EAST LYME, CT — The East Lyme Board of Finance voted unanimously Aug. 12 to accept the town's fiscal 2024 financial statement audit and related federal and state audits as finance officials reported a general fund balance of about $18.7 million and stronger-than-expected revenues.
The board also discussed changes to the town's budgeting process, reviewed a draft investment policy and agreed to consider a proposal assigning individual finance board members as liaisons to major town departments.
Finance Director Kevin Gervais told the board that East Lyme's net position increased by $2.65 million in fiscal 2024. Governmental activities, excluding the sewer enterprise fund, increased from $53.8 million to $56.4 million, while the sewer fund recorded an increase of about $12,000.
The general fund ended the year at $18.74 million, including $16.3 million that was unassigned, according to Gervais. About 65 percent of the town's overall net position was tied to capital assets such as buildings, vehicles and land.
Kim Kalajainen moved to accept the fiscal 2024 financial statement audit, with Barry Sheckley seconding. The motion passed 5-0. A separate motion by Kalajainen to accept the related federal and state single audits, seconded by Sandra Bullock, also passed 5-0.
Gervais reported that East Lyme budgeted $96.66 million in revenue and collected $96.55 million, leaving a shortfall of about $133,000.
Several revenue sources exceeded projections. Interest income totaled $1.75 million compared with a $1.25 million budget, while private-duty police revenue reached $250,000, double the $125,000 budgeted. Conveyance fees were $200,000 over budget, and building permit revenue exceeded $1 million, which Gervais described as the highest total recorded.
Several departments also returned money at the end of the fiscal year. The Police Department returned about $175,000, the Highway Department saved approximately $50,000 because of vacancies and the Fire Department recorded savings despite overtime costs, according to the minutes.
The town had initially expected to use $1 million from its fund balance to close the fiscal year. Updated projections indicated that only about $100,000 might be needed and that roughly $1 million could instead be added back to the fund balance.
Tax collections were also running ahead of the previous year. As of Aug. 5, the town had collected 54.4 percent of taxes compared with 53.3 percent at the same point a year earlier. A recent tax sale generated about $175,000 in overdue taxes, Gervais said.
First Selectman Dan Cunningham told the board that a Phase 1 environmental assessment of the old police station identified asbestos in multiple areas, lead in building materials and PCBs in certain components.
Cunningham said abatement alone was estimated at roughly $300,000, even if the building is eventually demolished. Phase 2 will include core sampling of the parking lot to determine the extent of contamination. He said East Lyme could qualify for a state brownfield grant that could reduce the local cost.
The town had also received about 300 responses to a public survey concerning the property. Cunningham said a broader discussion involving the Board of Finance, Board of Selectmen and public would eventually be held after additional information becomes available.
Sheckley presented a proposal for changing the fiscal 2028 budget process by establishing financial assumptions earlier, setting guidelines for departments before they prepare requests and relying more heavily on actual spending rather than previous budgets as a starting point.
The proposal also calls for departmental performance measures, improved public communication and possible joint meetings among the Board of Finance, Board of Selectmen and Board of Education. A projection model would use actual data from the Finance Department, assessor and treasurer to provide the town and school board with starting budget figures earlier in the process.
Board members expressed support for the approach. Scott McCallister supported more proactive budgeting but cautioned against the finance board becoming involved in departmental management, saying its role is financial oversight.
Kalajainen supported Sheckley's modeling proposal and recommended using prior-year actual spending rather than prior budgets as the baseline. She also supported requiring departments to provide operating measures with their budget requests. No formal vote was recorded on the proposal.
Gervais also presented a draft short-term investment policy prepared by Deputy Treasurer Denise Hall with input from Gervais, Treasurer Bob Curry and Mitch Nixon. The document was being reviewed by JPMorgan and town counsel and was expected to return to the board for possible approval the following month.
Kalajainen suggested adding percentage guidelines for different classes of authorized investments and requiring people with delegated investment authority to file conflict-of-interest disclosures concerning relevant financial relationships.
Bullock separately proposed assigning each finance board member as a liaison to a major town department, such as police, fire, Public Works, Parks and Recreation, information technology or the Board of Education. The liaison would serve as a communication link and update the finance board on departmental needs and potential budget issues.
Board members supported placing the proposal on the September agenda for formal consideration, while discussing safeguards against liaisons becoming advocates for individual departments and the possibility of rotating assignments.
Acting Chairman Richard Steel also expressed disappointment that no Board of Education representative attended the meeting. Earlier, Steel noted that the school board finished the previous year with a $230,000 surplus and said the finance board did not yet know whether fiscal 2026 ended with a school surplus or deficit.
The meeting was held at East Lyme Middle School and adjourned at 7:16 p.m.
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