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TOWN FINANCES: Auditors say we're in good
shape
Jan 4, 2006
The 2005 fiscal year was a healthy one for the town, despite the
fact that the �surplus� is on the low side. Ridgefield received an
�unqualified opinion� that its books are in order, according to a
report released last month by town auditors Blum &
Shapiro.
Town Controller Jay Wahlberg said the fact that
the auditors� report is �unqualified� makes it �the highest opinion�
an auditor can offer.
Mr. Wahlberg said the fiscal year, which
ended in July, left the town with a 5.1% fund balance, relative to
the town�s budget. The unreserved surplus for the year was
$5,386,000, he said. �Basically, to determine the percentage of our
fund balance, we take that number and put it against our current
2006 budget,� he said. �We�re at 5.1% for the fund balance.
Traditionally, the �safe zone� is between 5-7%.�
�I think the
Board of Finance would like to see it around 6%,� he said.
�Drawn
down� balance
When representatives from Blum & Shapiro
presented their findings to the Board of Finance on Dec. 20, they
said they generally recommended that municipalities keep a fund
balance of between five and 10%, relative to the town�s overall
budget. The money can be used in case of unbudgeted
emergencies.
But Mr. Wahlberg pointed out that the reason
Ridgefield�s fund balance was relatively low is that the town paid
$2.3 million out of the fund balance last year as part of a
court-mandated settlement on Bennett�s Pond.
Finance board member
David Ulmer told the auditors that his board deliberately chose to
�draw down� the fund balance, rather than ask taxpayers to absorb
more of the cost of the Bennett�s Pond settlement last
year.
�We intentionally took it down to 5% because of the
Bennett�s Pond settlement,� he said.
Board of Finance Chair Marty
Heiser � who was elected to the Board of Finance in November after a
two-year absence � joked that the town�s fiscal health was in
jeopardy without him.
�You know, I leave this board for 24
months, and just look....�
But Mr. Wahlberg said the town�s fund
balance is still within what he considers to be an acceptable range,
albeit it on the low side.
He said he did not know if the finance
board would seek to add to the balance in the coming year.
Budget surpluses
Both the
Board of Education and the Board of Selectmen ended the fiscal year
in the black, although �the town was tight,� Mr. Wahlberg
said.
The Board of Education �came in under budget by $172,000,�
he said. The town �was $65,000 under.�
Mr. Wahlberg said he had
run projections for the current fiscal year at the end of October
2005, to see where the town stands financially. �My crystal ball as
of Oct. 31, 2005,� he called his forecast.
So far, he said,
insurance costs have been less than was projected in the budget, but
fuel costs have been more.
A fortunate boost to the 2006 budget
is the fact that the revenue from the town�s conveyance taxes will
be approximately double the amount projected in the 2006 budget, Mr.
Wahlberg said. The town has already exceeded the $600,000 budgeted
for conveyance taxes, and there is still half a year left before the
close of the fiscal year, he said.
The reason the revenue is so
much higher than anticipated is that in June state lawmakers renewed
a provision that allows the town to collect a higher rate of
conveyance tax, Mr. Wahlberg said. That higher rate was enacted as a
temporary measure several years ago to help Connecticut balance its
budget, he said.
�The temporary increase in conveyance taxes were
to lapse as of June 30, 2005, so the Board of Finance was reluctant
to budget at the higher rate � they reduced it to the old rate,� he
said. �Then it was renewed.�
Mr. Wahlberg said if his �crystal
ball� from October proves accurate, the town will end fiscal year
2006 with a $1.13 million surplus.
Debt
service
The town�s debt service continues to account
for a large part of the town�s budget, due to the fact that
Ridgefield borrowed over $100 million to build the �bundle� of
municipal building projects.
�The rule of thumb is 10% debt
service to budget...,� Mr. Wahlberg told the Board of Finance.
�We�re at about 13 to 14%.�
Mr. Wahlberg said the debt service
ratio will remain high for the next several years. �The debt will
plateau until 2009, and then there will be a significant downturn,�
he said.
� Copyright by Hersam Acorn
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