By Devin Leith-Yessian
BERLIN — The town is starting the fiscal year with a $2.8 million surplus left over from the last fiscal year’s budget.
Finance Director Kevin Delaney credited multiple offices with finding creative methods of increasing revenue, while noting the bulk of it was accumulated through one-time situations, like state grants and back tax collections. He cautioned that the size of the surplus will not be precisely known until the town’s audit is complete in October.
A set of proposals Delaney gave to the Board of Finance during its August 6 meeting would use the majority of the excess funds to pay down the portion of the town’s debt that can be retired early. Taken together, his suggestions would whittle the surplus to between $300,000 and $400,000.
Board of Finance Chairperson Sam Lomaglio and board member Mark Holmes are pushing for the remainder be used to purchase a new scoreboard for Sage Park at a cost of around $200,000. At the August 8 meeting of the Parks and Recreation Commission, they said the appeal of a new scoreboard, which would essentially be a large digital screen, would be the ability to play advertisements that could offset the upkeep of the fields.
The Parks and Recreation Commission raised a number of questions, including how the board would be run and what protections the revenue could be given from diversion. Voting was delayed to further explore the issue. The possibility of an in-house revenue stream, however, appeared alluring to some commission members, who also heard from two softball coaches who brought maintenance issues at Sage Park to their attention.
Surplus achieved through state grants and town staff
Delaney credited the Revenue Collector’s Office for continuing a years-long effort to eat away at unpaid taxes, to the effect of a third of the outstanding $3 million in back taxes owed to the town at the start of the 2019 fiscal year being collected. The town’s tax collection rate increased to 99.7 percent, up from the 99.1 percent that was anticipated.
In cases where town staff were having difficulty getting property owners with a mortgage to pay their taxes, staff instead approached the bank which would pay the taxes rather than have the threat of a foreclosure and would seek reimbursement from the homeowner.
“The (revenue collector’s) office has done a really good job of identifying other collection opportunities, much of which are actually less labor intensive for the town, but much more effective," Delaney said.
An additional $700,000 in increased revenue was achieved by Treasurer Nancy Lockwood moving town funds to bank accounts with higher interest rates.
"To give you some perspective, we started out the fiscal year between 0.4 and 0.6 percent for most of our bank accounts, in terms of an interest rate - annual interest rate. We finished the year just over 2.4 percent," Delaney said.
The town also received $1.8 million more than budgeted through the state education cost sharing grant, a sum that was anticipated but not budgeted for because the state budget was still in flux when the town passed its spending plan by referendum on May 28.
Recommendation to use excess money to pay down debt
The largest debt payment Delaney is lobbying to make with the surplus is reallocating $1.4 million towards the pension fund to bring the town in line with what the town’s actuaries believe the town will be required to pay out. The current balance dedicated to pensions is $190,565, enough to cover the expected annuities this year, but a paltry sum relative to the expected buyouts that are anticipated this year.
During this year’s budget process, the Board of Finance removed $1.4 million from the pension fund, which Delaney said was in response to a proposal from Mayor Mark Kaczynski to shift $400,000 out of the account to achieve a lower mill rate. By moving the $1.4 million into the town’s unassigned fund balance, the sum would still be available for buyouts, but would require the signoff of both the Town Council and Board of Finance for any transfers.
Delaney would also like to see $444,000 spent to pay off short-term bond anticipation notes before they must be converted to long-term debt, which would save the town at least $15,000 fees to issue general obligation bonds.
The Town Council and Board of Finance have already approved the transfer of $500,000 of surplus funds to pay off a $862,000 negative balance in an account for the construction of a new police department on Farmington Avenue, with the remainder of the balance zeroed out by state reimbursement funds from repairs to McGee Middle School’s roof. The negative balance stems from money bonded for the construction of a new police headquarters at 903 Farmington Avenue, but transferred towards other projects after the project failed at referendum in 2014.
“It’s a bill that we needed to pay and now we can move on,” Delaney said. “We’re paying off liability.”