East Haven Announces Budget Surplus, But Concerns Remain

EAST HAVEN, CT — Mayor Joseph Maturo, Jr. announced today that, despite funding cuts from the State, the Town of East Haven closed the 2016-2017 fiscal year with an audited surplus of $452,280.00 - the sixth balanced budget for Maturo since 2011 and his sixteenth since assuming office in 1997.

Maturo explained in a news release and prepared statement that, "This past budget proved to be one of the most difficult in my sixteen years in office due largely in part to the uncertainty, and the eventual loss, of funding from the State of Connecticut. Despite shortfalls in State funding totaling over $531,000.00 dollars, both the Town and Board of Education maintained balanced operations and logged a modest surplus of $452,280.00."

According to the official audit filed with the State of Connecticut, revenue for the '16-'17 fiscal year totaled $89,073,777 million and total expenditures totaled $88,630,520 million, resulting in an operating surplus of $452,280.00 after factoring in additional revenue of $9,023.00 from the sale of Town property.

Notably, the Board of Education, which faced questions over the past year about unbalanced operations in the '15-'16 fiscal year, closed its books with balanced operations and with a small surplus of $67,416.00 (1/10 of 1% of the total BOE budget) .

Maturo continued, "The official $452,280.00 dollar surplus will be credited to the Town's rainy day fund, raising that fund from $4.98 million to $5.43 million dollars – its highest level since 2007."

Finance Director Paul Rizza added, "Over the past six years, the Town has seen its fund balance, or rainy day fund, grow from just $200,800.00 dollars in 2011 to a healthy $5.43 million dollars as of 2017, an increase of almost 3,700%."

Rizza explained, "Credit rating agencies generally recommend that municipalities maintain a minimum fund balance of no less than five percent (5%) of their operating budgets. According to the audit, the Town's $5.43 million dollar fund balance represents 6.1% of total budgetary expenditures as compared to 5.7% in the prior year, an improvement which underscores the Town's continued financial improvement."

Maturo continued, "Our hard work shoring up our rainy day fund has paid dividends in a number of respects. In August of 2014, Standard and Poor's awarded the Town an increase in its credit rating from 'BBB+' to 'A-' after recognizing and validating the Town's efforts to improve its finances. In 2016, Standard and Poor's awarded the Town an historic two-tier bond rating increase from 'A-' to 'A+.' As a result, we've been able to both refinance existing debt and incur new debt at significantly lower interest rates, which has allowed us to avoid raising taxes while still expanding services and investing in capital."

According to the audit, the Town's long term debt stood at $26.52 million dollars as of July 1, 2017, a figure which the Mayor says is forecasted to drop even further in the current fiscal year.

Maturo explained, "This past Fall, the Town Council approved my proposed $2.52 million dollar 2017-2018 capital and infrastructure program, which allocated funds for over 40 initiatives across Town in addition to grant-funded projects to revitalize the west end of Main Street and build the now-completed Skate Park. After scheduled principal and interest payments this year, and even accounting for our aggressive capital program, our long term debt is slated to drop to approximately $23.09 million dollars, which represents a reduction of 48% from the staggering $48.10 million dollars in debt that the Town was carrying just six years ago."

However, in announcing the news of the Town's sustained financial success, Maturo also cautioned that additional State cuts could present budgetary hurdles in crafting the 2018-2019 budget, a process which begins with the submission of departmental estimates by department heads throughout January.

Maturo explained, "In early December, Governor Malloy proposed slashing municipal aid by $100 million dollars as part of a 'menu of choices' to address the $208 million dollar hole in the State's budget. If those cuts become a reality, we will need to look long and hard in our budget to make up for any lost funding. As tough as our last budget cycle was, I expect this one to be even more challenging."

Maturo concluded, "Since 1997, my team and I have maintained a steady fiscal course to benefit all of our community's taxpayers, a course which has enabled the Town to preserve vital services for all of our residents in the face of the State's fiscal mess. Moving forward, we will continue our efforts to limit borrowing, improve our infrastructure, and increase services while doing our best to keep taxes low and stable."