As budget season begins, what is the state of Greenwich’s fiscal ship?

Greenwich-Voices-GoldrickNext month the Board of Estimate and Taxation will begin budget hearings for the next year, and here’s a snapshot of where the town stands now.

First, the most important figure for the town’s finances, the grand list, stands at $42.3 billion. That is far larger than that of any other Connecticut municipality. On a per capita basis, it’s five times higher than the state average. Home prices have been on the mend of late, with the median in Greenwich increasing 5% over the past year.

Revenues from the town’s conveyance tax have risen 4% during the first six months of the fiscal year, and stands 70% higher than two years ago. The town’s fund balance (which is essentially its cash reserves or rainy day fund) rose to just over $35 million, adding nearly $8 million over the past fiscal year.

The “unassigned” portion of the fund balance rose to just under $22 million. That equates to a ratio to operating expenses of 5.7%. The town’s policy is to maintain a figure of between 5% and 10%. That unassigned fund balance is likely to approach $30 million by the end of this fiscal year at the end of June, which could take us over 8%.

At $3,026, Greenwich’s per capita debt is roughly comparable with the median for other AAA-rated towns in the state. But when compared with the value of our grand list, Greenwich’s debt burden is far below that of other top-rated towns. Debt divided by the grand list offers a figure for Greenwich of 0.44%. In comparison, our peer municipalities in Connecticut stand at an average of 1.8%.

In other words, our debt burden translates into less than a quarter that of similar AAA-rated towns in the state.

Contrary to numerous press accounts, Greenwich has never been in danger of losing its top credit rating over the past two years. Indeed, as affirmed by our comptroller, rating agencies did not demand that we implement a debt policy, nor make changes to our policy on general fund balance. The town’s fiscal metrics have been, and remain, in the top echelon of AAA-rated municipalities both nationally and in Connecticut.

But Greenwich faces challenges, and for too long the town has been reactive in its capital funding.

We are in the midst of a major multi-year project to repair our aging sewer system, which suffered five major breaks. Those breaks resulted in the EPA issuing two consent decrees requiring repairs to the system. Serious overcrowding at New Lebanon School has led to calls for a new and larger school to handle the growing student population. Plus a consulting project regarding Binney Pond is in progress.

The pond’s siltation continues apace, with birds now able to stand in the shallow waters near the center of the pond. At some point soon, we will need to dredge and install silt traps that will slow siltation in coming years. And the town needs to decide on a plan for a new Eastern Greenwich Civic Center to replace the aging facility now in use because the repairs for it are becoming increasingly expensive.

The town’s pension fund contains assets of a third of a billion dollars. Unfunded liabilities total $155 million. The town has funded the required annual contribution (the “ARC”) every year. But poor market conditions coupled with underperformance relative to the public pension fund universe has resulted in rising payments to the pension fund.

The required contribution for the next fiscal year is estimated to rise by more than $3 million. A challenge is how to reform management of the fund to ensure better returns, and possibly to lower costs. New Canaan operates a system that separates portfolio management from the administration of the pension plan itself.

Investment responsibility rests with a committee of the town’s finance board, which in turn outsources investment, rather than attempting to manage the fund internally.

 

Sean Goldrick is a Democratic member of the Board of Estimate and Taxation, though the opinions expressed in this column are his own. He may be reached at [email protected]

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