As GOOD Morning Wilton previously reported, First Selectwoman Lynne Vanderslice attended the July 12 meeting of the Board of Finance (BOF) to request budget guidance from the BOF ahead of next year’s budget planning process by the Board of Selectmen (BOS) and Board of Education (BOE).
To make the case for why a budget target would be useful, Vanderslice highlighted data showing the cost of debt service for the Town will be increasing over the next few years — a reversal of the debt service trend that has helped to minimize Wilton’s mill rate increases over the past several years.
But Vanderslice felt the course of the July 12 discussion — notably, BOF vice chair Stewart Koenigsberg‘s question about what level of borrowing would put Wilton in a “danger zone” — may have left residents with the wrong impression about the Town’s level of outstanding debt. She took the opportunity at Tuesday night’s July 19 BOS meeting to assure board members and the public that Wilton’s expected debt levels are not unusually high.
Historical Context
In a memo sent to the selectmen in advance of the BOS meeting, Vanderslice offered a brief preview of what they’d be discussing.
“I attended [the July 12] Board of Finance meeting to encourage them to provide targets for the FY2024 budget and to remind them… that debt service would be increasing over the next couple of years.”
That’s in contrast to the past five years, when debt service costs were aided by lower interest rates along with lower levels of borrowing — something Vanderslice says was intentional, in anticipation of the millions the Town would need to borrow for the new police headquarters.
“Over the last five years, outstanding debt has decreased by $11.6 million, from $81.9 million as of June 30, 2017 to $70.3 million as of June 30, 2022,” Vanderslice said.
But the same chart shows that trend will change beginning in FY2023, with $16 million approved for the new police headquarters and another $25 million in bonded projects Vanderslice expects will be referendums at Annual Town Meetings over the next three years.
In addition to the millions of dollars in projects identified in Wilton’s five-year Capital Plan, the anticipated new debt would include $2 million for a new turf field; $5.5 million for critical upgrades at Town Hall, Wilton High School and Middlebrook facilities; and $800,000 for major renovations at the “Yellow House” at Ambler Farm.
Not Exceeding Previous Debt Levels
Some of the anticipated new debt will be offset by older, retiring debt. As a result, Wilton’s overall outstanding debt is expected to remain in line with debt levels seen since FY2016.
In fact, while the debt level is expected to surpass the $80 million threshold by 2025, it would remain below the 2018 high mark, when renovation costs for the Miller-Driscoll School were borrowed.
Vanderslice also told the selectmen that Wilton’s debt levels are a mere fraction of the statutory debt limits.
“We’re well under the statutory debt [limit],” Vanderslice said.
In an email exchange with GMW, Vanderslice said the maximum debt allowed for Wilton is over $850 million — more than ten times the debt Wilton has historically carried.
“Ten percent of the statutory limit is far from ‘danger’,” Vanderslice said in the email.
Bottom Line
“Debt service [cost] is going to come up,” Vanderslice acknowledged. “But [the debt level] is not going to be dissimilar to where we were just a few years ago.”
Still, Vanderslice is cognizant of the impact rising debt service costs could have on potential mill rates and budgets. At the July 19 BOS meeting, she reiterated her belief that the BOF should provide the BOS and BOE with guidance on what potential mill rate increases the BOF might find acceptable, before the budget planning process.
She believes it would encourage “early engagement of the three boards and the public in the budget process” and would “eliminate situations like last year when members of the public were taken by surprise [about the budgets] in April.”
GMW reached out to BOF chair Michael Kaelin for comment on Vanderslice’s request for budget targets, but did not receive a response before publication. (This story will be updated with any further comment.)