TIME AND PLACE OF MEETING
The meeting was called to order at the East Windsor Town Hall at 5:10 p.m.
Denise Menard, First Selectman, Chairman
Also present: Chrissy Caruolo, Webster Bank
CHRISSY CARUOLO FROM WEBSTER BANK WILL GIVE A PRESENTATION REGARDING CAPITAL PROJECTS
Chrissy Caruolo introduced herself and the history of Webster Bank assistance with the Town. She detailed a whole world of theory about capital budgets and why to separate from operating budget. A capital budget is more specialized while an Operating budget is recurring expenses happen every year – spend money on things go away – salaries, supplies. Some town who can afford pay large capital items out of operating budget because they can. In other towns Capital items are treated separately
She also distributed GFOA Recommended Practices by the National Organization of Finance Directors which contains recommendations policies and practices.
Capital budget have detail such as a specific dollar amount where cannot get in unless meet threshold. In East Windsor the threshold currently is $20,000.
It is Multiyear planning East Windsor’s plan is five years out. In reality past practices have been that the last four years change a lot – first year front loaded and the rest has been a wishful thinking list.
Ms. Caruolo also brought other polices plan from other Town of East Windsor for the committee to review.
Historical analysis of capital budget and debt service of East Windsor was explained in detail. Ms. Caruolo will correct any items on those sheets, as well as include the amount of debt.
The grand list growth used in the sheets distributed is at 2% based on historical data of average grand list growth.
There are two theories to Capital budgets. The pay as go thru operating budget which is the cheapest way; or the other theory is to borrow and have five years of taxpayer pay off as those taxpayer have benefit of project
Ms. Caruolo indicated one spread sheet which shows that the town has borrowed to purchase large items – to do so again would be to continue what town has been doing.
Ms. Caruolo outlined that some towns are protective of capital budget and cut in other places rather than capital projects. But did not think it unusual that East Windsor makes cuts to capital projects.
Ms. Caruolo, when asked what she sees has worked, she indicated it depended on town. Some towns are willing to pass budget with large increases – others are not. Some towns set aside money every year and use cash. Others rely on issue debt – as once debt passed you have to pay it. It is more expensive but not more expensive if look at maintaining infrastructure.
Item distributed – “Tax supported debt and capital budget as a % of general fund expenditures”
Many towns use 10% in debt to capital per year. The label was in correct (The cross-hatch on graph is debt). The graph shows that next year the debt drops off a lot – so it will be a year to add debt and keep expenditure level with no mill rate impact.
Item distributed – “Debt and Capital Expenditures as a % of total 2008-09 approved budget”
Ms. Caruolo put this together, but invited Ms. Menard to advise if there are other towns usually correlated with East Windsor.
Item Distributed “Tax supported cip spending at .5 mills per year”
This graph shows what the picture would be if you dedicated ½ a mill – and it looks feasible due to the upcoming debt drop off. It was discussed that a mill is worth 167,000. ½ a mill would be 80,000.
Ms. Menard discussed the idea of dedicating either 2 or 3 mills or set dollar amount or set percentage of budget for CIP expenditure. This gives the committee a solid amount to go in and say specific amount, look at all requests – for amount of money prioritize. Currently the reverse is done – what are the best projects – presented and then board of selectmen and finance review and determine what is appropriate for the budget (without attendance at presentations). This is a different way of doing the cip budget.
Ms. Menard indicated the town is not expecting to incur significant debt currently except for a fire truck. A school study is a potential CIP proposal. But there are no commitments for significant future debt. In 2010 a significant reduction in debt – that could be a time and place to target a mill at that point – so there would be no impact at that time.
It was noted that the ideas presented now for funding the CIP is a business concept and looks to make sense for a capital program. Discussion took place on projections for housing and increased population in schools in future years Projections and thoughts to consider. As well as discussion of federal and state spending as projected.
As a matter of policy, it would be helpful to have more specific guidelines to devote to Capital budget and make more consistent.
While towns described in the discussion are not necessarily comparative size and budget wise these are ideas of what other towns do to fund capital projects.
Ms. Caruolo distributed the Berlin comprehensive capital planning for the Committee’s review and detailed specifics regarding length of borrowing time, nonformal policy keep capital items to 2 mills, as well as how Berlin specifically funds their cip.
She also distributed the Tolland Capital Financing Policy. Berlin and Tolland designate specific revenue to specific cip programs. Wethersfield Capital Acquisition and improvement policies were also distributed for information.
Ms. DeSousa, Chairman of the Board of Finance, indicated that the misperception of a CIP in Town for East Windsor. By providing information to the public it will help to disillusion the concept this is a wish list.
Ms. Menard felt that the Board of Selectmen and Board of Finance should adopt a CIP policy. It was discussed that monies will need to be spent to bring items up to par – once CIP projects and repairs are made, then it remains an operating expense. Ms. Menard felt that a policy the governing boards and the financial boards and infrastructure boards all buy into the philosophy behind funding the concept.
An idea of a consistent funding policy and it would be a good time due to the debt service drop off in 2010.
Ms. Caruolo indicated that the Board of Finance needs guidance from the Capital Improvement Planning Committee as to what is urgent and what is in the five year plan – and to stick to the five year plan.
In the municipal bonding structure East Windsor is rated A1. This is the highest of the A’s. It was inquired if the % benchmark of spending to maintain rating – it can be effected it if a Town is overspent in debt and it can swing and be under funded. These items can effect outcomes in funding, but you need to look at the entire picture.
Based on lower debt in 2010 and the infrastructure problems could (not guaranteed) effect the rating. Rating is on the debt of town holds – so if town has no debt, it has no rating – you have not need for rating unless you borrow money – to get the good rates, you need a rating. Further discussion took place of future projects to possibly bond. 90% municipal debt is a general obligation bond – strongest bond issued with lowest interest rate. Extensive discussion took place on bond practices and how bonds are structured and backed for the committees information and knowledge.
Ms. DeSousa felt it was great that the boards were working together and have some experience from past budget sessions and now members are aware of what can change and what would work figuring in what has not worked in the past and the requests of the public for more information.
TO REVIEW AND DISCUSS THE CAPITAL IMPROVEMENT PLAN FOR THE FISCAL YEAR
At last senior staff meeting Ms. Menard made it clear that capital projects under $20,000 and/or those requests that do not have back up material would not be considered by the CIP Committee.
Ms. Menard stated, after the presentation by Webster Bank that the CIP needs to face the fact that the policy cannot be changed this year and the Committee needs to get going on capital projects and requests from various agencies.
The Committee discussed the upcoming presentations and historically when and how they are held. The public safety presentations are to be held on December 3 – in 30 minute blocks as follows:
5:30 – 6:00 p.m. Warehouse Point Fire Department
6:00 – 6:30 p.m. Broad Brook Fire Department
6:30 – 7:00 p.m. East Windsor Police Department
MOTION: To adjourn at 6:30 p.m.
Made by Mr. Norton , Seconded by Mr. Simpkins
ALL MEMBERS IN FAVOR. MOTION CARRIED.
Cynthia D. Croxford