[PPT] - IN INFORMA RMATIO TIONAL NAL MEET ETING ING ON SUPPLEME PowerPoint Presentation

SLIDE 1

1

Janua uary y 10, 2018

IN INFORMA RMATIO TIONAL NAL MEET ETING ING ON SUPPLEME PLEMENTAL AL TAX AX

JANUAR ARY Y 10, 2018 8

SLIDE 2

TOWN N OF OFFICIA FICIALS LS

 BOARD

RD OF OF SELECTMEN

 Clyde G. “Bud” Knorr, Jr., First

st Selectman man

 Ka

Kathl hleen n A. Devlin, n, Selectman man

 Timoth

thy

y Potr

trik

ikus, us, Selectma man

 FINAN

ANCE CE DEPARTM RTMENT

 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

 BOARD

RD OF OF FINAN ANCE CE

 James Persano,

no,

 Chairman

irman

 Timoth

thy

y Ge Geib, Vice Chairman irman

 Thomas

as Mazzoli

 Michae

ael l Pa Park rker

 William

iam Salka

 Joseph Tolisano

ano

2

SLIDE 3

INFORMA ORMATIONAL TIONAL ME MEETING NG ON ON SU SUPPLE LEMENT MENTAL AL TAX

Moderat derator Bud Knorr

rr

Informa

rmational

tional Pr Present esentation ation Micha hael el Marinacc inaccio io Publi blic c Commen mments ts Audie ience nce Boar ard Commen

mments

ts Various ious Member mbers Wrap ap-up up Bud Kn Knorr

rr

Meet eting ing Over vervi view w

3

SLIDE 4

4

State Aid d by Type e of Gran ant FY2018 Town wn Ad Adop

pted

ed Budget 10/25/1 /17 State Adop Adopted ed Budget Redu ductio ion in State Aid id

Mohegan n Pequ quot

t

$ $ 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

ST STATE E AID SH D SHOR ORTF TFALL ALL

State aid in Town’s adopted budget based on Governor’s proposed budget
Legisl

slat ature ure reached ed budg dget et compr mpromi

mise

se without hout Governor ernor in Octob

ber 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
ber

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

talin

ing g $498,00 000 0 or a 0.59 mill equiv quival alen ent

SLIDE 5

5

State Aid d by Type e of Grant ant FY2018 Town wn Ad Adopt

pted

ed Budget 10/25/1 /17 State Ado Adopted ed Budge get Redu ductio ion in State Aid id 11/1 /17/20 /2017 OPM Holdb ldbac acks Ad Additio ditional al Redu ductio ion in Aid d

Mohegan n Pequ quot

t

$ $ 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

ST STATE E AID SH D SHOR ORTF TFALL ALL

On 11/17/1

7/17 Govern ernor

r 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

us reducti

ctions

ns 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

nal

al revenu nue e shortf tfall all to Town of $600,254 54 or a 0.72 mill equiv quivalent alent

12% reducti

ction

n 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

SLIDE 6

ST STATE E BUD UDGET T OU OUTL TLOO OOK K

Stat

ate e Comptr ptroller

ller 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

ration

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

SLIDE 7

IMPACT ON SOMERS

7

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

ften

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

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

SLIDE 8

IMPACT ON EXPENSE BUDGET

8

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

ns 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

SLIDE 9

IMPACT ON FUND BALANCE

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
n taken

n to minimiz nimize mill rate increase ases

Current

ntly y unrest stric ricted d fund d reserves s tota

tal $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

t a viab

able optio ion



9

Fund balance is the cash that the Town has accumulated from prior year budgets when revenues exceeded actual expenditures.

SLIDE 10

FUTU TURE RE IM IMPACT CT

WHAT DOES THE FU FUTURE URE HOLD?

10

?



Continued

tinued parti tisan n batt ttles les and bicker ering ing in Har artf tfor

rd
Lawmak

maker ers s mistru strust st of the Govern ernor

r and his administrati

inistration

Unf

Unfor

rtun

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

n Stat

ate e aid

As Stat

ate e aid conti tinue ues s to erode, de, corres espondin

nding

g increases reases in local l tax x mill ll rates es are likely ely

SLIDE 11

PROPERTY TAX – PEER COMPARISONS

Somer

mers s has a low tax x rate

Stat

ate e OPM database base shows s that at out of 169 cities ies and Towns s in the Stat ate, e, Somer ers ranks nks as follows: ws:

High

gh relianc iance e on Stat ate e aid as a percen ent t of total al revenu nue e – 21 21st

st

Low use of proper

perty ty tax x revenu nue e as a p perce cent nt of total tal revenue nue – 143rd

rd

Unu

Unusu suall ally low proper perty ty tax x revenu nue e per capita ta – 157th

th

Equalized

alized Mill l rate e – 143rd

rd

Stat

ate e views s Somer mers s as very y capable le of increasing reasing local l taxes es and relying ying less ss on grant nts s to fund its s operat rations ions

11

SLIDE 12

Source: e: St State e OPM Munic icip ipal l Fisc scal l Indicator

rs

s databa tabase se

21

12

SLIDE 13

Source: e: St State e OPM Munic icip ipal l Fisc scal l Indicator

rs

s databa tabase se

143

13

SLIDE 14

Source: e: St State e OPM Munic icip ipal l Fisc scal l Indicator

rs

s databa tabase se

157

14

SLIDE 15

Source: e: St State e OPM Munic icip ipal l Fisc scal l Indicator

rs

s databa tabase se

143

15

SLIDE 16

16

Somers’ equalized mill rate of 16.23 is the lowest of all Towns in the CRCOG
Average equalized mill in the 38 Town CRCOG is 23.10
Equalized mill rate used by the State as an indicator of a Town’s financial

health and ability to bear a greater local tax burden

PEER R COMP MPARIS ARISONS ONS CA CAPIT PITAL AL REGION ON COUNCI NCIL OF G F GOVERNM ERNMENT ENTS (CRCOG) G)

SLIDE 17

PEE EER COM OMPARISONS ARISONS – MI MILL L RATES ES

Town Mill Rate FY 2012 Mill Rate FY 2018 6 Year Growth Equalized Mill Rate $200,000 Assessed Value FY 2018

Tolland 29.73 34.48 4.75 23.40 $6,896 Stafford 28.96 34.49 5.53 23.14 $6,898 Ellington 27.50 31.70 4.20 21.48 $6,340

E. Windsor

24.38 32.77 7.32 20.94 $6,554 Suffield 24.17 28.20 4.03 19.11 $5,640 Enfield 23.88 31.43 7.55 20.69 $6,286 Union 23.05 30.84 7.79 22.53 $6,168 Somers 22.12 25.47 3.35 16.23 $5,094

17

Other her Town wns s have e exper erien ienced ced signi nificant cant mill rate e inc ncre rease ses

Somer ers continu tinues es to have significantl icantly y lower r pro roper erty ty taxes than an its neighbor

rs

SLIDE 18

SU SUPPLE LEMENT ENTAL AL TAX INCRE CREASE ASE

POTEN TENTIA TIAL IMPACT CT

Assesse essed Value Tax with Mill Rate 25.47

Curren ent

Tax with Mill Rate 26.22

.75 Increa ease se

Tax with Mill Rate 26.47

1.0 Increa ease se

$100,00 000

Increa ease se

$2,547 $2,622

$75 $75

$2,647

$100

$18 188,90 900* 0*

Increa rease

$4,811 $4,953

$142 42

$5,000

$18 189

$200,00 000

Increa ease se

$5,094 94 $5,244

$150

$5,294 94

$200

$250,00 000

Increa rease

$6,368 $6,555

$18 187

$6,618 18

$250 50

$300,00 000

Increa ease se

$7,641 $7,866

$225

$7,94 941

$300

$400,00 000

Increa ease se

$10,188 188 $10,488 88

$300

$10,588 88

$400

18

* Median assessed value

SLIDE 19

SU SUMM MMARY

Total

al reduction ction in Stat ate e resu sults lts in a $1. 1.1 million llion revenue ue shor

rtf

tfall all to the Town (1. 1.31 mill ll equivalent) alent)

BOS

S and nd BOE bu budge get t cut uts s totaling aling $498,000 (0.59 9 mills) lls) have been init itiat iated ed

Gap of $602,000 remains

ains (0.72 72 mills) lls) due to holdb dbac acks ks

Fur

urth ther er Stat ate e cut uts s and nd holdbacks backs are very y likely ely

Furth

ther er Town expense pense budge get t cuts s at this is point nt in the fisca cal l year r would ld have a n negati ative e impac act t on servic vices es including uding poten enti tial al layoffs fs

Usin

ing g unrest estrict ricted ed fund reser erves es not a viable le optio ion

Curren

rrent t Town budget t is $32.23 million; llion; tax rat ate is 25.47 mills; lls;

ne

ne mill ll is equa ual l to $839,490

1919

SLIDE 20

PROP OPOSED OSED ACTION ION

Board

d of Financ ance e needs s to det etermi ermine e and vote e on adjust usted d tax x levy

Recommend
mmend the Board

d of Finan ance e implement plement an addit itional ional tax x levy to make e up for the shor

rtf

tfall all in Stat ate e aid

The bu

budget t implem lemen enter er bi bill ll passe sed d along ng with h the Stat ate e bu budget permits mits Towns s receiv eiving ing less ss Stat ate e aid than anti ticipat ipated ed in their ir adopt pted ed budge gets ts to issue ue supplem lemen ental tal tax x bills ls

CGS

GS Section tion 7-567 7 permits mits the Board d of Financ nance e withou hout t furth ther er authority hority to issu sue e supplemental plemental tax x bills ls

Consid

sider er range ge of increase rease to be 0.75 -1. 1.00 0 mills lls

Ant

nticip icipat ate e the very real l possi sibi bility ity of fur urther ther Stat ate e cut uts s and nd holdbac backs ks

Supplemental

plemental tax x bills ls to be issued sued prior ior to Februar ruary 1, 2018 18

2020

SLIDE 21

PUB UBLIC IC COM OMMENT MENTS

GUIDE DELINE LINES

Only one per

e person spe peaks at a t tim ime

State

e your r name an e and d add ddres ess pr prio ior to pr pres esen entin ing g your r comments mments

Lim

imit it comme

mments

ts to 5 min inutes.

es. Once

e ever eryone

ne has

bee een hea eard d you u wil ill have e the e opp pportuni tunity ty to spe peak ag agai ain

Plea

ease e be e res espe pectf ctful ul - ever eryone

ne has the

e rig ight to be e hea eard

Thank you

u for r your r coope

pera

rati tion

n

21

SLIDE 22

WRAP UP UP

Bud Knorr rr First st Sele lectm ctman

22

SLIDE 23

FI FISC SCAL AL CHA HALLENGES LENGES

23

Main

intain in pu public ic safet ety, , min inim imiz ize e neg egativ ive e impa impacts, ts, conti tinue ue quali lity ty ed educati tion

n
Main

intain in ade dequa quate fund d balance to preserve Aa2 Bond d Rating

Contin

inue ue to hold d the lin ine on o

ur budg