WeHa's Taxpayer Bank Account Mandated To Increase: Council

WEST HARTFORD, CT — Many of us would love to have a sizeable percentage of what we spend to live socked away in case we need it.

But that's usually a difficult proposition for an individual with a job, mortgage and kids to raise.

For the Town of West Hartford, however, a recent town council vote establishes that as not only a goal, but a mandate via a new policy revision.

And because of the unanimous, 8-0 vote along bipartisan lines, local officials hope to stave off any future fiscal impacts should an emergency arise in town requiring a dip into taxpayer coffers.

The Feb. 14 vote approved a resolution to revise what's called the town's "fund balance policy" regarding the general fund. It was created in 2016.

The new revision mandates that town officials create a fund blance equal to 16 percent of the town's annual spending.

When the percentage exceeds 16 percent, according to the policy, those extra dollars can be spent for things like tax relief (a guard against mill rate spikes), unanticipated expenses and new capital projects (roads and town building work).

Municipal leaders have some work to do, however, with the fund balance at only 9.2 percent, with the new policy requiring fiscal planners set aside cash in future budgets to get to 16 percent, if possible.

Given that West Hartford's 2022-23 budget is about $317,082,151 to run the town and schools, 16 percent of that equals $50.73 million.

West Hartford Town Manager Rick Ledwith said the fund balance is currently about $28.68 million.

He said local officials' desire to revise the policy came from when they learned Moody's, a bond rating agency, had revised its metrics regarding how it assigns bond ratings to a town.

Basically, Ledwith explained, in order for West Hartford to maintain the solid bond rating it has enjoyed since 1972, it would have to save more money in its budget to reach the 16 percent mark.

"We will commit a certain percentage of our annual surplus to the fund balance so that we continue to move toward that goal of reaching 16 percent," Ledwith said.

"Although the news from Moody's did surprise us, we also know and agree that it is sound fiscal practice to maintain a sizeable fund balance," Ledwith said.

"This policy will further that commitment to growing that fund balance over time," Ledwith said.

Though not a complete blank check account, the fund balance is, essentially, funding budgeted for and collected, but, for whatever reason, not spent by a town.

Often expenses are not as high as budgeted.

This can happen, for example, if there's a mild winter and not a lot of snow needs to be removed from roads or if the school system hires teachers at a lower-than-budgeted pay level.

Town officials said the Government Finance Officers Association recommends all local governments have a policy on the town's fund balance, which can improve a town's credit rating.

If a town or city has a healthy fund balance, it can get lower interest rates should it have to borrow money to, say, build a school or bridge or any other large, capital item.

"The Town of West Hartford recognizes that adoption of a formal fund balance policy for the town’s general fund is financially prudent and demonstrates its commitment to take all practical steps to maintain the highest credit rating," reads a memo from Ledwith to the town council.

For the minutes of the Feb. 14 West Hartford Town Council meeting, click on this link.

For documents related to the fiscal policy revision, click on this link and scroll to Page 45.