Norwich ended last fiscal year in the red

City Council to consider series of complex moves to help balance books

Norwich — The city ended the 201718 fiscal year with spending deficits of $1.268 million and revenue shortfalls of $1.25 million but with savings of $538,000 in other areas, reducing the overall shortfall, city officials said.

The City Council at its 7:30 p.m. meeting Monday will consider a series of complex moves to balance last year’s fiscal books. A resolution up for a vote would transfer funds from several surplus accounts to cover some of the shortfall, and the council will schedule a public hearing for a future meeting on an ordinance to use undesignated funds to cover the rest of the shortfalls.

For several months, school officials have warned that the year would end with a deficit of $1.5 million to $2 million in special education tuition and transportation. The final number was $1.1 million, but the state also cut the city’s Education Cost Sharing grant by $250,000.

School Superintendent Abby Dolliver said it’s difficult to project special education costs because of fluctuating student placements in programs, shifting needs, new students entering the district and others departing.

“We have to always look at tuitions and where our expenses are and where we land,” Dolliver said. “It’s pretty fluid, and we have to wait for the final bills, so that’s what we did.”

City revenues fell $1.25 million short of what was budgeted, city Comptroller Josh Pothier said, slightly lower than the original projection of $1.45 million, Pothier said in a memo to the City Council explaining the fund transfer requests.

In anticipation of state and local budget uncertainties, city departments were asked to limit spending wherever possible, yielding savings totaling $538,000 in 20 areas, including $100,000 in the law budget and $115,000 in public works.

Monday’s resolution would transfer that money to cover a $15,000 shortfall in the police budget, $3,000 for the Laurel Hill Volunteer Fire Department, $3,000 for the Taftville Volunteer Fire Department and $517,000 to cover nearly half of the school budget deficit.

“My first thought is I want to thank all the city departments who scrimped and saved and did not spend all that was allocated for the year,” Mayor Peter Nystrom said. “Their efforts helped cut that deficit literally in half. I’ve seen some savings (in past years), but not of that magnitude. I want to thank the city manager (John L. Salomone), too.”

Ordinance required

Covering the rest of the deficit will require an ordinance to draw funds from three separate undesignated funds — the city general fund, the undesignated fund for the central city paid fire department and the undesignated fund that covers the five volunteer fire districts.

The remaining $583,000 of the school budget deficit would be covered through the city’s general fund surplus generated from citywide property taxes.

Pothier told the City Council in his memo that, between the revenue shortfall and the school budget deficit, the general fund would be reduced by $1.8 million, but still would be at 12 percent of the city’s annual operating budget. The City Council’s policy is to keep the undesignated fund balance at 10 to 17 percent of city operating costs, which currently total $126 million.

The much smaller volunteer fire district fund would end the 2017-18 fiscal year with a $29,000 deficit after $54,000 in lower than expected motor vehicle tax revenues and a spending deficit of $3,000 for property tax breaks to qualifying firefighters. The City Council in spring of 2017 voted to use $346,000 from the fund to help keep property taxes down.

The fund is generated by the small tax rate, now 0.45 mill, on properties in the volunteer fire districts to cover volunteer firefighter pensions and the property tax breaks. Pothier said “it’s entirely possible” that this year’s revenues will be enough to replenish the fund without further city action.

But the proposed ordinance includes a plan to restore the volunteer district undesignated fund by raising the district tax rate next spring to cover any remaining deficit, Pothier said.

The undesignated fund for the central city paid fire district also would be tapped in the proposed ordinance to cover a deficit of $144,000 in the Norwich Fire Department’s overtime costs. This fund had a revenue shortfall of $15,000 from the decline in motor vehicle tax revenue, Pothier said, and the City Council used $311,000 from the fund to offset taxes last spring.

Pothier said after covering the revenue loss and the fire department deficit, the central city fund balance would stand at 5.8 percent of the district’s operating budget of $7.8 million.