Stonington leaders criticize Malloy request for details on town's surplus
Stonington — First Selectman Rob Simmons and Selectman Mike Spellman criticized Gov. Dannel Malloy on Wednesday for asking the town to report how much money it has in its undesignated fund while Malloy looks to cut all of the town’s $1.6 million in state education aid.
“This is a disgrace. The problems of the state are now being shoved down the throats of the rural and suburban towns,” Simmons said.
For almost two decades, the town’s Board of Finance has made it a priority to build and protect the town’s undesignated fund balance, which is designed to provide money in case of emergencies, such as the unexpected replacement a few years ago of the Deans Mill School roof.
In addition, having a healthy fund balance, which is defined as two months of the town’s operating expenses, has helped boost the town’s bond rating to AA1. This in turn saves taxpayers money when the town needs to borrow for projects such as the just started $67 million renovation and expansion of Deans Mill and West Vine Street elementary schools, the most expensive project in the town’s history.
Over the years, the undesignated surplus, which currently totals about $11.2 million, has helped the town save millions in bonding costs on various projects.
If Malloy’s aid cuts to small and medium-size municipalities in order to benefit large cities are approved by the state legislature, the town likely would have to dip into the surplus to offset the cut or lay off employees and cut other spending. If state aid continues to be eliminated in coming years, the fund could continue to be depleted, which in turn would lower the bond rating, increasing the borrowing costs for taxpayers as the school projects move forward.
“We have shown a disciplined approach to the budget and we should not be penalized for it. Raiding these funds to support other municipalities is not just unfair. It is tantamount to theft. We should not be penalized for exhibiting foresight, ‘belt tightening’ and fiscal responsibility. Rather, the responsible approach we have taken should be promoted as an example for other towns to use as well. It should be rewarded by the state. Anything less is just not good public policy,” Simmons wrote in a letter last week to state Office of Policy and Management Secretary Benjamin Barnes.
Simmons' letter was in response to one from Barnes earlier this month in which Barnes wrote that Malloy had asked OPM to produce a series of reports on the fiscal health of municipalities. To do that, he said he was requesting updated information on the town’s fund balance from fiscal years 2017 and 2018. He asked Simmons to produce any additional information about “the potential impact of a continuing state budget impasse on your community’s finances, such as contingency plans to utilize fund balance, issue supplemental taxes or reduce spending.”
The General Assembly is expected to hold a special session next month to hammer out a budget for the current fiscal year, which will determine how much aid should go to towns and cities. To deal with the possibility of not having an approved state budget, Malloy has issued an executive order that shifts more state dollars to larger and poorer school districts and away from communities such as Stonington.
At Wednesday night's Board of Selectmen meeting, Spellman said the town is being targeted by a governor who has "an abysmal approval rating."
He said Malloy was playing a political game of Robin Hood by eliminating funding to Stonington and Groton, while giving more to so-called "Gold Coast" municipalities such as Norwalk and Stamford, where Malloy served as mayor. He called Malloy's action's "reprehensible."
Simmons said some towns have chosen to ignore Barnes' request for surplus information or say they can’t answer without information on the state budget.
But Simmons, a former state representative, state business advocate and congressman, said “I decided to lay it all out.” He responded to Barnes' request with a four-and-a-half-page letter.
“The whole idea that the Town of Stonington could work 10 years or longer to improve our bond rating and generate a surplus so we could renovate our elementary schools and meet other obligations and then the state comes in and raids our fund balance is outrageous,” he said.
Simmons pointed out that the town can’t stop the school project now and Moody’s bond rating service already has warned investors about buying local government bonds in Connecticut because of state budget problems.
In his letter to Barnes, Simmons pointed out the town expects to use as much as $5.5 million of the surplus over the next three years to mitigate the impact of the debt service from the school project on the tax rate.
He pointed out the town currently has a list of deferred capital maintenance projects totaling more than $10 million, and some of the surplus money could help fund that work. Meanwhile, Malloy also has proposed to eliminate all road and capital improvement aid to the town.
Simmons said any use of the surplus to offset further state aid cuts “would significantly impact the Town’s ability to safeguard the town’s assets, properties and population.” If the state is going to cut funding, it also needs to modify or eliminate the numerous mandates it imposes on towns such a prevailing wage on projects which increase costs for towns, he said.
Simmons also criticized comments Malloy made to The Day last week in which he compared Stonington’s healthy surplus to that of New London’s.
Saying he has always supported New London, Simmons said the two municipalities are very different and Malloy should not pit one against the other.
“It will not help New London to take a few million dollars from Stonington," Simmons said.
At Wednesday night's selectmen meeting, Spellman spent a few minutes listing the large numbers of struggling residents who have been assisted by the town's Human Services Department, including 90 homeless people.
"That is not the hallmark of an affluent community," he said.
To see what he is talking about, Spellman invited the governor to come down to Stonington and not just for a fundraiser in the borough.
"The state should start exercising the same fiscal responsibility up in Hartford that we do here in Stonington," he said.
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