Groton officials consider possible uses for budget surplus
Groton - The town expects to have a surplus of more than $2 million when it closes the books on the 2013 fiscal year because it spent less than expected and collected more, Town Finance Director Sal Pandolfo said Monday.
Pandolfo told a joint meeting of the Town Council and Representative Town Meeting that Groton spent almost $1.6 million less than budgeted during the fiscal year that ended June 30, and saw better collections in property tax revenues and higher than anticipated state grants. Pandolfo cautioned that an audit is underway, so the figures could change.
Discussion then focused on what to do with the money. Councilor Bruce Flax raised the idea of returning it to taxpayers, but others pointed out that Groton must brace for a future loss of about $2 million in annual tax revenue from Pfizer when it finishes razing its former research headquarters.
Demolition has begun on Building 118 on Eastern Point Road, but the full financial impact won't hit until the 2015 fiscal year.
However, other monies will disappear along with the Pfizer money. For example, Groton received $300,000 more than expected this year from a state manufacturing grant, Pandolfo said. The grant has ended and won't be available this year.
But he said the town is hopeful the grand list will grow in other areas.
Councilor Karen Morton said town leaders should assume it won't.
"I think the prudent thing is to assume the worst case," she said.
Others suggested using a portion of the surplus to increase the town's overall fund balance so Groton holds onto its bond rating.
Fitch Ratings Inc., one of the major bond rating houses, recently affirmed the town's bonds as AA and its outlook as stable. Bonds affect a town's interest rate on debt.
But Fitch also wrote in its summary that "strong management" rather than a good economy contributed to its decision.
"The town's employment base continues to decline, despite marginal population growth ..." Fitch wrote.
Town Manger Mark Oefinger said he felt like Groton was viewed by the rating house as "not the best student in the world" but one who received good grades because it applied itself.
"They gave us, in my mind, a pass on a couple of issues," he said.
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