Preliminary Report Shows $1.3 Million 2011 Deficit

Finance Director Jeff Smith said the preliminary draft of an audit of the 2011 fiscal year budget shows a deficit of approximately $1.3 million.

Smith told the Finance Committee on Monday that it will be another couple of weeks before the official results of the audit are released. The preliminary figures show that revenues were $142,256 higher than expected, but that expenditures were also $857,247 more than budgeted. There was also a $607,778 in projected financing from other sources, leading to a total deficit of $1,322,769.

The draft says this reduced the fund balance from $6,298,191 on July 1, 2010 to $4,975,422 on June 30, 2011. The budget for the 2011 fiscal year projected $76,015,081 in revenue and $77,414,875 in expenditures, with the $1,399,794 deficiency made up by other financing sources including transfers and the use of $59,440 from the fund balance.

In revenues, the income from state and federal funds was about $1.1 million higher than budgeted. Also higher than anticipated were charges for licenses and permits, by $481,195, and other revenue, by $158,494. Revenues that were less than anticipated included charges for services, by $939,586, and property taxes, by $521,704.

In expenditures, the largest overdrafts were the and . The fire department was over budget by $569,562, while public works was over by $544,592. The city manager’s budget was over by $179,493. The was $347,935 under budget, while all other departments were over or under budget by less than $60,000.

Council President Michael Passero, who chairs the committee, said he has personally asked department heads to determine what would have to be done to bring their expenditures within budgeted parameters as the city pinpoints the deficit it is facing for preparation of the 2013 fiscal year budget. Smith said the departments are considering this, and that New London’s credit rating is currently secure.

“Part of the problem is even if we cut all the expenditures, it’s still on the revenue side,” he said.

The 2011 fiscal year shortfall is one part of what Smith and Mayor Daryl Finizio have said is an anticipated . In this projection, the remainder of the fiscal year 2012 budget would be drained and $6 million would replace it as part of accounting practices for the 2013 fiscal year.

Councilor Adam Sprecace has disputed the deficit figures put forth by Smith and Finizio.

“I still do not think it is a $4.5 million deficit,” he said. “I believe there are some areas that have not been counted that should have been counted.”

Former Mayor Rob Pero spoke during the public comment portion of the meeting and said he believes the 2011 deficit may fall as low as $300,000 once the audit is completed. He said the fire department has usually overrun its budget due to contracts and other factors.

Pero was also critical of Finizio’s actions, saying the press conference announcing debt projection could harm the city’s credit rating. He also said the overdraft in the city manager’s budget constitutes a one-time expense, and that the establishment of new positions by Finizio will ensure continuing new expenses if they are left in place. The City Council recently voted 4-3 to at least through the start of the next budget.

“Going forward, I think it’s getting the positions out that were never in the budget to begin with,” Pero said.

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