State’s request for financial info irks officials

TORRINGTON » The state’s Office of Policy and Management is seeking information on the city’s financial reserves, and officials have grave concerns about the request.

In a letter dated Aug. 2, Gov. Dannel P. Malloy directed OPM Secretary Ben Barnes to ask municipalities for updated information on their respective fund balances, saying aid to cities and towns is the largest state expenditure and had been held harmless in recent years while the funding

for other aspects of state government had been affected significantly.

“As our state struggles to finalize a biennial budget, how we fund our single largest expenditure must be on the table for discussion with the General Assembly and the public,” Malloy said in the letter. “If we fail to recalibrate aid based on shifting local demographics, economies, and need, we risk perpetuating an inequitable distribution of burden among our communities. We risk not investing in the communities that should be our assets in attracting economic development, young professionals, and families.”

Thus, in an effort to “inform and facilitate the budget process,” Malloy asked Barnes to send data on “municipal aid, local tax levels, expenditure trends, fund balances, and any other criteria that could better inform our decisions.”

In turn, an Aug. 7 letter from Barnes was sent to the city of Torrington asking for updated information on the state of the city’s fund balance at the end of the last fiscal year and a projection of how it would look after fiscal year 2018 based on the city’s projections.

Barnes also requested officials “provide any supplemental 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.”

Mayor Elinor Carbone shared deep concerns about the potential meaning of the letters Monday evening, describing them as the potential precursor to a raid on city coffers, as well as a letter indicating that the city would not be reimbursed for funds lost as a result of a tax rate cap on the assessment of motor vehicles. This would reduce the city’s income by between $1 million and $2.9 million, according to Carbone — she said Wednesday that some, but not all, of the potential loss of nearly $3 million had been factored into the city’s 2018 budget.

“Those are the very communications that make a mayor’s blood run cold,” said Carbone.

She said the letter regarding the city fund balance was particularly alarming, in response to a question from Council Member Anne Ruwet.

“I can imagine your outrage,” said Ruwet. “I think a message needs to be carried to our legislative body to ensure that they are representing the people of Torrington. This is appalling to hold municipalities hostage in this environment. And without having a budget, that’s exactly what they’re doing.”

The city’s fund balance holds money for one month’s worth of expenses, Carbone said. The Board of Finance passed a policy requiring that the city keep 7 to 10 percent of its operating budget in reserve in May 2016.

“To entertain the idea or the thought of raiding that fund balance — punishing us for doing good financial planning — is beyond egregious,” said Carbone. “So to say I’m angry is an understatement.”

Carbone said Wednesday that she would remind OPM of this policy in her response to Barnes’ letter, indicating that the city could not reduce its fund balance further under current precepts.

Michael McClure, public information officer for OPM, said Wednesday that the office is gathering information as an updated look on the financial health of towns and cities hasn’t been compiled after the 2017 fiscal year.

The same letter was sent to all 169 municipalities in the state, he said, with a requested return date of Aug. 16.

The data would form part of the larger discussion on municipal aid and allow the effects of potential grant reductions on property taxes to be better gauged, he said.

“At this stage, we are gathering information,” said McClure.

Municipal officials from throughout the Northwest Corner have used different methods to consider and guard against a potential decrease in state funding, as legislators continue to deliberate on a new budget.

Torrington officials chose to pass a budget described as suitable for the “worst-case” scenario in June.

Carbone said the Board of Finance had requested an additional mitigation plan to be used if the state budget continues to be delayed into October, when the first Education Cost Sharing payment is typically received.

In July, Carbone said the city had instituted a series of mitigation measures after the tax rate was set, including reviewing all overtime expenditures, most notably in the Street and Parks Departments; a hiring freeze, other than in the Police Department; and a halt to all discretionary spending.

A tax advancement, she said Monday, is a potential option if the city’s cash flow situation becomes dire. This would represent borrowing against future tax receipts, Carbone said Wednesday.