Wednesday, October 19, 2005

Town Finances

There were a couple of requests to discuss Town finances. One specific request was "How about taking on a 'rural legend' such as:-The town's 'rainy day' fund has been washing away over the past 2 years. True or False?" Good question. There were also questions about the long-term finances of the Town. I don't have the answers tonight but I will gather up the information and try to shed some light on the subject as best as possible. In the meantime, feel free to share any information you might have.

9 comments:

Anonymous said...

A definition of the "rainy fund" should be established. CIP is holding funds that should not be included in this "fund".
Let us determine exactly what the town has for "rainy day" funds and where the funds are invested.
The teachers pension funds should also be looked at as we operate under State of CT. rules for this investment to cover future liabilities for these pensions.
Willington is responsible for these pensions. Should the State fail to invest properly we will get the bill.
Notice that the State has been investing our teachers pension money in hedge funds and derivitves.
Given the State track record this is not a good bet.

willington taxpayer said...

Most people consider the "rainy day" fund to be the general fund balance held by the Town. The general fund balance is the accumulation of all yearly surpluses and deficits since the inception of the Town.

The Capital Reserve (or CIP)funds are a combination of different funds which can be used to pay for capital projects. The reserve fund is a savings account which can be used by the Town for any project it so desires. This reserve is funded by annual contributions from the general budget. There is an emergency services reserve fund which is to be used to pay for emergency services equipment like the ambulance or fire trucks. This reserve is funded by monies collected from ambulance calls.
Another fund is called the Local Capital Improvement Program (LOCIP) which is State funded. This money can be used for non-school related projects.

The Town invests both reserve money and general fund balance in the State Treasurer's Short-Term Investment Fund (STIF), which is an investment pool managed by
the State Treasurer's Office. It also invests in the Cooperative Liquid Assets Security Systems
Fund (CLASS), which is an investment pool managed by MBIA Municipal Investors Service Corp. Both funds are highly liquid and extremely conservative.

I agree with the teacher's pension funds issue being raised. The State continuously fails to live up to its obligations regarding the pension plan. Many elected officials have a very short-term vision and the voters allow them to succeed with that vision.

Anonymous said...

Re: "rainy day fund"
Willington Taxpayer has very constructive comments concerning finances of Willington.
We still do not have, but should have, a definition of "rainy day fund".
This should be a fund completely seperate from all other town funds. The only manner in which the "rainy day fund" could be used is with the vote of the Board of Finance.
In simple terms what Willington is doing is leaving all monies in a checking account and nothing in a savings account.
If the town does not have a "rainy day fund" let us not pretend that it does. Establishment of such a dedicated fund whould be good for the town.
Thanks again to Willington Taxpayer for constructive comments.

willington taxpayer said...

The general fund balance is invested in an interest bearing "savings account". It is akin to a money market fund. NO money from any reserve fund or the general fund balance may be spent without Board of Finance and Town meeting approval. The credit rating agencies recommend the Town maintain a minimum of 5% of annual expenditures in the general fund balance. We currently have about 9%.

The general fund balance is there to help with cash flow and to be a cushion when we have a catastrophic event requiring an unexpected large expenditure of funds like last weeks washouts of roads.

Since we ran out of money in the mid-70's, the Town has tried to maintain an adequate general fund balance for emergencies and other occasions.

Anonymous said...

I agree wih Willington Taxpayer in that the town finances are in very good order with our 9% general fund excess balance based on current expenditures.
This fact does not mean that the town has a "rainy day fund". The town does not have a rainy day fund. Let us not discuss something that does not exist.
With that established, maybe the conversation should revolve around the issue of the status of the ratio of expenditures to cash balance. In conjuction with that disscussion the issue of actually having a dedicated fund could be raised.

willington taxpayer said...

... With that established, maybe the conversation should revolve around the issue of the status of the ratio of expenditures to cash balance. In conjuction with that disscussion the issue of actually having a dedicated fund could be raised.

What would you consider the distinction to be between a "dedicated fund" and the general fund balance which exists to take care of unexpected problems?

I agree that the ratio of cash balance to expenditures is important but we must also take into account not just cash but deferred or no maintenance. Not doing maintenance helps your cash balance but creates much larger problems down the road. The new accounting rules (aka GASB 34)being implemented for municipalities is trying to account for not maintaining existing infrastructure. The new rules make a lot of sense although they require a lot more work and data collection for staff.

If you are interested in the Town finances, you can get a copy of the Town's consolidated annual financial report (CAFR) which goes into a lot of detail about the Town's finances. A copy of the 2003 CAFR is available on line at www.willingtonct.org and the 2004 CAFR should be available at the Town Office. I don't know why they didn't put it online.

Anonymous said...

Can anyone tell us the tax increases over the past 4 years, year by year?

Anonymous said...

Re: Tax increases year by year for the last four years.
Those numbers are easily available. Under the assumtion that you refer to taxes in Willington I would say the best way is for you to go to the tax assessers office and request your tax bills for the past four years.
Willington only taxes real and personal property (excluding business which pay other taxes) so the tax increase for a property owner would depend on the value of property owned.
Should you desire to find out the amount of town expenditures that number is also available by reading our annual reports. You will also be able to break it down as to the amount of increase attributed to town government and our education system by town schools and region 19.
Hope that is a help.

willington taxpayer said...

anonymous asked "Can anyone tell us the tax increases over the past 4 years, year by year?"

I took the average household assessment received from the Assessor's office and multiplied it by the mill rate. The average house tax bill increase by $583.72 in the last two years (2003-2004)which included a revaluation year or an average of $291.86 per year increase. Prior to those two years and if I include the previous revaluation year (1999) to be fair, the average house tax bill increased by $329.75 over a four year period (1999-2002)or an average of $82.44 per year.