New BET guidelines could save taxpayers millions

Greenwich-Voices-GoldrickSix million dollars. That’s how much more Greenwich taxpayers will have to pay next year alone to maintain the Republican majority’s ill-considered decision to spurn long-term financing.

In the budget guidelines that my colleague Randall Huffman and I constructed, we calculated that shifting to longer-term financing and locking in current record-low interest rates would reduce the capital tax levy by $3 million next year compared with current fiscal year levels. By contrast, maintaining the current five-year amortization cap will result in an increase in the capital tax levy of $3 million next year.

Further, the costs to taxpayers of that short-term debt policy will be amplified in later years. We project that over the next four years, flexible financing could reduce the capital tax levy by $34 million, including over $11 million in the fourth year, compared with the costs of the current policy.

In total, we identified $82 million in budget savings in our guidelines proposal over the next four years. Indeed, we estimated that our guidelines proposal would have kept property tax increases to less than 1% next year. And, given continued strong growth in conveyance and building permit revenues the town is receiving, taxes could have been kept flat.

Our guidelines proposal included a gradual drawdown of the town’s $47-million cash pile. The cash reserve, or “general fund balance,” is meant to provide emergency short-term funding against unforeseen shortfalls. But $47 million is far more than the town requires. Greenwich’s debt policy calls for maintenance of a reserve equivalent to between 5% and 10% of the town’s operating budget, equivalent to $20-$40 million. Yet the current cash reserves are even higher, equivalent to approximately 12% of operating expenses.

We believe that a prudent reserve, especially given Greenwich’s strong fiscal metrics, would be $20 million at the most. In fact, during the worst of the severe economic contraction in 2008, the town utilized less than $12 million to balance the budget. Town government is not an investment management company and it should not retain taxpayer funds in large amounts, earning virtually no interest, without intending to use the funds in the near future.

Further, Randall Huffman and I proposed in our guidelines, and continue to push for, the implementation of a tipping fee on commercial trash haulers utilizing the town’s Holly Hill facility. We estimate that a tipping fee would bring in revenues of $3 million annually.

Greenwich is the only municipality in our region that doesn’t charge commercial trash haulers a tipping fee for using its town dump. The fee is considered a normal cost of doing business for commercial haulers, and failure to collect the fee is simply inexplicable and inexcusable. Moreover, Greenwich households are paying trash collection rates comparable to those in other municipalities that do charge commercial haulers the fee. Quite simply, Greenwich taxpayers are being fleeced, while the trash haulers are lining their pockets at taxpayer expense.

Last spring, I urged First Selectman Peter Tesei to finally take action to collect those tipping fees. It is the responsibility of the first selectman and the board of selectmen to propose the fee. Yet while Mr. Tesei has gone on record as supporting a tipping fee, he has yet to take any action to implement it. He needs to take action.

We further recommend maintaining the projected portfolio rate on the town’s pension fund at 7.25%, instead of reducing it to 7%. Though it appears a small change, maintaining the current rate would save taxpayers an estimated $1.8 million annually. The pension fund is in serious need of restructuring after years of chronic underperformance, and taxpayers should be cautious about making large up-front payments to the pension fund when annual required payments currently put the fund on a sustainable path.

The common-sense policies that Randall and I proposed can save taxpayers tens of millions of dollars. They deserve to be implemented.

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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