Chair: Annual Update from Board of Finance


As the Board of Finance does each year, this is an update on our current budget and tax projections as we close out our 2019/2020 budget on June 30th as well as an overview of our new 2020/2021 budget that begins on July 1st.

As always, and especially this year, I can never thank our volunteers across the town, our town employees, our volunteers on many Boards and Commissions, our Town Council, our Board of Education, and our First Selectman enough – they make an incredible effort on our behalf in order to keep our town in great shape in every way. And while that is always true, the past 100 days have truly stressed the system. But our town response has been overwhelmingly positive, from our schools, our residents, the donations people have made, and all the volunteer help across the town. An extra grateful thank you to the volunteers and healthcare workers who have gone above and beyond to support our community and our region.

The fiscal year that we are closing in June will show back-to-back years of below budget spending, and declining debt. We will also require less tax income from our taxpayers for the second year in a row. We believe that this is a first. Our mill rate will also slightly decline to 18.16. The mill rates of Wilton (28.5), Ridgefield (28.1), and Weston (32.3) are considerably higher. The Route 1 coastal towns of Westport (16.9) and Darien (16.5) have lower mill rates driven by the much higher commercial revenue tax base of the Route 1 businesses, and higher total grand list values.

Through careful spending and planning, we are fortunate to be able to keep taxes from rising, while not cutting any existing school programs, sports, arts, teachers, police, or fire as many districts have been forced to do across Connecticut. This isn’t an easy thing to do with the many demands we have each year for more spending, including contractual annual cost increases. No other town in Fairfield County asked their taxpayers to pay less in total taxation in back to back years while delivering below budget spending two years in a row. 

Our single largest expense every year is for Education, representing approximately 62% of our total budget. Nearly 70% of our budget this year will be spent on Education, Police, and Fire. The remaining 30% is spent on roads, building maintenance, town employees, pension expense, Public Works, health care, and debt service. 

Regarding debt, over the past 25 years we have borrowed approximately $140M for school renovations and improvements, $20M to purchase Irwin Park, as supported by a town-wide referendum, and $18M for the Town Hall renovation project. We also borrow much smaller amounts each year for building maintenance and road repairs. And we pay down our debt every year on a straight-line basis. Our long-term debt was $127M in 2011. Our town’s debt today is $107M. We project that our debt will trend down towards $100M for the first time in 20 years by the end of this calendar year. 

But keep our debt in perspective. The combined income of the residents of New Canaan was $2.4B as reported by the State of Connecticut. The total grand list is valued at $7.7B. So $100M of debt represents approximately 4% of our income and 1.3% of our assets. Our debt level is by no means a problem. We will continue to borrow strategically and prudently, leveraging historically low rates for road and building repairs. And we have saved several million dollars of interest expense on our debt over the past three years through refinancing, again driven by low rates and the favorable Aaa bond rating that our town has earned and kept. We want to reduce our annual debt expense as a means of lowering overall town expenses.

It is our expectation that we will continue to evaluate the sale and divestment of certain town-owned assets. Today, those assets cost money to repair and maintain and don’t provide tax revenue to the town. As I said in my update last year, if we divest certain properties and assets, we will be able to avoid continued repair costs, use the proceeds to reduce debt if needed, fund other investments, or lower taxes, while adding to our Grand List value as well as property tax revenue. A win win win. We are also evaluating our long-term capital plan to continue to enhance the assets in our town for the next several decades. Our schools, police station, and library will be among the top areas to invest in over the next decade.

From a Board of Finance perspective, our top priorities continue as before: one, our schools must continue the long, multi-decade tradition of being a leading district in Connecticut. Two, we must continue to provide a beautiful downtown, with surrounding parks, activities, and programs throughout the town. Three, we need to continue to provide safety and emergency services for our residents and visitors. Four, we need to maintain financial strength as a town, while enhancing, improving, or renewing out town assets to continuously improve the services and support that our residents expect. In short, provide excellent value while helping New Canaan succeed financially in good times and bad.

Going forward into the new fiscal year, working with the Board of Selectman, Town Council, the Board of Education, and all the other town departments, we will continue to look for ways to spend less. The Board of Finance worked very closely with the Board of Selectman, the Town Council, the Board of Education, and the other departments and organizations across New Canaan during the budget process right as the Covid-19 crisis unfolded. The current crisis reminds us to challenge our spending and borrowing assumptions. We will continue to be prudent in the coming year. 

In summary, our Bond rating continues to be Aaa. Our town pensions are fully funded at 105% as of March 30th. Our overall spending this year is projected to be $2.2M below budget, and our debt decreased this year. Our rainy-day, unassigned fund balance maintains an appropriate amount to handle shocks to the system like we are seeing right now. As a benchmark, we hold the equivalent of 15-18% of our annual budget in our unassigned general fund for risk management. Most towns that we compare ourselves with hold 8-14%. Bond agencies want to see at least 10% of the town’s annual budget in an unassigned fund to take advantage of the most favorable rates. We ran surpluses in the fiscal years ending in 2018 and 2019 that increased this fund as we spent less than we budgeted, and had more revenue than we planned. For our 2020/2021 budget we are planning to use $4.5M from this fund to offset town expenses. This will reduce the demand for taxes by the same amount. We budgeted similar offsets in prior years but have been able to avoid drawing them down due to reduced spending and increased revenue. For the period of March through June, the town will see less revenue from parking permits, conveyance fees, and other revenue sources. Our fund balance will absorb these shortfalls without adding taxes, but also limits how much we can now contribute.

We certainly need a healthy reserve fund to protect taxpayers from unforeseen shocks and costs, and to maintain our financial strength. However, the Board of Finance believes that we should offset $4.5M of expenses from funds that have built up over time and give it back to the taxpayers at a time like this. This will reduce the burden on our taxpayers while maintaining ‘dry powder’ to help address future risks. 

Todd Lavieri 
Chairman, Board of Finance

4 thoughts on “Chair: Annual Update from Board of Finance

  1. Todd,

    Excellent report. Thank you for your diligence and that of the Board of Finance. The bottom line of this is New Canaan remains the best value In Real Estate in the State. Thank You for getting the word out.

  2. Extremely proud of the job done by the Board of Finance. A great balance between town priorities and fiscal realities. Too bad that the CT state legislators have refused to face the reality that they are driving tax payers to seek residence in other tax friendly states. Proud to be a New Canaan resident.

  3. We are fortunate to have thoughtful, capable leadership in New Canaan, at no time more than in our current crisis. Thank you for stewarding New Canaan’s finances with a balance of fiscal conservatism and wise investment in our future – especially in prized assets like our fabulous library, schools and police. Well done!

  4. Todd, you and the rest of The Board of Finance have done an incredible job on behalf of taxpayers in leading the way on fiscal responsibility. My sincere thanks.

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