Town Manager's Budget Message

March 20, 2009

Mayor Andrew Adil
Members of the Wethersfield Town Council
Citizens and Taxpayers of Wethersfield

As all of you are aware, local and state governments throughout the country are battling our federal monetary crisis, as the economy worsens every day, and citizens lose their jobs, trying to pay bills with a smaller paycheck. Wethersfield is no different. The budget you have before you is one that tries to assist our residents in meeting their budgets, yet keeps core services alive for another year, so that our taxpayers receive the most value for their tax dollars. What makes us unique, though, is that not only are we working with a negative economy, a large amount of lost revenues and higher expenditures, but with a revaluation year, which will mean different tax bills for different types of homes and businesses.

Late last year, I requested the Department Heads to come in with zero increase budgets over this year, and they did an excellent job in doing just that, but for some, this was impossible, without eliminating core services. The staff and I also have to try and make up for lost revenues, which total $1,471,784, due to a loss in investment income, permits, State aid, and other revenues

My goal in this budget proposal is to keep in mind the core services that you, the Town Council, and I have worked on during the last year: identifying exactly what services government should deliver to their citizens, prioritizing those services, and giving them sufficient funding to fulfill their mission. We have worked hard on putting together this list, and you will see some of the results in this budget document. What we are looking for is giving the public key services that affect the greatest number of citizens and assist the Town in a positive manner.

The .62% increase in spending represents a -2.46% decrease in Town expenditures and a 2.85% increase in the Board of Education budget. This would mean a decrease in the mill rate of 3.6 mills, from 34.71 to 31.11. Taking into account the reductions in revenues and the spending increase, the homeowner who had an average assessed value (70%) for FY 08-09 of $152,860 and now has an average assessed value of $180,140 after revaluation, would therefore see an increase of $298.65 in their yearly tax bill.

Revaluation

Before discussing in detail the revenues and expenditures of the 2009-2010 budget, I would like to take some time to discuss the outcome of the 2008 Revaluation. Normally in my yearly budget message, I can tell you what percentage taxes will go up from the year before, but in a revaluation year, because the value of buildings shifts depending on how the real estate market has been during the last 5 years, there is no one percentage that will affect each home and building the same. The market to some degree dictates whether a property owner's taxes will go up or down. In Wethersfield, residential properties went up 17%; commercial 22% and industrial rose by 25%. This is very similar to other communities who went through the revaluation process this year. For example:

Under my proposed budget, a starter home would have an 18.4% increase in taxes, meaning an estimated $772 increase in taxes; a mid range home would have a .17% increase in taxes, which would be an approximate increase of $12.50; and the larger sized homes, which have lost more value than other homes, would have a decrease of 16.38% in taxes, an approximate decrease of $4,000. The market/sales prices for condominiums were fairly strong and the average value of condos in Town went up 30%. Thus when you apply this budget to an average condo, the property owner would see a 20.79% increase in taxes, for an increase of approximately $405.00. A reminder that these percentages and dollar amounts are estimates for an average type of home in the categories listed above - starter, mid range, larger sized and condominium. Taxpayers should not use these numbers and percentages to calculate their taxes for the new year.

So this proposed budget will have a different effect on each taxpayer, depending on the results of revaluation.

Just because the mill rate goes down, does not mean that every building owner's taxes will go down.

Revenues and Fund Balance

The Town's revenues, which are used to offset the amount of property tax, have gone down $1,471,784. The largest amounts of decrease are in the area of investment income (-12.6%), and intergovernmental revenues (-5.2%), which includes State revenues based on the Governor's proposed budget. Revenue for State Education funding is being estimated at approximately (-5%) less than the Governor's budget.

I have also heard that State aid to municipalities may drop even further, due to the severe budget situation at the State capital. Because of that, I have taken only $700,000 from the undesignated fund balance to offset the tax rate, which would leave you, the Council, some room to offset any additional decrease in State aid, if this occurs after you adopt the 2009-2010 budget. We have always had a goal of keeping the fund balance at 8% or above. With $700,000 being used to offset the property tax, at this point, we could be at 7.38%, which is below our targeted goal.

As I stated in last year's budget message, it is imperative that we work with our State legislators to allow for local option taxes, such as a hotel/motel tax and/or a sales tax, so that municipalities can derive revenues from sources other than the property tax, which has been such a huge burden on our taxpayers.

Under the direction of Rae Ann Palmer, Assistant to the Town Manager, we will develop a list of proposed increases to user fees, which could allow for a minimal amount of additional revenue. These are in the area of Building and Planning fees, as well as Parks and Recreation and Social Services.

Expenditures

We have had some savings in utilities from previous years and do not have as large an increase in benefit costs as in previous years, but these areas will still have an effect on next year's budget. Throughout this budget, we have projected the following increases:

• Electricity - 3 % increase
• Health Insurance - 7.5% increase
• Refuse Disposal - 2% increase
• Liability Insurances - 9.6% increase
• Worker's Compensation - 5% increase

We also were able to factor in some decreases in several areas notably:

• Diesel Fuel - 46.5% decrease
• Gasoline Fuel - 39.6% decrease
• MDC Charges - 4.1% decrease
• Pension Costs (Town Only) - 3.4% decrease
• Dial A Ride Services - 0% no increase budget
• Heating Oil - 48.1% decrease

Below you will find some of the major expenditure cuts that I took on the Town side to minimize taxes and which led to our -2.46% decrease in the budget, which equates to $855,020.

1. Reduced contributions to all outside agencies.
2. Reduced the funding request from the 375th Anniversary Committee from $25,000 to $10,000.
3. Eliminated the salary of the Emergency Management Director. The duties of this position will be shifted to other Public Safety agencies.
4. Cut technology equipment requests in half, although this is a much needed tool for our staff. We will have to replace equipment at a slower pace.
5. Reduced Economic Development and Tourism requests by 66.2%.
6. Reduced many of the part time positions by 5 hours each, unless related to Public Safety or significant areas of need.
7. Eliminated two full time positions in Social and Youth Services, as well as the part time vacancy. This will mean elimination of the ROPES and Adventure programs for our youth.
8. Reduced the Physical Services staff by one vacancy.
9. Reduced overtime in the Police Department, which will potentially impact training funds.
10. Reduced the equipment account, as well as the Awards Dinner line item for the Fire Department. I have also not filled the requests for new vehicles for this Department, or their request for a new software program that would allow for easier training of our volunteers for safety and OSHA courses. There is, however, a new NFPA requirement to have all clothing inspected on a yearly basis and this is now in the Fire Department's budget.
11. Reduced the number of vehicles that we currently have in the fleet. This will reduce maintenance and fuel costs and will reduce the workload on the garage staff, which has been down one person since we eliminated the supervisor position in the 2008-2009 budget. The staff will need to share more of the vehicles, and we will do a complete analysis before replacing future vehicles. We need to reduce the size of our fleet.
12. Reduced the streetlight account by $75,000. We will need to have the Infrastructure Committee make recommendations as to which lights should be shut down. We will also be shutting off all parking lot lights at midnight to save on energy.
13. Eliminated temporary employees' salaries for the leaf program, which will slow down the program and the collection of the leaves in the fall.
14. Eliminated the Assistant Library Director's position and reduced the materials budget below past years' budgets.
15. The Physical Services' Division had requested two dump trucks and a pay loader. I have kept in the two dump trucks, which would mean our truck fleet will all be fairly new, bought within the last 6 years, but I did eliminate the pay loader.
16. Although I kept in the yearly road money and safety/health projects for the Town and Schools, you will find the capital budget has been reduced significantly from past years.
17. The Nature Center is no longer in the General Fund Budget, except for $5,000 towards utilities. I have allowed Kathy Bagley, Director of Parks and Recreation, and Christopher Shepard, Director of the Nature Center, the use of their escrow fund and a contribution from the Friends of the Nature Center, to continue for another year, to see if they can raise the revenues through programming to continue this asset to our community.

Recommendations and Solutions

Needless to say, this is going to be a very difficult budget process. It is important that we keep in constant touch with our State legislators to make sure no bills are passed which will have a negative effect on our budget or create new mandates; try to have new local option revenue sources passed, to decrease the reliance on the property taxes; and to work with them in suggesting creative ways to resolve the State and municipalities' fiscal issues.

It will also be imperative that the staff and I keep up to date with the Federal Stimulus programs, to see if there is any possibility of receiving one time funding for items that are presently in our budget or are being requested for future years. Rae Ann Palmer and I are attending as many informational sessions as possible to make sure Wethersfield will be on top of the list when funds are being distributed.

During our upcoming budget workshops, I would recommend the following:

1. Unless covered by 100% user fees, do not add any additional programs that will add to future budgets or make the Town obligated to provide this service in following years.
2. Continue to look at our "Cost of Doing Business" for programs, and make sure user fees cover our expenses.
3. Do not use one time revenues to fund operating expenses.
4. If we must reduce services and/or increase fees, make sure the truly needy are taken care of, through sliding fees or other means.
5. Consider a shortened work week, so we can save utility costs.
6. Consider regional efforts with our neighboring communities, especially when the Governor is proposing offering financial incentives to regionalize services.
7. Follow your financial policies. The Town Council has passed some excellent policies in this area. Make sure you follow them at a time when it would be easier to ignore their recommendations. They are there for a reason.
8. Keep in mind core services and what programs have the greatest effect on the greatest number of taxpayers, especially in the area of safety and health issues. Try to rank them in order so while reviewing the budget you know what your priorities are for the coming years.
9. When eliminating dollars from line items, consider what effect that will have on programs and services, so that next year, you are well aware of service levels that may have been reduced due to budget constraints and can speak to our residents on why cuts had to be made.
10. Once finalized, we will be glad to draft impact statements so that the public is aware of any service reductions that will take place during the next fiscal year. Communication with the public will be critical.

I have met with the Town's union leadership and all Department Heads to give them an overview of my budget proposal and to ask for concessions and creative ideas for reducing costs. They will be meeting with their union membership in late March or early April to discuss this. I have made myself available to go over our budget constraints with the unions. If there is a salary freeze, we will save approximately $295,000 per year and if there are furlough days, it would save about $27,000 per day.

The staff and I are ready to meet the challenge of next year's budget with you. We are here to assist. As you proceed with the budget process, please keep in mind that a mill is worth $2,311,009, so therefore, for every $231,101 you add or delete, the mill rate will go up or down 1/10 of a mill.

I thank the Department Heads for their hard work and creativity during this budget process and also thank Rae Ann Palmer and Lisa Hancock, Finance Director, for their efforts in putting together the budget proposal. Thanks also to Gale DiLuzio, Executive Secretary, and Paul Dudley, Data Services Manager, for their hard work in preparing the final budget book.

I strongly encourage all taxpayers to attend the Public Hearing on April 20, 2009 at 7:00 p.m. at Silas Deane Middle School Auditorium so we can hear how the public wishes to have their tax dollars spent for next year. I also encourage them to call me at 721-2801 or contact me with letters or e-mails at bonnie.therrien@wethersfieldct.com. This year, you will be able to view the budget on the Town's website and be able to submit your comments and suggestions online. I will make sure you receive all suggestions and remarks. The Town Council must adopt next year's budget no later than May 15, 2009.

Sincerely,

Bonnie L. Therrien
Town Manager