Politics & Government

Sprecace: New London Deficit Could Be As Low As $397,000

In report submitted to Finance Committee, councilor calculates lower projected shortfall for 2012 fiscal year

Councilor Adam Sprecace submitted a report to the Finance Committee on Tuesday calculating a significant reduction in the projected deficit in municipal finances.

Mayor Daryl Finizio and Finance Director Jeff Smith announced on Jan. 27 that the city is facing a roughly $12 million deficit. The projection takes into account three budgets, with estimates of an approximately $1.3 million deficit in the 2011 fiscal year, $4.4 million in the 2012 fiscal year budget, and replenishment of the general fund in the 2013 fiscal year budget.

In the report, Sprecace suggested that a forensic audit of all city finances is necessary to determine the validity of the projected deficit. Sprecace said he studied the issue for about 100 hours and spoke with several city officials over the past three weeks and determined that the projected $4.4 million deficit is closer to $1.1 million, and that cost-saving measures could reduce this amount to about $397,000.

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“The effort detailed in this summary should not be considered an exhaustive accounting,” Sprecace wrote. “Other information that could shed more light on this issue undoubtedly exists and should be reviewed in order for the most accurate picture of the city’s finances to be drawn.”

Sprecace said there were some unanticipated costs above the 2012 fiscal year budget approved by the City Council, including the establishment of the mayor’s office in City Hall, retirement agreements for employees not retained by the administration, the creation of new administrative positions, extra legal costs related to a dispute between Police Chief Margaret Ackley and former City Councilor Michael Buscetto III, and an anticipated shortfall in state revenue. Sprecace said the increases have been offset by overestimates in certain expenditures, unanticipated revenue streams, and other budgetary adjustments.

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Sprecace further said that his estimate of a $1.1 million deficit in the 2012 fiscal year budget could be reduced by about $737,000 by keeping 13 vacant positions empty for the remainder of the fiscal year and taking into account savings in the energy and utilities budget as well as fringe benefits and insurance account. Sprecace said that since this adjustment would affect the 2013 fiscal year projection as well, he calculates that the total deficit is approximately $5.5 million, with $3 million still to be addressed as part of the 2013 budget discussions.

Public Works budget

Also on Monday, the Department of Public Works identified several areas where it has overrun its budget. The department's projected deficit for the 2012 fiscal year budget is $610,862.

Tim Hanser, director of the department, said the Public Works’ spending has not changed significantly in six years when adjusted for inflation. He said the number of positions in the department has declined from 94 in 1987 to 57 at present, of which only 52 are filled.

“We’re actually projecting we’ll spend a little bit less this year,” said Hanser.

Among the higher cost overruns for the 2012 fiscal year budget are the overtime payroll, which Hanser said is projected to exceed budget by $233,358, and energy costs, which are projected to exceed budget by $210,756. Hanser said overtime costs can fluctuate depending on the number of storms or other emergencies requiring immediate attention, as well as some activities such as Saturday solid waste work.

Hanser said the energy costs take into account fuel, electric, and heating use by all municipal vehicles and buildings. He said the use of fuel by buses in the New London Public Schools is also included, but that the school district reimburses the city for this expense.

Councilor Michael Passero, chairman of the committee, asked Hanser what steps would be needed to bring the department within its expenditures. Hanser said the department is forgoing the hiring of seasonal staff for a savings of $37,000, but said much of the extra costs are tied up in personnel.

“Short of laying off an enormous amount of staff, I don’t think it’s feasible for us to get to zero,” he said.

Hanser said laying off 13 people would result in only about $213,000 in savings and would also have a detrimental impact on services. He also said that such layoffs would result in more overtime expenditures on the remaining staff.

The next Finance Committee meeting is currently scheduled for 4 p.m. on March 5 at City Hall.

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