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Thursday, April 5, 2012

To balance Wallingford budget, mayor had to dip into rainy day fund

As published online at

By Mary Ellen Godin
Record-Journal staff
(203) 317-2255

WALLINGFORD — The mayor’s proposed budget for 2012-2013 includes adding $4.3 million from the rainy day fund to maintain services without costing taxpayers more.

“It helps balance the budget,” said Finance Director James Bowes. “It’s considered a tax savings while helping provide services.”

It’s not unusual for Mayor William W. Dickinson Jr. to use surplus funds to cover shortfalls in other areas. This year those shortfalls are created by a $5.2-million increase in department requests, fewer state and federal grants and unfunded mandates, Dickinson said at a budget presentation Monday.

Had he not dipped into the fund, it would have meant another 1-mill increase for taxpayers or drastic cuts in services. As proposed, the budget comes with a .76-mill increase to 25.98 mills.

The rainy day or surplus fund now has $14.8 million, or $10.5 million if the budget is approved, Bowes said. The town works to keep more than $9.8 million in reserve to maintain its AAA credit rating, Bowes said.

But town councilors are worried about rebuilding the rainy day fund in 2013-2014 when town employees who did not get raises this year have wage increases negotiated for next year. A large concern is teachers, who are set to receive close to $2 million over the next two years. Three other unions representing managers, clerical staff and police and fire department employees are also in negotiations and could be in line for two-percent wage hikes.

“With eight, nine percent unemployment, you have everyone functioning like everything is normal,” Dickinson said. “Wages should be tied to the private sector.”

Town Councilor Jason Zandri said the rainy day fund can be likened to a personal savings account. If mortgages and utilities increase and a person continues to dip into it, it’s going to wither.

”You’re taking more out of the bank and eventually run out of that savings,” said Zandri, a Democrat. “You need to put it in every day.”

Town Councilor Nicholas Economopoulos said the fact that the rainy day fund had to be used to pay for existing services shows that this budget challenged Dickinson, a Republican.

“He’s definitely aware of it,” said Economopoulos, a Democrat. “He has his back against the wall. He has a challenge to make it more efficient and accountable. We may have to turn to fire and say, we can’t do it for you,” he said referring to plans to build a new firehouse.

Town Councilor Craig Fishbein, a Republican, said the rainy day fund is designed to cover shortfalls in the budget and prevent tax increases, but he’s more worried now.

“As I pointed out last year, that money is dwindling,” Fishbein said. “You don’t have that money next year to pad the budget.”

The most effective way to replenish the rainy day fund is through the town’s grand list, Bowes said. This year’s grand list growth generated $900,000 at the current tax rate. A residential and commercial real estate market that’s slowly stirring back to life could boost revenue, he said. But there is no magic bullet.

“It’s a multi-faceted question and there is no one answer,” Bowes said.

The town’s residential and commercial tax burden doesn’t fluctuate wildly even after revaluations, he said. In 2010 commercial property values dropped from 65.1 percent of the town’s tax burden several years earlier to 64.18 percent. In 2011, it was 64.05. Commercial and industrial property owners picked up slightly more of the burden in 2010 and 2011, but personal property or equipment taxes declined due to depreciation.

“Businesses have to replace those assets with newer assets at a faster clip,” Bowes said. “That’s a large component.”

Businesses moving in and moving up also help that number grow. The town also has to see some return of state and federal grants, instead of one- or two-year programs that evaporate leaving the town to support new hires, or new programs, Dickinson said Monday.

Fishbein said the town needs to take another look at agencies and programs it’s sending checks to and stop paying the state $70,000 a year for bus service, among other changes.

Economopolous said it might be time to say no to large projects such as the fire station, while Zandri said it’s time to review agreements with local non-profits for payments in lieu of taxes.