$272M town budget OK'd after clash over contingency cut
After an angry confrontation over cutting the town budget's contingency account, the Fairfield Representative Town Meeting on Tuesday approved a municipal budget of $272 million for 2012-13.
The approved spending package, which takes effect July 1, was cut $1.1 million from the budget recommended by the Board of Finance. The vote to adopt the amended budget was 34-13.
The proposal by RTM Republicans on Tuesday to cut $850,000 from the contingency account was denounced as "financial suicide" by town Fiscal Officer Paul Hiller and prompted angry Board of Finance members to walk out of the meeting.
Tuesday's sessions was a continuation of the legislative body's annual budget meeting that began Monday night, when the RTM cut $250,000 from the Board of Education budget for the new fiscal year.
Abandoning a plan to make line item cuts in the budgets for individual municipal departments, Majority Leader David Becker, R-1, made the motion to cut the $850,000 from the contingency account, which the selectmen and finance board had beefed up to $1.08 million because there are still five contracts with union employees that need to be settled. The cut leaves the account with $238,517.
"I considered zeroing it out," Becker said. "We feel a quarter of a million is enough to leave in there." He said the first selectman and department heads should be able to "manage down" line items to find savings throughout the year to cover any additional funds needed to cover contract settlements.
But Hiller contended the cut is financially dangerous, especially in light of the fact that Moody's credit-rating firm last week removed its negative outlook for the town's AAA bond status, based in part on decisions to increase the town's reserve funds.
To cut the contingency, Hiller said, would be "financial suicide."
And Republican Thomas Flynn, chairman of the Board of Finance, said the cut would be "fiscally irresponsible." He said cutting the contingency by $850,000 would leave the town exposed if something catastrophic happened, like a hurricane. "The only place we could go would be to the surplus to get these funds," he said.
The town budget's surplus fund, which is about 5 percent of the overall budget, is already below the 10 percent level the credit-rating agencies want to see.
"The less contingency you have, the more risk there is to the surplus," Flynn said. "In my opinion, the risk is too great."
The RTM, however, voted 26-21 in favor of the contingency cut, prompting finance board members to leave the meeting.
RTM Democrats and Thomas Conley, R-3, the only Republican to vote against the cut, took to the microphone to ask GOP members to reconsider the vote, but their pleas fell on deaf ears.
Conley said he did not want to put the town at financial risk. "I trust Mr. Hiller and Mr. Flynn," he said, and if the RTM wanted to cut $850,000, it should go over the budget accounts line by line.
"If you take it out of the contingency, and we get a hurricane, we're screwed," Kenneth Lee, D-10, said. "Our general fund goes down. (The rating agencies) want to see it go up."
Selectman Cristin McCarthy Vahey said, "If we're talking about managing down, then let's talk department cuts."
"We decided to take a more global approach," said Joseph Palmer, R-4, adding that RTM members appreciated the work department heads did in providing a list of what would be cut if the GOP's previously suggested 2 percent across-the-board budget cut was imposed.
Minority Leader Hal Schwartz, D-7, said he was still in a "state of shock" over the vote to cut the contingency. He said at Monday night's meeting, the discussion for well over an hour focused on being fiscally responsible. "Instead, we don't make a budgetary decision, we make a political decision," he said. "The majority decided, `We can put the town in financial jeopardy.' "
Democrats accused the Republicans of abdicating their responsibility by cutting the contingency account and not going through the budget line items to make the spending reductions.
Becker, who when he proposed the 2 percent across-the-board reduction, said it was to be the start of a community conversation on spending, said there didn't appear to be any rules to guide the RTM. "It appears there are no rules because at every turn the goal posts move," he said., adding for the third year in a row, Republicans were the only ones to propose spending cuts.
"The conversation starts tomorrow," Becker said, and perhaps should include charter revision.
"I think we're effectively ending the conversation we started and that upsets me to no end," said Sheila Marmion, D-6. "We asked for the impact" of a 2 percent cut, she said. "I was prepared to have a conversation with the department heads about the impact these cuts would have. We need to have an open dialog so the entire town can hear."