Tetreau Proposes $272.6M Budget for FY2013

First Selectman Michael Tetreau presented to the boards of Selectmen and Finance Thursday a $272.6 million operational budget for Fiscal Year 2013 (FY2013).

The proposed budget carries a 3.61 percent ($9.4 million) increase over the current budget and would, if approved as is, carry a .9 mill increase -- or raise most residents’ taxes by 4 percent.

The goal of the budget, Tetreau said, is to “strengthen the town’s financial foundation…without significantly decreasing services, without reductions in personnel.”

Still, the town continues to face a “challenging economy.”

“We’re certainly still struggling, and it’s not going to change anytime soon,” Tetreau said. “It’s the new reality.”

Non-tax revenues are down $700,000 -- or 3.3 percent -- from Fiscal Year 2012 (FY12), Tetreau said. Non-tax revenues are generated through sources like golf fees, conveyance taxes, state aid, and building permit fees.

On the bright side, the town is projected to save approximately $900,000 in expense salaries like health insurance (1.05 decrease), electricity (16.85 decrease), and pension contribution (12.94 decrease). The decrease in funds for electricity is a result of actions taken by the Purchasing Department to improve efficiency; health insurance costs have been offset by an increase in employee cost share; and pension is fully funded.

Tetreau added that department heads did a “significant amount of work” to maintain their overall costs at an almost zero percent increase.

He also reduced the Board of Education’s budget to $148,852,416 -- $612,525 decrease -- a result of revised pension numbers discovered after the Superintendent Dr. David Title submitted the budget. The school budget now carries a 2.18 percent increase over last year, instead of the 2.6 percent that was originally approved by the school board.

Approximately $8 million of the $9.4 million increase is attributed to eight line items, which Tetreau called the “major budget drivers.” Those items are marked by an * in the complete proposed budget chart below:

*Explanations for the major budget drivers:

• The Board of Education budget reflects more than a $3 million increase for FY2013, Tetreau said. Roughly 75 percent of that impact is derived from labor costs, and Tetreau’s reduction of the Title’s proposed budget does not impact any educational or planned programs, he said.
• Debt Service (paid on general bonds) carries a $1 million increase. Debt services, along with workers compensation insurance and retiree medical insurance, is a multi-year commitment that cannot be changed in one particular year, Tetreau said. However, changes can be implemented that could reduce the expense over several years, he added.
• Supplemental Contribution - Surplus is a new line item that is intended to “maintain a reserve in line with rating agencies guidelines for AAA towns,” Tetreau said. This is part of the effort to address the Negative Outlook that Moody’s assigned to the town.
• Supplemental Contribution – Risk Management is another new line item created to increase “total net assets in the risk management fund” to also shore up reserves, per rating agencies’ guidelines for AAA towns, Tetreau said.
• Paving carries a large increase due to an agreement between the Boards of Finance, Selectmen, and the RTM to include it in the budget rather than to bond all paving projects.
• OPEB – Retiree’s Health Insurance is now fully funded as recommended to the town.
• Contingency funds for unforeseen circumstances was increased significantly (following the wake of natural disasters like Tropical Storm Irene and the October snowstorm).
•  Unemployment compensation was increased by 100 percent due to last year’s slash in the Board of Education budget and the layoffs that ensued. “What we did a year ago impacts us this year and will impact us next year as well,” Tetreau said.

The “All Other” category includes department budgets and capital requests.

[Editor’s Note: For updates on the budget process, refer to the Fairfield Patch Budget Guide.]