Rutishauser & Balderston Respond to Criticism of BOF Budget Analysis
Last week, resident Peter Squitieri wrote a Letter to the Editor (“Budget MUMBO-JUMBO from the BOF”) commenting on budget numbers prepared by the Board of Finance as part of the budget-setting process for FY2020, and was critical of analysis of those numbers put forward by BOF member Peter Balderston (“Wilton’s FY’20 Budget a “Perfect Storm” of CT’s Ailing Economy, Grand List Woes & Student Enrollment Declines”). Today, both BOF chair Jeffrey Rutishauser and Balderston respond.
To the Editor:
A recent letter to GOOD Morning Wilton used some numbers from a chart of budget numbers I put together but showed a fundamental misunderstanding of the budgeting process itself. To provide clarity, I will go over the entire Board of Finance (BOF) budget process, including final numbers for the past five fiscal years.
Every year, during the period from mid-January through late March, the BOF assembles a number of budget inputs, including Board of Education (BOE) and Board of Selectmen (BOS) approved budgets, Grand List, other non-tax revenue, excess reserves, etc.. These are “rolled up” and presented to the public at the BOF Public Hearings in late March. At the hearings, the financials are presented including the projected (initial) “shortfall” amount and the associated mill rate increase necessary to close the shortfall assuming that the BOF makes NO budget cuts. Then, depending on how we assess the situation, we either accept submitted budgets or reduce them in the Mil Rate meetings. The remaining shortfall after budget cuts (if any) is calculated and the mil rate increase is determined.
A fundamental concept is that we can only close the initial shortfall by reducing BOE/BOS budgets and/or raising revenue (combination of Grand List growth and mil rate increase). It is a zero-sum situation each year.
The table above shows the results of the past five fiscal years:
FY16–There was an initial shortfall of $2,276,490 after the “roll-up”. The BOF decided to not reduce either BOS or BOE budgets so that the entire FY16 shortfall was closed by a revenue raise, resulting in a mil rate increase of 1.20%.
FY17–There was an initial shortfall of $3,005,947 after the “roll up”. In the Mil Rate Meetings, the BOF decided to cut the BOE budget by $400,000 and the BOS budget by $218,000, reducing the shortfall to $2,387,947 which was closed by a revenue increase. This resulted in a mil rate increase of 1.89%.
FY18–There was an initial shortfall of $2,163,706 after the “roll up”. The BOF decided to not cut either BOS or BOE budgets so that the entire FY16 shortfall was closed by a revenue increase, resulting in a mil rate increase of 1.58%.
FY19–There was an initial shortfall of $2,903,279 after the “roll up”. The BOF decided to cut the BOE budget by $500,000, reducing the shortfall to $2,403,279 which was closed by a revenue increase. This resulted in a mil rate increase of 1.51%.
FY20–There was an initial shortfall of $2,892,588 after the “roll up”. The BOF decided to cut the BOE budget by $1,107,044 and the BOS budget by $309,305. The remaining shortfall was covered by a revenue increase of $1,476,239, raising the mil rate by 1.24%.
If the three categories used to close the $13.24 million of shortfalls from FY16 though FY20 are added together, we have:
- BOE budget reductions of $2,007,044 (15% of the initial shortfalls)
- BOS budget reductions of $527,305 (4% of the initial shortfalls)
- Revenue increases of $10,707,660 (81% of the initial shortfalls)
Finally, to summarize:
- Total Funds Required rose from $112.23 million in FY15 to $120.41 million in FY20, an increase of 7.3% over the 5-year period.
- Over the same period, the net Grand List fell from $4.233 B in FY15 to $4.219 B in FY20, a drop of 0.3% over the 5-year period.
- The mil rate, essentially the tax rate on existing property, rose from 26.5132 in FY15 to 28.5373 in FY20, an increase of 7.6% over the 5-year period and faster than the growth rate of government.
In other words, the town’s spending growth during the last five-year period was covered entirely by tax rate increases with little to no help from Grand List growth.
The point of the chart above was to demonstrate that, with Grand List growth essentially flat, Wilton has become overly dependent on revenue increases predominantly through increasing the mil rate, to close our chronic budget shortfalls/deficits. This is putting additional financial pressure on taxpayers and softening real estate prices. Those are important considerations to us on the BOF.
Chairman, Wilton Board of Finance
To the Editor:
Peter Squitieri’s May 10, 2019 GOOD Morning Wilton letter maligns an analysis I published in GOOD Morning Wilton. My analysis provides historical data as the context for the April 2, 2019 Board of Finance’s (BOF) mill rate vote. I stand by its content and take offense to Mr. Squitieri’s implication that these numbers were presented in a fashion to mislead or that my mil rate vote was undertaken to simply benefit Wilton homeowners who have more expensive properties.
Mr. Squitieri states in his May 10, 2019 letter: “A budget cut cuts taxes proportionally for everyone, and the high-end houses benefit from it much more than the lower-end housing.” To refresh the reader’s memory, the BOF held both the Board of Education (BOE) and Board of Selectmen (BOS) flat to their fiscal year 2019 budgets, rejecting requested increases by both boards. Nevertheless, FY 2020’s mill rate will increase by 1.24% as the residential portion of our Grand List was down over 4%.
More importantly, as Mr. Squitieri notes, this increase in percentage terms will be disproportionately felt by smaller homes and condos. It is true higher-appraised homes in Wilton (i.e. generally those greater than $1 million) will see their property taxes fall as a result of the 2019 Assessment. Why? Because of very significant value depreciation of those higher-priced homes–on the order of 20 to 35% as reflected by actual home sales over the past three or four years. This is not to engender sympathy for those in higher appraised homes. It’s just a fact, and likely a painful one for many recent sellers of higher-priced homes who purchased their homes at the top of the market.
Mr. Squitieri goes on: “I live in one of the lower end condos, and expect a tax increase of 16% this year, on the very high end of increases. If the budget had been left as [originally proposed by the BOS and BOE], I would have paid another $126, which I’m sure I could afford.”
Do Wiltonians–particularly those in the smaller homes and condos–feel as sanguine and matter-of-fact about a double-digit tax increases as Mr. Squitieri? I doubt it and I voted accordingly. As the BOF member who proposed the measure to keep the 2020 BOS & BOE budgets flat to last year, I felt it was appropriate and fair to balance the needs of our town agencies with the tax burdens on those who are least likely to afford the substantial increase resulting from the 2019 Revaluation.
Do Wiltonians feel that the votes of BOF Republicans were motivated to benefit those in higher-priced homes as Squitieri says: “it looks like the intent [of the vote] was to distribute the change in the other direction [to benefit higher-priced homeowners].” This is the second time in less than a month that a senior member of Wilton’s Democratic Town Committee has leveled unsubstantiated accusations of bias or unethical behavior by Republican BOF members.
First, Squitieri has no proof of this. Second, he ignores the fact that during Wilton’s strong growth period (the 1990s and early 2000s), the burden of sizeable year-after-year tax increases fell disproportionately, on a dollar basis, on those in the largest, most-expensive homes. I’m betting most Wiltonians found the BOF vote to keep budgets flat to last year an appropriately fair measure to moderate a sizeable tax increase for those who are likely to least afford it.
Policy does matter and carrying it out in a defensible and transparent fashion while considering the impact of the town’s tax burdens on ALL residents is what I think the BOF majority members did this year. I will continue to focus on facts and contextual factors in my votes and avoid, like most decent people, leveling disparaging innuendo or unsubstantiated allegations at others in the press.
Peter R. Balderston
Board of Finance Member
 The other appeared in the April 17, 2019, Wilton Bulletin, “Commentary: A zero-percent budget increase is wrong,” where the author, [BOF member] John Kalamarides, reacting to the BOF’s approved zero-percent budget increase for 2020, stated: “It was clear they had met overnight, had made up their minds, and were going to vote for a zero percent increase.” No such meeting took place among Republican BOF members. In fact, after the April 1 Tri-Board Meeting referenced by Kalamarides, three of four Republican BOF members went to Marly’s Restaurant for a beer with Ceci Maher, the newest Democrat BOF member.