I needed an attention grabber for a title, but this piece focuses on the implications of publicly available data and is not intended to be provocative. It is a summary of how your tax dollars are being spent locally and what needs to be done to change it if we are going to start being fiscally responsible and have the best shot at maintaining, or I dare say, growing property values over time. Although the topic may seem boring, bear with me, because the numbers are enthralling…unfortunately in a bad way currently. First, a caveat in anticipation of some nasty and/or ignorant responses that will likely come my way for discussing the fiscal reality behind the veneer: we have excellent schools, a beautiful town and everyone I know, including myself, wants to keep it that way. I have gone to Hartford to give public testimony multiple times this year to fight against forced school regionalization as well as statewide car and property taxes that will exacerbate negative trends facing all residents. Second, my experience with every town representative I have talked to is that they are well intended people. They are representing us on a voluntary basis and have spent many hours in town meetings, along with work outside of meetings. OK, with that out of the way, onto some data and analysis.
Some context that sets the framework: New Canaan has the highest debt per resident and second highest spending per resident out of 169 towns and cities in the State. For comparative purposes, our debt per resident is almost double that of Darien and spending per resident is roughly 10 percent more according to the Connecticut Economic Resource Center, a non-partisan arm of the Connecticut government focused on research and economic development. One should think of our town debt as deferred spending. All of it will be borne by taxpayers at some point. The totality of our current and deferred spending far exceeds that of any the 169 towns and cities in Connecticut. According to a Yankee Institute comparative town analysis, in a sixteen year period between 1996 – 2012 New Canaan raised property tax rates by about 150 percent to support an approximately 160 percent increase in spending, or about 10 percent on average a year excluding the effect of compounding! Would anyone reading this manage their household or business expenses this way?
Excessive spending begets excessive leverage. Our town debt is about 75 percent higher than the average of our District Reference Group of neighboring towns. Our debt service costs – our annual costs to pay back our debt – is roughly 12 percent of our total budget. One goal of the Board of Finance is to lower our debt service cost to under 10 percent in the next five years. To do that our newly issued debt would have to be zero over this timeframe. There is a greater likelihood of the Sun rising in the West. One of the primary reasons we need to issue new debt is to pay off maturing debt. In addition, there are non-discretionary maintenance expenses that are typically bonded to keep our public stock from falling into disrepair. We are caught in a pickle of our own creation and have little flexibility to change things without making some fiscally conservative decisions. That brings us to BOE spending, which consumes roughly 60 percent of the town’s budget.
Here is some summary data from a roughly 20-year look back at BOE spending I recently did:
- In an 8-year period between 2001-2009 spending per pupil went up by close to 60 percent. At that point our spending per pupil was about $16,900. Our increases since 2009 have come off of a much larger base created by a period of extremely large increases in the previous decade.
- Our total elementary school enrollment has declined by over 10 percent in the last 17 years while our spending per student has more than double during this period! Birth rates have declined steadily from 210 in 2005 to ~138 currently. We are likely to see an increase in kindergarten enrollment this year but the longer term trends continue to be down and are the basis for the New England School Development Council—an organization BOEs use for enrollment projections, among other uses—projecting an enrollment decline of about 15 percent over the next 10 years in our public schools.
- From 2007-2017 our total school enrollment was up about 2 percent according to NESDEC data while FTE count was up about 16 percent according to CT Department of Education data! “Other non-instructional staff” FTE count was up about 40 percent. We could have 81 less FTEs, probably save several million a year—I am not saying we should—and be at the FTE/student same ratio as Darien, who has better academic outcomes than us from 8th grade on when the cumulative impact of one’s academic experience is more fully realized.
- If one uses FY 2018 BOE debt expense the proposed BOE budget implies spending roughly $24,500 per student. This is roughly 10 percent higher than the average current spending of our DRG making conservative assumptions about their BOE debt levels.
Finally, there is no correlation between per pupil spending and academic outcomes, as measured by standardized test scores, according to the State’s Office of Legislative Research. About 80 percent of the variance between standardized test scores among students is attributable to parental educational attainment and whether or not the student is coming from a single family home. A core group of generally excellent staff and administrators—which we have and certainly pay for—is important. What is more important in determining academic outcomes is the family the students are coming from and their deep involvement in the students’ lives.
So, what to do about all of the above?
To be clear on what I believe should happen: we should hold our BOE spending flat this year and our overall town budget flat, at most, for the next few years, until we work off some excess home inventory and our local property tax rates start to become more predictably contained. We have 18 months of home inventory, the most in Fairfield County. That much supply will lead to lower prices, and presumably higher tax rates down the road to offset them unless we start producing fiscally conservative budgets. We should eliminate all non-maintenance capital expenditures over this time period. A flat town budget will entail some staff reductions at the BOE – something none of us want – but my concern is that unless we take serious steps to address our fiscal situation now the staff reductions will become much greater in the future, especially if we face a recession. Westport is cutting 17 FTEs in the BOE this year, a decision I am sure they did not make lightly.
In terms of what readers can do, my hope is that more people start getting involved in local government, either through writing to our town representatives [email addresses for different town bodies are bos, bof, and tcdistribution@newcanaaninfo.gov], showing up at town meetings, and/or running for local office. We have local elections in November. Ask every representative what their opinion is of the issues mentioned above and how they would change the status quo going forward? The status quo this year is a property tax rate that will be up about 7-8 percent this year and property tax burden that will be up over 10 percent for around a quarter of our residents, many of whom are seniors living on fixed incomes. At one end of the spectrum, some residents saw a 5-year revaluation on their homes up 30 percent-plus, meaning a tax burden increase of 37-38 percent, even in the midst of an overall town revaluation down 7.2 percent. This compares to 5-year town revaluations in Darien and Wilton down about 1 percent and 2 percent, respectively. Why are we performing worse? At the other end of the spectrum, many have seen large double digit declines in their home assessment in the revaluation. Whether one is facing a much higher tax burden, much lower home valuation, or something in between, no one is a winner.
With all of this said, there are little steps of progress in our budget this year but it is not even close to enough in my view in the context of over spending for decades. We have some representatives—such as Town Councilman Mike Mauro and Council Chairman John Engel, for example—that are consistent in advocating and pushing for a more fiscally conservative agenda, but they and others face an uphill battle. There are a number of other representatives on both sides of the aisle that are fine with inexorable increases in spending and property tax rates to fund that spending. I am asking readers to be vocal, do some digging on town fiscal matters, and if you are concerned with what I wrote only vote for representatives that can clearly define a pathway to flat or lower local tax burdens and stabilizing real estate values.
Please email me at jdb435@nyu.edu with any questions or follow up you have if you want to be part of the change.
Aren’t there additional functions at the BOE that could become shared services with the town that would reduce cost, ie the town and the school districts each have their own payroll person? Through getting involved in hands off our schools I have come to realize that many towns let their citizens vote for their budgets, why doesn’t New Canaan? It has allowed them to keep their tax increases to zero! If we do not reduce our property taxes our real estate values will continue to decline.
Really made me think about this and became aware of the problem. We do need to address this now.
thanks very much James for well presented sobering assessment of our financial situation. It seems to me without having all the numbers that like any household NC is spending more than it makes. To make matters worse the bloated BOE continues to use the town bank book as a means to fund expansions for students that never materialized and of course ,adding more teachers to teach these phantom kids. Yes we should be proud of our schools and appreciate teachers hard work but to the extent that the running of these and the accompanying poorly negotiated union contracts have put the town in a deeper hole than any other town in the state seems foolhardy. So maybe all within the town government has to make moves to get this runaway train at least ” slowed down” – taxes are going up for a lot of seniors living in the smaller condo’s with the bigger properties getting significant reductions. All seems unfair but hey no one said life was going to be fair!!
James were do I send my champagne contribution ??
I think we need you in office — I talked to a TC member who ran on
“there never been a budget that could not be cut by 5% “and will not go along with the chairmen on a spending cut of .003% — remember anything done could be undone with a BOF appropriation — a off budget amount = to the .003% of the cut in any BOF meeting if ever needed
I have attended BOF meeting when they have off budget appropriation of over $900,000 for the schools — with out big headlines in the new paper — it could be done
Great in-depth research and write up
There must be a cap to the ” open ended expenditures ” and to the ” unlimited access ” into tax-payers’ pockets.
Excellent summation of New Canaan’s fiscal problems. But the chances of improvement are near zero unless NC returns to the typical New England Town Meeting form of government, where citizens directly vote on the budget (which it had when I moved here in 1969 ). Many Charter Revision groups since then have avoided readopting this form of governance like the plague. Just like the utmost efforts that are made every time to block holding a referendum on any major town expenditures.
Apparently New Canaanites are too dumb to let them say how their money should be spent.
The need to cut couldn’t be more true – I am disappointed that elected officials don’t recognize that smaller population using services mean the government should also get smaller with less spending.
The external conditions and CT along with rises taxes in New Canaan will drive down property values – tolls and higher CT taxes, and federal non-deductibility of property taxes over 10,000 all send a signal CT is not managing its money properly and will cause people to second guess a buying decision. In order for New Canaan to prosper, it needs to be comparably more more attractive then other first tier towns – the way that is done is through low taxes.
Our current course is the fine comb of disaster – higher spending causes reduced property values which causes higher taxes which further reduces property values.
Change must happen now.
I agree, James. Maybe you should run for office.
my assessment went up 11% while every other home on the street saw a decline. there is no rationale and the Board offered no clarity despite numerous attempts to appeal.
Alexix, since your assessment was up 11% your tax burden will go up by ~18%. 7 town representatives found this increase acceptable.
There will be no other attempts to reduce the property tax rate increase from up ~7% by our town.
Thanks to all for your comments; it is appreciated. It reinforces that this will be a necessary multi-year fight for change. One resident sent me this important feedback but wished to remain anonymous. Some of my own thoughts to representatives in an email this morning follows.
“Thank you for your editorial in the New Canaanite! You are preaching to the choir.
I have noticed that the MER (‘minimum expenditure requirement’) is rarely mentioned when talking about BOE spending and its effect on the increased spending year after year. Citing from a publication – ‘State law requires cities and towns to spend at least as much on education from one year to the next, with a few exceptions for things like declining enrollment.’ Every year that our town government has authorized increased spending in the schools, the town government has boxed us into a situation that has forced equal spending the next year. Their actions of increased educational spending every year for decades has resulted in the ballooned spending in our schools and increased burden on our town’s citizens. If the increases do not stop here – we are soon going to be hurled over the precipice by the ever increasing burden of the educational budget. The town government has appeared to be reticent to freeze spending and to apply to the state to reduce spending requirements when school enrollment is down … but instead increases school spending even more. If other good quality schools can accomplish good results on less per student, why can’t New Canaan do the same?
We have been residents in New Canaan for over 30 years and the amount of spending and wasted funds in the last two decades has been mind-boggling. No household can run that way, so how can our government expect to do so. One would hope that a local government would be more concerned about being financially frugal and responsible with its RESIDENTS’ funds paid in trust for the benefit of the town population. As less ‘older’ New Canaan residents no longer can afford to live in ‘their’ town and are being supplanted by ‘bigger pockets,’ it appears that the spending philosophy of the town changed. With the latest assessment those of us who are older residents in mid-size homes and condos will find our property taxes rising significantly and inequitably, causing financial stress and possibly additional flight from the town. Many of us have served our ‘dues’ to our town for many years and have served as volunteers on committees, nonprofits, and local government. It is sad that we are being ‘forced’ out of New Canaan financially when many would like to Stay Put.’
My comments to town reps: I have received many comments with a similar message. All of these messages give me reinforcement in viewing this as a multi-year fight against anyone that doesn’t pursue fiscally conservative policies. If you think there is no room to cut this year and in years ahead explain to residents if you decide to run again why it’s acceptable to increase property tax rates by ~7% this year? A year in which ~27% will see their property tax burden increase by 10% or more, while those with lower tax burdens faced home devaluation of ~7% or greater. Explain to residents why our property revaluation was down 7.2% versus Wilton at down ~2% and Darien down ~1%? Why we have 18 months of home inventory, the highest by far in Fairfield County? Why the totality of our debt (deferred spending) and current spending far exceeds any other town/city in a spendthrift State? Why their representatives still can’t figure out where to put a couple dozen BOE administrators — and spending ~$340,000 a year in rent for recently expensively renovated office space — despite having a wealth of large town-owned properties and underutilized or empty classrooms. Why Westport is cutting 17 FTEs this year, but meaningful cuts in staffing is anathema in New Canaan following a decade between 2007-2017 where enrollment was up 2% and FTE count was up 16%! And you can tell them why their continually higher costs of living here doesn’t matter that much, that it’s only Hartford’s fault, or you are convinced their town government is an efficient spender of their tax dollars despite overwhelming evidence over decades disproving that. There will be plenty more “why” questions. You can safely bet on much more individual accountability going forward!
This is exactly what I have been saying. In your household if you or your spouse or both are out of a job, do you put the blinders on and continue to spend because you are in a fairytale? Grab yourself by the butt, stop spending and see where you can reduce expenses.
Rep Tom O’Dea — we are very lucky to have him — stated last night that between 2014 to 2017 NC incomes taxes to Hartford have dropped from ~$225 mm to ~$190 mm. It speaks to a lot of the points many of you have raised on this thread.
What is that potentially an indication of? Perhaps older residents that have accumulated more wealth moving out because costs are too high, and younger folks are moving in because our homes have become so devalued they can now afford it. Maybe some will see this trend as a good thing. It may have led to a blip in kindergarten pre-enrollment though we’ve seen it blip up before with no follow through. Should we be rooting for enrollment growth from home devaluation so that NESDEC’s projected enrollment decline of ~15% over the next 10 years becomes less awful? No! If our costs are too high these same people will be selling their home once their kids are out of school.
James — I have to say how sorry I am that you were treated the way you were last night at the meeting — I think I speak for a lot of residents
— people do go over their allotted time when speaking — pro BOE speakers were not treated as you were by a certain TC members
Tom Butterworth who showed real aggression toward you for what reason
I don’t know and the BOE minions who started clapping while you were speaking show how low class they are — I guess some people
fear the truth
Thanks Rich. Comes with the territory. Really difficult to change entrenched beliefs. There’s always going to be push back, especially when I’m discussing the need for change. What’s disappointing to me is that I heard very little last night that was based on substantive analysis/data from town/State budgets. We have excellent schools and we should maintain them, but I heard barely any analysis last night challenging the presumption that it is primarily ever increasing spending that is driving that excellence. To the extent it is spending and not family environments and other factors, what can be cut when our homes are constantly being devalued that will have little to no impact on the classrooms? The answer isn’t nothing! We’ve heard that response for far to long and now we have the highest total debt and spending per resident in the State by a long shot. I’m ranting so I’ll give myself a self-imposed time out right now…
James, I’m hoping you will consider running for First Selectman in 2019. I appreciate your efforts and facts-based analysis.
Thanks John, Steve, Penny, Mike, Joe, and Liz for your votes against New Canaan’s relentless spending and tax hikes.
Chris — I think you thanked Liz — I think the 6 were
John, Steve , Penny , Mike , Joe and Christina not Liz
Mike our great reporter will know for sure
6 got it right and 6 got it wrong — time will tell which 6 got it right
Thank you First Selectman Moynihan for taking the longer view that was articulated very well by council member Rich Townsend on Tuesday evening.
Yes the man who never saw a budget he could not cut by 5%
Had trouble cutting a budget by .003% next time we will know his words have no meaning never get my vote again
The 6 who voted for a budget reduction of $207,000 were John, Steve, Penny, Joe, Mike, and Liz. The 7 who voted to not reduce the budget were Richard, Tom, Jim, Christa, Christina, Sven, and Kevin (tie-breaking) vote.
We have far and away the largest debt (deferred spending) plus current spending per resident of any town/city in the State. Residents should plan on a property tax rate increase of ~7% this year. Median home values are down over 20% so far this year.
James this may seem like a technicality, because the only changes that the Town Council can make to the budget are reductions, but I don’t recall that the vote was for a reduction of $207,000. I know that John Engel mentioned $207,000 specifically—however, I believe the motion that required Kevin Moynihan’s vote was whether to preserve the Board of Ed’s operating budget or not. Had he voted “no,” then the Town Council would’ve been able to take up the matter and it’s likely that someone would have made a motion for that reduction. However, it never got that far.
We now know who to vote out
All too often Town officials justify spending for non essential projects and new deficit funding to the availability of unusually low interest rates for extended periods of time. However this approach leads to bubbles and dire tax consequences in the future when interest rates normalize or a financial correction exposes how NC is vulnerable to the health of banking and Wall St
You are correct Mike. Also, I should clarify that the median house value drop of 20%+ year-to-date refers to sold homes.