Budget Update – 3/25/2009

Posted by Bob on March 25, 2009 under Daily Blogs | Read the First Comment

In the midst of global economic uncertainty, our local Joint Boards of Mayor and Burgesses and Board of Finance are formulating the Borough’s 2009-2010 budget.  The current administration appears determined to pass a budget that contains no tax increase before the May 4, 2009, election.

This sounds great, a welcome departure from the dramatic tax increases of the past two years and the recent history of eight straight tax increases.  We can all only hope that Naugatuck can finally adopt a budget that does not further burden our citizens.  Unfortunately for taxpayers, however, the numbers being used are as fragile as the state of our economy.

Please review the proposed budget that is scheduled for a public hearing on Monday, March 30, 2009:

Proposed Budget for Public Hearing

The current budget is using revenue projections that have not been finalized to any degree of certainty.  There is no guarantee that said projections are accurate, and we will not know the final status of the Educational Cost Sharing grant until the state legislature completes its session later this spring.

In addition, the prevailing thought is that any federal stimulus dollars designated for municipalities should not be and probably will be prohibited from being used to cover operating costs.  Using one-time revenues in this manner would leave huge holes in future budgets once such funding evaporates.

The revenue side of the current proposed budget is only part of the story.  Expenditures have been allocated based on revenue-neutral increases to the Borough’s largest departments:  Fire, Police, Street, Park and Education.  As of today’s date, only the Police Department has agreed to a pay freeze concession for this coming year’s budget.

Assuming zero-based budget expenditures without firm concessions from municipal workers is a risky gamble and contrary to previous Joint Boards’ practices.  The strategy is based on the fact that local unions will be forced to accept a pay freeze or accept layoffs.  The current proposed budget takes no account for the horribly negotiated teacher’s contract which was unsuccessfully taken to arbitration by the Borough.  The arbitration award includes raises that are ignored by current budget proposals.

The current administration certainly has the right advocate this all-or-nothing, pay-freeze-or-layoff approach, but voters need to understand the ramifications of such a strategy.  Certain departments contain mandatory staffing ratios.  Others have minimum expenditure requirements.  Noncompliance with such mandates could put Naugatuck in violation of state and/or federal law.  If Naugatuck terminates public safety officials, overtime costs in those departments will be astronomical.  Under the administration’s current budget proposals, Naugatuck would be forced to expend funds that are not being budgeted.

Laying-off workers also requires direct costs to the Borough such as payment of accrued benefits and sick/vacation days, increased unemployment compensation and administrative costs.  No where are these direct costs reflected in the current budget proposal.

In addition, negotiating pay freezes requires a certain skill and strategy that this administration has, up to this point in time, failed to demonstrate.  The only major union from which the current administration achieved a pay freeze for this year’s budget is the police department.  The police union pay freeze, however, was a deal that the union could not refuse.  In exchange for a pay freeze in this year’s budget and next year’s budget, police officers will receive a two-year extension of  their current contract, a SIX (6%) PERCENT increase two years from now and a massive increase in private duty rates.  That means if an organization needs to hire an officer for a community event or a homeowner needs a police presence to have a tree removed from their property, rates will be significantly higher than they were previously.  Pay freezes sound great in newspaper articles, but taxpayers have the right to know the long term ramifications of such concessions.

If a budget is prematurely adopted without accurate revenue and/or expenditure calculations, and such projections result in budget deficits, Naugatuck taxpayers will be left to pick-up the tab.  Passing a budget in such a manner is not responsible.  The consequences of error in the budgeting process can result in additional taxation, a reduction to the Borough’s bond-rating or even state oversight in the extreme.

This is a bad business practice which helps explain why Naugatuck is in the mess that it is today.  For years mayors have produced spring budgets that look great at election time, but are not based in reality and hammer taxpayers in years to come.  Two years from now, police officers will receive a SIX (6%) PERCENT pay increase so that the current administration can tell you that a pay freeze was achieved today.  We should not mortgage our future and tie the hands of future administrations through bad negotiations.

Everyone knows this year’s budget is going to be one of the most difficult in recent history.   All  members of the Joint Boards should be working to adopt a budget that contains no tax increase, but such a budget should be based on accurate information and sound business practices.  Adopting the budget without firm numbers on either side of the ledger for political purposes is a relic of Naugatuck’s failed past.  Naugatuck taxpayers deserve better, and most certainly need to know the details of the budgetary process.