti tinues nues to creep p upward • Stat ate e revenue ue det eteri eriorat oration ion a g growing wing concern rn -- -- Connecticut’s • mone ney y is moving ing out ut Governor sends letter urging lawmakers to shrink the “gap” • soone ner r rath ther er than n later er – proposes poses $300 million llion in options ions ($189 189 million llion in n revenue nue and nd $113 million llion in n cut uts) s) for them m to consider ider. . To date, e, no action ion taken en Raises ses concern erns s for further ther funding ing cuts s to the Town -- -- both in • the second nd half of fiscal al 2018 18 and nd in n the ne next xt fisca cal l year r 2019 6 6
IMPACT ON SOMERS • Town wn is facing cing and d will l conti ntinu nue to face ce unprece nprecede dent nted d budge dget challe allenges, nges, this s year ear and d in the e futur ture • Stat ate e grant ant estimat timates s have become come unre reliab liable le and d are e often en chang anged d without thout notice tice • Cash sh flow w disr srupt upted • Further ther cuts ts in Stat ate e aid d antici ticipat pated • Stat ate e putt ttin ing g the he Town wn into o a box x (cuts uts up to 12% in aid; d; surpris prise e cuts; ts; cuts ts late e in the e fiscal cal year ar) ) limiti miting ng options tions • Town wn needs eeds to balan lance ce spendi ending ng cuts, s, use e of fun und reser reserves, es, and d additi ditional nal tax x revenu nue 7
IMPACT ON EXPENSE BUDGET • Poten enti tial l to neg egativ ivel ely y affec ect t and d di disrupt pt pu public ic safet ety, , Town n ope perat ation ions s an and d ed educ ucat ation ion fun undi ding ng • State e aid id fundi ding g shortf tfall ll forci cing g pr progr gram am cuts ts • Edu ducation ation budg dget et red educed ed $20 200,000 0,000 • Town n bud udget get $295,000 295,000 cut uts s in in var ario ious us de depa partmen ments ts in includi ding g lim imit itin ing g over erti time me, , red educti ctions ons to pe pensio ion fund d contri tribution butions, , capi pital expe pense fu e fundi ding, g, and r d road d mai aint nten enan ance ce • No layoffs fs at this is tim ime 8
IMPACT ON FUND BALANCE Fund balance is the cash that the Town has accumulated from prior year budgets when revenues exceeded actual expenditures. Alre ready dy used $1, 1,36 362,43 2,431 1 in fund d re reserves s in FY2017 7 • ($559,25 9,257) 7) and FY2018 8 ($803, 3,174) ) budget ets Action on taken n to minimiz nimize mill rate increase ases • Current ntly y unrest stric ricted d fund d reserves s tota otal $4,483, 83,915, 5, or 14% of • budget eted ed FY 2018 18 expenses ses ($32 millio ion) n) Normally ly 15% is requir ired ed to be m maint ntai ained ned in reserve • Recent Moody’s Rating Alert placed Town on “Negative Outlook” • list because se of level of fund d reserves Caution tion against inst furthe her r use of fund d re reserves • Using ng reserves s to close the gap wou would d furthe her deplet ete fund • Doing so could result in the lowering of the Town’s bond rating of • Aa2 Consens nsus: us: using ng unre restr tric icted ed fund d re reserves not ot a viab able optio ion • 9
FUTU TURE RE IM IMPACT CT WHAT DOES THE FU FUTURE URE HOLD? Continued tinued parti tisan n batt ttles les and bicker ering ing in Har artf tfor ord • Lawmak maker ers s mistru strust st of the Govern ernor or and his administrati inistration • Unf Unfor ortun tunat ate e that what’s going on in Stat ate e is going g to have a • direct ect negati ative e impact act on the citize izens ns of this is Town No easy fixes es to Stat ate e budget t woes • Furth ther er reduction ction in Stat ate e aid; ; surpris rprise e cuts; s; cuts s late in the • fiscal al year Municipali ipalitie ties s should ulder erin ing g a majority jority of the tax x burden en • Need to sidest estep ep parti tisan san polit itics, ics, look k for stability ability and rely ly less ss • on Stat ate e aid As Stat ate e aid conti tinue ues s to erode, de, corres espondin onding g increases reases in local l • ? • tax x mill ll rates es are likely ely 10
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