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FEBRUARY 21, 2006

ATTENDANCE: Carvin Hilliard, Chairman; Gwen Briggs; Matt Miklave; Doug Hempstead;
Kelly Straniti

STAFF: Tom Hamilton, Finance Director; Frederic Gilden, Comptroller

OTHER:
CALL TO ORDER

Chairman Hilliard called the meeting to order at 7:35 p.m.

DISCUSSION ON THE FISCAL YEAR 2006-07 OPERATING BUDGET AND
TAKE ANY ACTION NEEDED.

Mr. Hamilton provided highlights from his written report. He said that the recommended budget is $250,841,364. The role of the Common Council in the operating budget is to set a cap on the overall level of spending, which would incorporate both the city budget and the Board of Education. The practice is to calculate the number by taking the gross budget number that is recommended and subtracting the intergovernmental grants. They subtracted $18,041,859 worth of grants to arrive at an appropriations cap of $232,799,505. The Common Council must set a budget cap by the 4th Tuesday of the month. The budget represents an expenditure increase of just under $16.3M, or 6.95%, that translates into an increase in the tax levy of 5.5%. When the grand list growth and revaluation changes are factored in, the impact on the median single family taxpayer in the 4th District would increase by $227, or 4.5%.

The majority of the money comes from property taxes. 86% of the budget comes from local property taxes. Grants make up 7.2% of the budget; departmental fees make up 4%, interest income is 1.4%, and miscellaneous is 1.5%.

The drivers for the increases in the budget are the Board of Education at $5,864,000, which is a 4.4% increase. He clarified for the record that the 3.9% increase the Board of Education uses is a different number than what they use, which is a 4.4% increase. This is due to calculations that they made on the original adopted budget. The Board of Education calculates it on the adjusted budget of this year. There was a $550,000 surplus from last year that was appropriated to the Board of Education. The mill rates are based on the original budget.

Debt service is also a major driver. It continues to increase by $3.3M next year, which is a 19% increase. Debt service is broken down by the Board of Education projects and the city projects. Brien McMahon High School is the driver for the Board of Education side, and the Police Station would be the driver for the city side.

Employee wages and benefits continue to drive the budget. Health benefits continue to be problematic for the city, and they continue to rise 10% a year. That adds $1.7M to the budget for next year, which would equate to about 3.75% of wages.

Pension contributions are also increasing by $1.26M, or 64%. A defined benefit pension plan sheet was provided. There were three years where no contributions were made. The city had good market returns, which meant that they didn’t have to contribute. The normal cost of funding the pension plan is about $5M. They need to put in about $3.2M for this year, and the following year they will need to contribute $4.4M. Then it should level off.

Mr. Hamilton distributed a debt service schedule, and said that the budget for the fiscal year ending 2006/07 is $20,728,000. The projection for 2010 is that they will level out and decline. He said he was confident that this level of debt does not jeopardize the city’s Triple A bond rating.

Post employment benefits are an issue that everyone is concerned about. The Governmental Accounting Standards Board (GASB) sets the accounting rules for the entire country. The Financial Accounting Standards Board (FASB) sets the accounting rules for the private sector. The GASB sets the accounting rules for the public sector. The rules have changed for pension accounting in both the public and private sector. The retiree medical benefits had been treated on a pay as you go basis. The change in accounting rules says that you have employees for 20 or 30 years who are earning the right to medical benefits that will continue on into retirement. The liability is $152M. Of the $18M in the operating budget for employee benefits, $5M-$6M is for retirees. Contributions on a full actuarial basis would have to be about $14M, leaving a $9M gap to close. They would need to create a trust fund, along with a plan, to say that they will phase-in to the plan.

Capital debt service sees a jump in 2007 for school projects. Brien McMahon High School will be a continuing project, and there will be renovations to Kendall, Columbus, Tracey & Roton.

Mr. Hamilton clarified for Mr. Miklave that on the budget guide, the $51,382 for the city clerk is the grant coordinator position. The $414,582 for the police is for overtime and three new officers.

The increases for Public Works are in the non-wage area.

Mr. Hempstead said that the 6.95% expenditure increase is a major concern, and that the taxpayers would have to pay for the large budget increases.

RESOLUTION

** MS. BRIGGS MOVED THE FOLLOWING RESOLUTION TO COMMON COUNCIL:

WHEREAS, Section I-189 of the Norwalk Charter requires that a majority of the Common Council vote to establish a specific spending limitation on locally funded expenditures during the process of establishing the next fiscal year’s operating budget.

NOW, THEREFORE, BE IT RESOLVED BY THE COMMON COUNCIL OF THE CITY OF NORWALK THAT:

The maximum limit on total appropriations for the City of Norwalk for Fiscal Year beginning July 1, 2006, shall be no more than $232,799,504. This appropriation cap represents total expenditures of $250,841,364, less estimated intergovernmental grants of $18,041,860.

Be it further resolved that the result of this vote and resolution, together with the attached 2006-07 Budget Guide, be forwarded by the Clerk of the City of Norwalk to the Board of Estimate and Taxation.

** MR. HEMPSTEAD MOVED TO AMEND THE ABOVE RESOLUTION, CHANGING THE TOTAL EXPENDITURE FROM $250,841,364 TO $247M.

** MOTION TO AMEND THE ABOVE RESOLUTION, CHANGING THE TOTAL EXPENDITURE FROM $250,841,364 TO $247M, DENIED WITH TWO VOTES IN FAVOR (STRANITI, HEMPSTEAD), TWO (2) VOTES IN OPPOSITION (BRIGGS, HILLIARD), AND ONE (1) ABSTENTION (MIKLAVE).

** MOTION TO MOVE THE ABOVE RESOLUTION TO COMMON COUNCIL PASSED WITH THREE (3) VOTES IN FAVOR (BRIGGS, HILLIARD, MIKLAVE) AND TWO (2) VOTES IN OPPOSITION (HEMPSTEAD, STRANITI)

Ms. Straniti said she agreed to vote for the amendment to reduce the expenditure to $247M, but that if it was sent back to the Board of Estimate and Taxation, she felt they wouldn’t make it any lower.

Mr. Miklave said he voted to send this on to Council so that it wouldn’t die in committee. Once the Council sets the cap by majority vote, it can only be changed by a 2/3 majority, or 10 votes.

** MS. BRIGGS MOVED TO ADJOURN.
** MOTION PASSED UNANIMOUSLY.

The meeting was adjourned at 9:20 p.m.

Respectfully submitted,

Carolyn Marr
Telesco Secretarial Services