Editor’s Note: Last week, Patch ran a alluding to a complicated proposal by J.W. “Bill” Sheehan to save the town approximately $450,000 off the budget next year. That won’t come to fruition because of the timing, but this is what he was talking about. The RTM is still considering the proposal.
One of the major financial accounts supporting Waterford Town government is the Capital and Non-Recurring Expenditure Fund (CNR). This fund provides the financial support for most major and minor town infrastructure improvements and repairs over $10,000. Once money is transferred into the CNR, by state statute, it may not be removed except by expenditure on a capital project or purchase.
The funds in the CNR are split into three categories. The first category is designated. That means that the money is set aside for a specific project but it may not be expended. It is reserved for the specific project or group of projects.
The second category is appropriated. This means that the Board of Selectmen (BOS), the Board of Finance (BOF) and the Representative Town Meeting (RTM) have approved the expenditure of the funds for the assigned project. This approval occurs after the sponsoring department, board, or agency has made a presentation that justifies the project and the estimated cost of the project.
The third category is undesignated. These funds are not assigned to any specific project. Generally, undesignated funds are the interest earned by the fund, returned dollars from a completed project, funds that were undesignated when a project was cancelled before or after the funds were appropriated, or funds that were specifically transferred to the undesignated projects line during the budget process (Such action was common when Millstone Power Station provided greater than fifty percent of the tax base).
During the budget process, I proposed, both at the BOF and again, at the RTM budget reviews, that the funding of most of the projects listed in the Transfer to Capital and Non-Recurring Expenditure Fund (CNR) department in the FY2012 budget be done by changing the designation of some of the funds in the Water Systems projects line of the CNR to the various projects planned in the budget presentation. It turns out that the BOF is not able to change funding designations or recommend changes unless it is proposed by the First Selectman and the Board of Selectmen. The RTM, however, as the final appropriating body, does have the power to change a funding designation.
This was my proposal to the RTM:
To do it properly and comply with Freedom of Information Act (FOIA) requirements, it will require a
number of parliamentary steps.
1. After discussion and a determination that the RTM is willing to do it
someone will have to move to add to the agenda, the redesignation of funds from
the Water System Improvement Line 20531-57330 to the various projects included
in the transfer to capital and non recurring expenditure fund budget for FY2012.
a. Police Department Roof and Gutter replacement - $135,000
b. Qswgatchie Building Improvements - $20,000
c. Underground Tank Replacements - $45,000
d. Soccer Lights at Spera Field - $34,500
e. Leary Park Road/Parking Improvements - $20,000
f. Public Works Road Reclamation/Overlay - $240,747
This leaves the Revaluation of $75,000 as the only transfer to capital and
non-recurring expenditure fund.
2 After two thirds agree to add to the agenda, then the redesignation of the
funds must be approved one by one by a majority vote..
3. Then the dollar figures in the transfer to capital and non recurring
expenditure fund should be zeroed except for the one item (revaluation) that is
being kept in the account.
This reduces the FY2012 budget by $495, 247 which reduces the mill rate by about
.14.
The reduction of $495,247 still leave the WUC with $868,753 in the Water System
Improvement Line and a total of $1,802,753 in the designated funds for water
system improvements - enough to complete all water projects anticipated from
2012 to 2016 in the CNR.
My logic in making the proposal was that the tax payer had already paid for designated funds that have not been used for almost twenty years and it would be appropriate to give the current tax payer a break.
The Finance Director, Rudie Beers, is opposed to this approach. She believes that responsible financing requires the taxpayer to fund capital projects every year. She pointed out that it is bad policy to not fund capital projects for a year. It also may adversely affect the bond rating the next time the town issues bonds for the school projects thus costing the tax payer more in the long run. There is some validity to this argument.
The Town Attorney, Rob Avena, had difficulties with the adding of the item to the agenda of a budget meeting. He believed that any changes needed to have the full week promulgation required in the Freedom of Information Act (FOIA) and the Utility Commission should have an opportunity to defend the current designation of the dollars in Water System Projects.
As of March 31, 2011 the CNR had $2,673,057.56 appropriated to specific projects, $8,382,901.93 designated to specific projects, and $4,661,805.90 undesignated to any projects. The largest designated projects are $4,560,000 for New School Construction and $1,364,000 for Water System Projects.
Actually, the Utility Commission has a total of $2,298,000 designated for various Water System Projects in the CNR and another $381,051.71 worth of water projects in the Current Year Capital Improvements Account. Most agree that the $1,364,000 was designated in the early nineties when it was expected that the Town would have to develop its own water supply to augment the New London Water System from Lake Konomoc. This requirement was overtaken by events when the pipeline across the river from the Groton Water System was built as a joint project of Waterford, Montville, and the Mohegan Sun Casino in the mid 2000s.
The Utility Commission’s Chief Engineer, Tali Soto, testified to the RTM on the final budget night the he believed that the funds in the Water System Projects line had already been redesignated. Finance Director Beers noted that the fund designation had not been changed.
Because of this uncertainty, the proposal was referred to Finance, Wage, and Personnel standing committee as part of a review of designations in the CNR account. The taxpayers will not get a break in the FY21012 budget but it is possible that the designated Water System Projects funds may reduce the mill rate in future budgets as these funds are redesignated and then appropriated to other higher priority projects.
