Sullivan: "What A Failed Budget Will Mean To The Town"

"Rejecting this proposed budget because of an estimated surplus will make it more challenging for Clinton to implement a responsible spending plan that maintains the services that we sometimes all take for granted"


This letter is written by Brad Sullivan:

Voters should ensure that they understand what a rejection of the proposed town budget will mean to Clinton.  

There will be a marked decrease in services.  This budget already includes a line item of $200,000 for “Appropriated Surplus.”  The Board of Finance does budget a surplus and cannot increase that line upon budget failure. 

To suggest that the Board of Finance present a budget that includes any more of an unrealized, anticipated surplus as a source of funds available for spending on July 1, 2012 is irresponsible and would present an extreme weakness in financial practices.  At this time, there is NO surplus of $650,000 available to taxpayers to offset requested budget increases that are mandated by Clinton’s obligations.

Clinton’s credit rating is Aa2.  This means that external parties have evaluated the financial health of the town and determined it to be of high quality and bonds issued by Clinton are a very low credit risk. 

What does that mean to you?  Low debt service.  In fact, in the budget being voted on tomorrow, debt service has decreased by 15% because the town was able to secure lower interest rates during a recent refinance transaction. 

One of the credit rating factors is the level of general fund balance.  Rating agencies look for a balance of 10-15% of the fiscal year's operating budgets in the undesignated fund or general fund balance.  So, if the total operating budgets are $45 Million then the undesignated fund balance should be at least $4.5 Million.  We are close to that floor.

The goal is to leave the undesignated balance untouched. However, Hurricane Irene is the perfect example of why we need this fund and are relieved when we can make necessary appropriations in times of emergencies.  With the contingency fund reduced in the proposed budget, Clinton will have approx $150K in emergency appropriation money.

This proposed budget is tighter than what is usually comfortable for a Board of Finance. Concurrently, the BOF must fund infrastructure improvements and keep an eye on the town's credit rating. There isn't a trick to it really other than doing your best to make sure department heads are being responsible with their departments.  I do my best to locate “padding” in the budgets and eliminate it, but my responsibility on the Board of Finance requires that I also ensure that Clinton has budgeted enough to cover its bills. 

I loathe special appropriations during the fiscal year, but expenses and costs rise (some go down too!). Things like the weather, cost for a barrel of oil, an injured patrol officer, a broken transmission... You get the idea. I also loathe paying taxes I don't have to. I live and work in Clinton and understand the stark differences that exist within our community. Clinton is home to thousands covering every rung of the socio-economic ladder.

I say with pride that the Board of Education and the Town have had budget surplus every year since I was elected to the Board of Finance.  This means that we are watching every penny throughout the year and not wastefully tacking on needless spending to the budget.

The BOE and the Town are continuously identifying opportunities for savings throughout the year, not just at budget time.  These spending proposals are not massive over taxing.  It is 1%-2% increase.  The opposite of surplus is a deficit, and we just can't let that happen...ever. Of course, over the last few years that goal is getting harder to achieve, and it has come at the cost of reduced staff, services, capital improvements, etc.

The Board of Finance has a process for decision-making concerning surpluses, audits, budgeting, bonding, etc. It is a process that demands taxpayer participation but seldom realizes it. Ultimately, the town benefits from the Board of Education's surplus.

Historically, the BOE utilizes its surplus for capital projects, which comes back to the taxpayers in the form of reduced BOE capital request for next fiscal year. There is a 10-year capital improvement plan (CIP) that has been perennially reduced due to rejected budgets! The capital budget requested by the Board of Ed went down by 5% with this budget.  

Rejecting this proposed budget because of an estimated surplus will make it more challenging for Clinton to implement a responsible spending plan that maintains the services that we sometimes all take for granted such as town hall services, Dept. of Public Works (DPW), library and police. Vote yes and support your town and school district.

--- Brad Sullivan

Bradford J. Sullivan May 23, 2012 at 08:21 PM
The BOE surplus is used to defray next fiscal year's capital expenses. That is an excellent use of the surplus and I have yet to hear one good reason not to keep that policy in place. As far as utilizing projected surplus to reduce next year's operating budget, it is not as simple as you imply. The town cannot just appropriate audited surplus to the budget for tax relief without risk, and there is risk. The BOF presents options in the form of special meetings to the electors to choose whether the town should spend fund balance on things that the town needs. Unfortunately, it's a double edged sword. By proceeding in this fashion, the finance board is criticized for not offering tax relief to the voters by returning surplus, i.e., appropriating it to revenues. The converse, arguably, would be true: some taxpayers would be really angry if before dollar one is proposed to an operating budget, the finance board had to start the budgeting process with a tax increase or severe spending cut to cover the appropriated surplus amount used in the previous fiscal year if there was no surplus in the current fiscal year. Think about it. This is one of the reasons I vociferously argue, and yes get frustrated by those who would use the knowledge to mislead you and others, against the analogy of running a town like your business or your home. The town of Clinton is prohibited by state law from issuing debt (borrowing) for operating expenses, unlike households and businesses.
Clinton Resident May 23, 2012 at 08:42 PM
Well said Brad! Thank you for sharing the facts and your perspective, taking the time to educate residents and being so thorough.
Bradford J. Sullivan May 23, 2012 at 08:54 PM
Any surplus reported by the auditors for the current FY will be available next FY. And by available, I really do mean available to be spent or saved. Let's be clear: tax relief in the form of returning surplus is spending. And I doubt that the BOF will be spending any significant sums from the general fund in order to save taxpayers anything of significance per year. Further, sometimes surpluses are the operation of grants, LOCIP, STEAP, unforeseen revenue, etc., not over-budgeting or padding. There is no intransigence, but there is plenty of misunderstanding. If you truly believe that the BOF is engaged in some conspiracy and is hiding something from you then you really are lost. So, at the risk of repeating myself. No projected surplus reported in March of the current fiscal year would ever be appropriated to the next fiscal year's proposed budget because it could be characterized as gambling that there will be unending surpluses in our future. Sound familiar? Now, can the projected surplus be taken into consideration when proposing budgets? Of course, that's why the finance board likes the policy of defraying infrastructure expenses. Ultimately, appropriating surplus is too risky of a financial policy, and like so many of you like to remind me: It is taxpayer money not mine.
Mark May 23, 2012 at 08:58 PM
Services such as cable and mobile phones are services we can elect to use or not to use. Taxes we have no choice but to pay. 1 to 5 dollars per week ranges from $48 to $240 per year. Over the past 5 years for example, we are up to an extra $25 dollars per week at $1200 per year we are now paying. These costs accumulate and are an ever increasing burden. If this was one year with a 4 or 5 % increase, we could understand. But this is the status quo every year.
Mark May 23, 2012 at 09:00 PM


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