March 21, 2023

Kardama

Moving Forward

Board of Finance Chair: Budget Planning Amid Economic Headwinds

The goal of this letter is to update you on the program for the 2023/24 spending budget, and our over-all fiscal image. In summary, our city is in great economical condition, but there are financial uncertainties and problems that we will need to have to get the job done as a result of this 12 months. Enable me share some highlights.

On February 7th, the New Canaan Board of Finance will start off analyzing the Town’s spending plan for the fiscal 12 months 2023/2024 that begins on July 1st. The town departments have been doing the job on their requires and requests above the past number of months. The Board of Selectman will review the spending plan requests and mail it to the Board of Finance this thirty day period. Our Board will invest most of the thirty day period of February examining the requires and requests for every single division as very well as the revenue assumptions. In March we will mail the spending budget to the Town Council for their critique and approval. It then comes back to us for the closing placing of the mill price, and last acceptance in June. 

As a reminder, more than the prior 4 several years, the Board of Finance, doing work with the 1st Selectman’s business office and the Town Council have held the amount of income lifted by taxation flat. This is an unparalleled achievement around the prior 30 many years. We have been ready to do this even though continuing to devote in our town, our amenities, and specially our good college method that carries on to rank among the very best. Had we greater shelling out at a price of just 2.5% every yr as several towns have, taxpayers would have spent an more $18 million in assets taxes around this exact four-year period. By preserving paying out in verify and taxes flat, we were able to steer clear of $18 million in added taxes. That $18 million is avoided endlessly.

For the existing fiscal year that commenced on July 1, 2022, we did implement a modest improve to our mill fee of 1.14%.  Supplied the pressures of growing health care fees and inflation, it was important to have a modest enhance.

As we head into this ‘budget season’, we know economic forces will effects our budgeting and scheduling. We know mounting curiosity charges will set a chill on housing exercise. An engineered contraction in the economy by the Federal Reserve, with a declining money provide will, at best, generate economic warning. With regards to earnings, apart from residence tax revenue, we are at the moment observing a slowdown in conveyance fees for true estate sales in comparison with the prior yr. We continue to see parking costs increase, but however under pre-pandemic levels. And building permit charges are also managing under the prior 12 months. 

1 dazzling place this calendar year on the earnings aspect is interest income. We hope to gain approximately $1 million more in fascination this calendar year than budgeted. And we hope to receive a lot more upcoming 12 months than this calendar year as we benefit from a full year of larger funds industry rates. The Board of Finance has labored properly with our Town CFO Anne Kelly Lenz, and our Treasurer Andrew Brooks to improve the money we earn on our income although offering basic safety and liquidity for our city. Kudos to Anne and Andrew. We will evaluation all of these profits streams in the course of the funds method and program accordingly.

We have minimized the city credit card debt from the all-time significant of $147 million to close to $95 million very last yr. With a reduced base to operate from, we can safely and securely add debt for vital cash projects which includes on-going college making upkeep, and other town initiatives and plans. Around the previous four yrs, we also issued and refinanced debt at historically low degrees preserving the city millions of dollars in desire cost. As a lot of of you could know, we spend down our principal and interest fees for every bond that we situation on a straight-line basis each individual yr. We lower our personal debt by around $15 million every single 12 months prior to including new personal debt for new initiatives. We have watched rates fall in recent months and will situation upcoming debt prudently.

The past 3 price range seasons have been difficult. We have absent from plummeting revenues with Covid, to growing expenses with inflation. But performing alongside one another with the city departments, the Board of Selectman, and the City Council, we have achieved the wants our city when trying to keep the total raised by assets taxes virtually flat. These budgets have completely funded our colleges, law enforcement, hearth, and city plans. They have funded our parks, all the overall health and human expert services requests, all the unexpected emergency companies, city athletics, town departments, and so a lot of other vital packages and initiatives, including the required funds needs for buildings, roads, and tools. By way of thorough expending and scheduling around the past 3 years, we have not slash college courses, sports activities, arts, instructors, important social plans, or any unexpected emergency solutions, or basic safety paying. And as a result of a quite balanced partnership among the city and private investments, we will open a new library shortly, and a refurbished movie theater this Slide.

These days, we continue being in sturdy financial condition. Our rainy-working day fund is in the assortment we program for, while it has come down over the past 5 yrs as we return excess budget surplus quantities to the taxpayers by lessening the volume elevated by taxation. And our city pension fund and OPEB well being liabilities are extremely perfectly funded and are at or close to the highest concentrations as opposed with every single other city in the Condition. 

As has been the scenario for many years, the New Canaan Board of Finance supports our fantastic university method, serving to hold it a major district. As we have explained lots of moments, this requires time, determination, and management. We want to retain our good faculties for the following decade. That continues to be our best priority. This city and its taxpayers have normally believed it is an critical social obligation to have a leading college district. The Board of Finance will normally evaluate spending and check with how to enhance the income invested. That’s our work way too. But I imagine the town bodies share a prevalent aim – delivering for and providing a best tier university district each individual yr.

The blended economic challenges of inflation, rising costs, and an financial slowdown will existing issues to our finances for this coming fiscal yr. We will work to manage monetary energy as a town, chopping expenses where by we can, though we continuously enhance our town property, companies, and the assistance that our inhabitants anticipate. 

We will ship an update on the standing of the funds in June.

Todd Lavieri,

Chairman, Board of Finance, Town of New Canaan