BOARD OF FINANCE
MAY 16, 2006
REGULAR MEETING
1. CALL TO ORDER
The Regular meeting of the Board of Finance was called to order at 8:31 P.M. in the Henry James Junior High School cafeteria. The following members were present: Chairman Paul Henault, Peter Askham, Candace Fitzpatrick, Nicholas Mason, Anita Mielert and Kevin North. Also present were Board of Education Business Manager David Holden, Finance Director/Treasurer Kevin Kane, Deputy Selectman Joel Mandell and other interested parties.
2. APPROVE MINUTES
Ms. Fitzpatrick made a motion to approve the minutes of the April 4, 2006 Public Hearing and Mr. Askham seconded the motion. The motion to approve the minutes passed 5-0 (Ms. Fitzpatrick abstained).
Mr. Askham made a motion to approve the minutes of the April 4, 2006 Special Meeting and Mr. North seconded the motion. The motion to approve the minutes passed 5-0 (Ms. Fitzpatrick abstained).
3. AMEND THE 2005/06 SEWER USE BUDGET
Mr. Henault referred to the memorandum from Mr. Sawitzke dated May 5, 2006 (Addendum I) and the letter from Robert M. DeCrescenzio, Town Attorney (Addendum II). Mr. Askham made a motion to approve the increase the Sewer Use Fund Operating Budget from $1,392,201.00 to $1,442,201.00. Ms Fitzpatrick seconded the motion.
Mr. Askham asked Mr. Kane if the energy cost increases had been addressed in the 2006/07 budget. Mr. Kane stated that it had and that the increase was needed for two reasons, namely that energy costs had increased dramatically within the budget’s timeframe and also that portions of the new plant had come online earlier than expected. Mr. North stated that basically this action was required in order to cover a projected $50,000 deficit in the current year budget by drawing down from Sewer Use Fund reserves.
Mr. Mason stated that, although he had no problem drawing down from reserves, he did not like changing the original budget as the ability to track a negative variance from the original budget was lost. Mr. North stated that at the end of the year revenues have to match expenses. Ms. Mielert stated that year-end statements usually show the original budget, the revised budget and the variance. Ms. Fitzpatrick noted that there had been extensive discussion regarding this issue at previous meetings and at that time there were no exceptions noted by the Board.
Mr. Kane clarified with Mr. Mandell that the Board of Selectmen had approved the request to transfer the $50,000 from reserves and that, per the Town Attorney’s letter, a Special Town Meeting was not required. Ms. Fitzpatrick noted that Mr. Askham’s original motion did not include a transfer from reserves and Mr. Askham withdrew his original motion and Ms. Fitzpatrick withdrew her second.
Mr. Askham made a motion to transfer $50,000 out of the sewer use reserves per Section 908(c) as a supplemental appropriation to the sewer use fund budget. Ms. Fitzpatrick seconded the motion.
Ms. Mielert noted that the Town Attorney’s interpretation of the 1% Special Town Meeting threshold (i.e., that the term “annual budget” as stated in Charter Section 908 means the sum of all appropriations within the Town’s general operating budget) differs from interpretations used in the past. Mr. North stated that the Board has a legal opinion before it and, although Ms. Mielert’s interpretation is interesting, he is comfortable operating under the legal opinion. Ms. Fitzpatrick noted that the Town Attorney’s opinion is to amend the budget. Ms. Mielert stated that in the past the budget was first amended and then the reserves were transferred. Mr. North noted that, in the past, the Board has been asked to amend the budget and transfer funds between
line items, but not due to running in excess of budget and, therefore, there should be a two-step process involved, i.e., amending the budget and then transferring the funds. Ms. Mielert stated that this process has been used in the past in connection with purchases of open space and budget shortages associated with snow plowing and police overtime. Ms. Fitzpatrick confirmed with Ms. Mielert that a budget amendment was implicit in making a “supplemental appropriation” and the Board concurred.
The motion passed 5-1 (Mr. Mason voted “no”).
3. REFERENDUM RESULTS
Mr. Henault read off the referendum results:
Yes No
Board of Selectmen budget 2,289 754
Board of Education budget 2,240 768
Sewer Use increase 2,393 589
Library capital project 2,109 963
Tariffville School project 2,386 624
Mr. Henault noted the high approval rates and Mr. North stated that, as of 7:00 PM the turnout rate was 18% and by 8:00 PM it could have approached more than 19%, which is a very good turnout for a referendum.
4. MILL RATE CONSIDERATION
Mr. Henault noted two memoranda from Mr. Kane dated May 16, 2006 entitled “Preliminary Fiscal Year 2005/06 General Fund Financial Results” (Addendum III) and “”Projected Mill Rate” (Addendum IV). Mr. Kane reviewed fund balance projections, noting that at this time there is a projected surplus of $2 million that could vary by $200,000 in either direction. He also noted a letter received from Moody’s Investors Service regarding the Town’s last bond issue (Addendum V) in which Moody’s made a point that Simsbury approximated the State median average fund balance of 10.5% of revenues and that the national average is 24.8%.
Mr. Mason asked Mr. Kane what he thought a reasonable percentage was and Mr. Kane stated that he thought a range of 8-12% was appropriate. Mr. Askham noted that it would appear that the Town is in an above-average range and where the Board wants it to be. Mr. Henault asked about the $1 million transfer from reserves for the library project and asked if it had to be done this year and Mr. Kane stated that the language requires that it be done this year.
Mr. Henault noted the positive effects of the ECS grant increase due to the efforts of Mr. Heagney and Mr. Herlihy and Mr. Kane reviewed two other sources of increases in revenue since the original mill rate estimate was made and stated that, if the Board included these increased revenues in their mill rate calculation, the mill rate would then be 35.9 (vs. 36.3 as originally projected) or an increase of 1.99% (vs. 3.12% as originally projected).
Mr. North stated that, since this inequity relative to the ECS grant has been borne by the taxpayers for a number of years, he made a motion that the entire benefit be passed on to the taxpayers and that the Board approve a mill rate of 35.9, or a 1.99% increase. Ms. Fitzpatrick seconded the motion.
Ms. Mielert asked if there was any opportunity to appeal to the legislature to redress past errors in the form of a special monetary award to the Town. Mr. Henault noted that the Town of Bloomfield was in the same situation last year and that they got corrected but did not get any consideration for past years’ errors. Mr. Henault indicated that he would address this issue with Mr. Heagney and Mr. Herlihy.
Mr. Mason stated that he wanted to further drop the tax increase by using surplus. Mr. Henault stated that nine years ago the Board of Finance made a decision to gradually wean itself off the use of reserves. In doing so, this allowed the use of reserves for special projects. Mr. Henault stated that he would not be in favor of using the reserves because, as it stands, the Board now has a terrific outcome to tell the taxpayers, especially in relation to other towns in the State.
The motion passed 5-1 (Mr. Mason voted “no”.)
5. OTHER BUSINESS
No other business was introduced at the meeting.
6. AJOURNMENT
Mr. North made a motion to adjourn the meeting at 9:20 PM. Ms. Fitzpatrick seconded the motion and it passed unanimously.
.
_________________________________ ___________________________________
Paul Henault, Chairman Debra L. Sweeney, Clerk
| 
