Finance Director Jeff Smith said Monday that he estimates the 2013 municipal budget can be reduced to a level necessitating a five percent tax increase with a number of adjustments, including debt refinancing and cuts to the Finance Department and New London Police Department.
Smith presented the Finance Committee with an overview of adjustments to the expenditures and revenues to the $42,323,256 2013 fiscal year municipal budget. Voters rejected the budget, along with a 7.5 tax increase from 25.31 to 27.22, in a Sept. 18 referendum.
Smith’s figures make a net decrease of $944,126 to the expenditures as well as a $235,503 reduction in expected revenues. Smith is also proposing reducing a reserve fund for uncollected taxes from $950,000 to $850,000.
The greatest reduction in expenses would come from debt refinancing, although Smith said this also carries the most risk. He proposed refinancing with the expectation of saving $500,000, which he said is possible under current rates but could decline if interest levels decrease by the time the refinancing is done in November. Smith said further cuts would be necessary to make up for the difference if that occurs.
“If you take out a lot of things now and the $500,000 doesn’t show up, you’ve dug yourself a hole,” said Smith.
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Smith is also proposing the removal of $280,000 from the Finance Department, which was initially budgeted for the department to absorb the costs of the school business office. Dr. Stephen Adamowski, a special master assigned to the New London Public Schools, halted the transaction after the council passed the budget.
Smith also proposed cutting $250,000 from the police department. Police Chief Margaret Ackley said there will be five vacant positions in the department as of Oct. 1, and the majority of the savings would come from leaving these positions unfilled.
Smith is also proposing the removal of $46,976 from money budgeted for Mayor Daryl Finizio’s office manager, Tammy Daugherty. Finizio said at a Finance Committee meeting last week that Daugherty has been laid off for budgetary reasons.
Smith’s calculations also include two budget increases. The $59,700 would go toward a targeted audit of three city departments with significant budget overruns, while $73,150 would adjust the law department budget to meet the level of the department’s average spending over the past five years.
In revenue shortfalls, Smith said 60-day collections have not been correctly accounted for and $160,000 should be removed from this figure. He also anticipated a $50,000 drop in parking enforcement revenue since one parking enforcement position is currently unfilled, and a $25,503 loss of rent due to the Savings Institute Bank & Trust plan to vacate the city-owned building at 15 Masonic Street in December.
Smith said he will provide line item data at tonight’s meeting to show where the cuts and increases will take place. He also said he will provide information on the expected effect of a Municipal Employees Retirement Agreement contribution increase from 15.35 percent to 15.5 percent, an approximately $5,000 increase in Southeastern Area Transit fees, and fringe benefits adjusted for cuts.
Smith said he has also asked department heads to give quarterly updates on their budgets to keep the Finance Department and city government up to date on where departments are in their expenditures and revenues.
“I’m a little reluctant to do it, because everyone says the numbers keep changing,” said Smith. “Well, budget numbers do change.”
Council President Michael Passero, who set the five percent tax increase as a goal to reach after the initial budget and tax rate were rejected, agreed that the budget is subject to frequent changes. He said a major part of the anticipated 2012 budget deficit included an unforseen state cut to funds for distressed municipalities.
“We’re a bit cheating here, because we’re three months into the fiscal year,” he said.
Passero said he wanted to ensure that Finizio would back the proposals made by Smith or that six councilors would support them. Finizio may veto the new budget prepared by the council, but the veto can be overturned by a vote of six councilors.
Councilor Don Macrino said he thinks the budget has been brought down to a level where further cuts will be difficult. He said departments will have to keep close track of their finances due to a diminished general fund.
“I think more important than anything is that we control the budget we put in place,” he said.
Councilor John Maynard said he hopes to bring the budget down to a level where it increases taxes by only 3.5 percent. He said he will propose a number of reductions in personnel costs, including a $10,000 cut from the salary of each department head, when the committee receives the updated budget figures tonight. Maynard also said he was opposed to removing money from the police department, saying he would prefer that the money go toward bolstering the department’s staffing.
“I could make up for that with some of the cuts that I have,” he said.
Residents made additional suggestions at a public comment section to begin the meeting. Dennis Downing said he thought the salaries for the registrars of voters were too high and questioned the need for a director of the Office of Development and Planning.
“I don’t see the need for this position. We went a lot of years without that spot,” said Downing.
Mirna Martinez asked the city to avoid cuts to areas with services overlapping those of the schools, including the Public Library of New London. Suzanne Maryeski, the library director, also appealed to the committee to spare the library from any cuts. Maryeski said the state average for per capita tax appropriations for library services was $43.48 in the 2011 fiscal year, while in New London it was $23.02.
“That may sound like a lot, but in this day and age it doesn’t even buy one book,” she said.
Bill Cornish said the city might consider energy efficiency investments and charging for the use of piers and event space at Waterfront Park. Cornish also questioned an approximately $500,000 expenditure for the Water Street Parking Garage, saying the garage should be bringing revenue to the city. Councilor Adam Sprecace replied that the garage is a self-supporting municipal service, with some revenue going to the city and the rest going to maintain the garage.