Statement by Bud Morten to the Fairfield Board of Finance on Saturday, March 23, 2013
Thank you for hosting once again this public forum on the critical subject of Fairfield’s spending and taxes.
Thank you also for your public service, and for the excellent work your board has done to improve the town’s financial integrity by imposing discipline and transparency in the management of its capital spending, debt and long-term liabilities.
Since I cannot complete all my remarks in the two minutes allowed, I will send each of you a copy of my full statement, and I invite anyone else who is interested to go to the FairfieldTaxpayer.com website where a copy has been posted.
My conclusions are as follows:
Everyone appreciates the ongoing efforts that have reduced the proposed tax increase from 6.4% to 4.8% -- or from 3.2 times inflation to “only” 2.4 times inflation.
However, tax increases higher than the inflation rate cannot continue; they are steadily eroding Fairfield’s ability to remain a desirable and affordable community for all its residents; they are squeezing our household budgets, hurting our property values and forcing more and more of us to leave Fairfield.
The increase in FY 14 should not exceed 2%, the current rate of inflation, which is in line with what towns like Greenwich, Westport, Weston and Trumbull have proposed. The First Selectman and the BOE should work with department heads and the Superintendent of Schools to achieve this objective through efficiencies and service reductions that will have the least impact on residents and students.
For future years, my recommendations are as follows:
First, create a five-year plan that will reverse the downward trend in Fairfield’s affordability by holding future tax increases below
the rate of inflation.
Second, BEGIN every future budget cycle, as we all do at home and at work, by first establishing how much we can afford to spend.
Third, END every budget cycle with a clear explanation from every town body of why it considers the budget it approved to be affordable for the taxpayers.
Fourth, create a long-term, strategic plan for the town that, among other things, addresses the need for more non-residential commercial development in order to ease the burden on residential property owners.
Fifth, demand that the school and town administrations provide budget breakdowns by service so that the people and their elected representatives can make informed decisions about which services they want and can afford from their government.
Sixth, demand strong leadership from our State Representatives on the issue of unfunded state mandates that increase our local property taxes, like Binding Arbitration, Minimum Budget Requirements and Prevailing Wages.
Seventh, consider reforming our Town Charter to include a requirement that the town budget be approved by a town-wide referendum each year.
Please note that while I recommend significant budget cuts and offer specific suggestions of where they might be made, I do not presume to know better than you and other elected officials where in fact they can best be made; some of my suggestions may not be feasible for reasons I do not yet understand. Likewise, while I recommend that every town body focus on affordability and can offer specific suggestions of how affordability might be measured, I do not presume to know better than you and other elected officials how this can best be done.
The Board of Finance was the one, when no one else had the political will to do so, that stopped the town from kicking its “Long-term Liabilities Can” down the road – the can that was filled with pensions, OPEBs and bonding. Unfortunately, there is another can that has become just as dangerous to the town’s long-term financial well being – the “Affordability Can.” If this board does not address it, who will?
Thank you again for this opportunity. * * * * * * * * * *
There is an old saying, “You can ignore reality, and you can deny reality, but you can’t escape reality.”
This is relevant to today’s meeting because Fairfield seems to have been in a state of complete denial about the serious Affordability problem it faces after the last 14 years when spending and taxes increased at 2.5-3 times the rate of inflation.
The clearest sign of ignoring and denying reality is that, with tax rates already 11%-125% higher than other fine Fairfield County towns
(e.g., Darien, Westport, Greenwich, Ridgefield, Wilton and New Canaan), our First Selectman, with a straight face and without blinking an eye, was willing to propose a 6.4% increase in taxes next year, more than three times the rate of inflation
In case you were wondering, other towns in Fairfield County are not in denial. Even a town like Greenwich, which can afford to spend more on anything and everything than Fairfield and where taxes are currently 56% below those in Fairfield, there is real concern about affordability. Thus, not surprisingly, Greenwich, Trumbull, Weston and Westport, four towns facing all the same problems and pressures as Fairfield
, are initially proposing increases in FY 14 taxes of only 1.8%
on average within a narrow range of 0.6% to 2.5%.
Listen carefully to what the Greenwich Board of Estimate and Taxation said recently: “We are now in the fifth year of a recession that has seen home values decline, investment portfolios shrink and unemployment remain stubbornly high. A severe recession has gripped our nation since 2008. A fresh look at the budget guidelines is called for, and central to a fresh look is the question of what services do our citizens really want, and are willing to fund, and how can we provide those services more efficiently. We recommend that the total operating costs for FY 14 be capped at a 2% increase over FY 13.”
Listen to the First Selectman of Trumbull, who recently said: “The Town of Trumbull continues to operate under the constraints of a global economic recession that has had profound impact on our residents, our region, our state and our nation. At the Federal level, our citizens just saw a payroll tax increase. At the state level our residents are still reeling from the largest tax increase in the history of the state of Connecticut. Just this week, Governor Malloy proposed a biennial budget that if approved in its current form, will cause drastic increases in property taxes at the local level. This year I am proposing an overall town budget that requires a modest tax increase of 2.13%.”
Listen to Westport’s First Selectman: “A recent book entitled ‘The Age of Austerity’ argues that America has entered a period of austerity markedly different from anything we have seen before. We and our residents have been greatly impacted, despite our reputation as a wealthy community. We face the same issues as our neighbors – increasing health costs, pension and OPEB obligations – and increasing costs to maintain our quality of life. The overall town budget will increase about 2.5%.”
From Weston: The budget presentation begins with a section entitled, ‘Community Economic Indicators,” and presents a series of charts showing the continued rise since 2008 in the number of Weston households in financial need and in the town’s unemployment rate, and shows the recent history of foreclosures and short sales. Another chart shows the dramatic fall in new construction activity from the peak in 2006. Following increases of only 0.3% in both FY 12 and FY 13, the First Selectman proposes an increase in the mill rate for FY 14 OF 0.58%.
It is very important for everyone to understand that Fairfield must compete constantly to attract and retain residents who are willing to pay for services they don’t use. For example, the average home in Fairfield pays ~$10,000 in taxes, and every one of them enjoys municipal services like police and fire protection, roads, parks and beaches that – after deducting what is paid in commercial and industrial taxes – cost ~$5,000 per household. The other $5,000 in average residential taxes goes to support our public schools, but only 30% of Fairfield homes have children in our schools. So, on average, at least half of the taxes paid by the 70% without public school children represents a payment for services they don’t use. Some had children in school in the past and are happy to pay back some of the subsidy their family received; some may plan to have public school children in the future, and are happy to pay forward some of the subsidy they expect to receive; and some have never used and will never use our public schools.
If the cost of living in Fairfield becomes too high relative to other communities with equal or better schools and services, more and more people will leave, and fewer and fewer people who are moving into our area will choose Fairfield. When this happens, property values decline, pushing tax rates even higher in order to sustain the same services, resulting in further pressure on property values and a growing exodus that can be very difficult to halt or reverse.
Many of us here today feel that this downward spiral has already begun. Real estate agents all over town report that increasingly people moving into Fairfield County are not interested in Fairfield because our taxes are so much higher than other fine towns like Greenwich, Darien, Westport, Wilton, New Canaan and Ridgefield. Many of you may not feel overly sympathetic when I tell you that the market for homes at the high end of Fairfield’s market is extremely weak, with such homes languishing on the market for years despite sharp reductions in asking prices as more and more owners try to escape from their heavy and increasing tax burdens.
Why should you care if you don’t own one of these properties? Because as higher-end property values decline, the tax burden in Fairfield will shift more and more to lower-end homes, driving mill rates higher and higher and driving still more people to leave, particularly seniors on fixed incomes, despite senior tax relief measures (which, BTW, also increase mill rates for everyone else). That shift in tax burden will add further to the increasingly direct impact of tax increases on the cost of housing now that virtually everyone has already reduced their interest costs by refinancing their mortgages at the substantially lower rates that have been available in recent years.
Once this downward spiral begins, it is very difficult to reverse as “conventional wisdom” and perceptions spread (e.g., among real estate agents in other Fairfield County towns) that Fairfield is much more expensive in terms of its tax burden and can’t seem to control its spending and taxes.
As the spiral gains momentum, a tipping point is reached beyond which increasing numbers of people are forced to leave even median-value homes, and you end up with something that looks increasingly like Bridgeport where property values have collapsed and tax rates are extremely high.
To those of you who are here today to defend what some call “The Jewel” of Fairfield’s school system, I would suggest that you can defend it better in the long run by cutting spending now (e.g., non-core programs and courses, administrative support, teacher-per-student ratios) before it is too late and the relentless tax increases required to support “The Jewel” lead Fairfield further down the path to irreversible decline. Possible Opportunities for Savings & Higher Revenues in Fiscal 2014
: currently proposed at $6.6 million, up $3.0 million. Cut by $2.32 million
, which is 80% of the $2.9 million recently awarded by the court against Maxam Capital Management in connection with the Madoff Ponzi Scheme.
2. Health Insurance
: BOE currently up $4.3 million and Town currently up $0.2 million. Having reduced the original BOE increase of $5.4 million by $1.1 million based on improved claims experience, cut by another $1.4 million for the same reason, and by another $250,000 based on better rates by switching to a new carrier from Anthem. Total savings of $1.65 million
: currently proposed at $3.5 million, up $1.0 million. Cut by $1.0 million
, and fill potholes rather than paving entire streets in a year when we cannot afford to do so.
4. Reserve for Uncollected Taxes
: currently proposed at $6.3 million, up $1.5 million. Reduce to $5.5 million, still up 15% from last year, adding $800,000
to revenues. Economic conditions are still bad, but they are not getting that much worse.
: currently proposed at $2.6 million, up $2.3 million. Cut by at least $500,000
to reflect lower retroactive liabilities than expected under the new Police contract and perhaps under the new DPW contract.
6. Fees & Professional Services
: currently proposed at $5.5 million, up $523,842. Cut by $500,000
to a level roughly equal to last year.
: Eliminate the need for four additional policemen (one sergeant and three officers) by reassigning existing personnel to school safety from less critical programs like seat-belt and distracted driving enforcement. Savings: $450,000
8. Supplemental Contribution Surplus
: currently proposed at $925,000, up $425,000. Cut by $425,000
, to a level equal to last year because we cannot afford to increase the amount this year.
9. OPEB (Retiree’s Health)
: currently proposed at $8.7 million, up $340,393. Cut by $340,393
and hold this expense flat with last year based on savings in new Police and DPW contracts.
: currently proposed at $4.4 million for Library operations plus another $657,501 for library materials, resulting in a total of $5.1 million. Cut combined library budget by $250,000
(i.e., 5%) and either eliminate “nice-to-have” but not affordable programs like free DVD rentals or impose user fees that cover their costs.
11. Service Fees
: Raise fees at marinas where there are long waiting lists indicating that demand significantly exceeds supply at current rates. Add $150,000
12. Contributions to Non-Profits
: currently proposed at ~$800,000 should be cut by $100,000
, with most of the cut taken in the $350,000 contribution to the Pequot Library.
13. Senior Center
: Postpone hiring a Senior Center Director until we can afford it and until we know more about usage of the SC. Saving: $100,000
($68,800 in salary plus expenses).Total Savings and Revenue Enhancements: $8.6 million. Board of Education Budget
It may be possible to save enough money from improved efficiency and productivity to achieve the necessary reduction in the BOE budget without any cuts in programs or courses. If not, there are many courses that are “nice-to-have” but not currently affordable because they have few students enrolled (NB: 37% of all English, Math, Science, Language and Social Studies classes in our high schools have fewer than 15 students in them; data for all other courses are not disclosed
) and/or because they are too far beyond the scope of the excellent core education that we should be committed to providing. It is noteworthy in this regard that Fairfield’s high schools offer many more courses than do elite private secondary schools like Choate and Hopkins. In some cases, specialized, advanced courses could be offered at Fairfield University or Sacred Heart University at a lower cost. We can also raise ~$250,000
by instituting “pay to play” fees for high school athletics ($150 to $250 per sport). Some examples of potentially expendable courses at the high school level are as follows:
1. In addition to four years of French, Spanish and Chinese, both high schools currently offer four years of bothItalian
2. Gender Perspectives
: an English semester course focusing on the analysis of the changing portrayal of gender roles in literature and films.
3. Literature of the Supernatural
: a semester English elective that covers Non-Natural Beings (Vampires, Werewolves, Monsters, Zombies), along with Devils, Witches, Black Magic and the Afterlife.
4. Call of the Wild
: students are expected to participate in experiential activities that take place within wilderness settings, including a backpacking trip on the Appalachian Trail in north-west CT.
5. Understanding Film
: students need to learn how to read a film and to understand the art of watching a film, and will view films to understand human behavior so that they can make better choices in their own life.
6. Crime Lab Forensics
7. Crime Scene Forensics
8. Beginning Piano Keyboard
9. Chamber Orchestra
10. Concert Band and Wind Ensemble
11. Concert Orchestra and Symphonic Orchestra
12. Jazz Curriculum
13. Vocal Ensembles
14. Voice Class
15. Music Technology
16. Music Theory
17. Movie Production
18. Video Production
19. Introduction to Photography
20. Advanced Photography
21. Introduction to Digital Photography
22. Introduction to Pottery
23. Culinary Arts
: food preparation skills, quickbreads, eggs, fruits, vegetables, beef, poultry, pastry, appetizers, cookies and casseroles, soups and stocks, yeast breads, pasta and sauces, meats/poultry and seafood, cake preparation and decorating, international cuisine.
24. Food Services
: preparation of sauces, stocks and soups; appetizers; meats, fish and poultry; fruits and vegetables; salads and dressings; starches; baking and desserts; quantity food preparation, operating commercial restaurant equipment and operating in the in-school restaurant.
25. Four years of Fashion and Textiles Technology
: students will acquire and expand basic sewing skills through the use of commercial patterns and a portfolio.
26. Fashion Merchandising and Design
27. Interior Design
28. Physical Education classes in
· Cooperative/Team Games
· Flag Football
· Flag Rugby
· Floor Hockey
· Omnikin Ball “Kinball”
· Power Walking
· Self Defense and Strategy
· Team Handball
· Ultimate Flying Disc