We are now in budget season. From the Federal government and the fifty states down to the smallest municipality budgets are being proposed and adopted. Unlike the Federal government states and municipalities have to present a balanced budget each year.
The budget process in my home town of Fairfield is probably typical of what is going on all over the country.
A recent edition of a local newspaper carried
Fairfield First Selectman Mike Tetreau’s letter to the town about the proposed
budget that features more than a 6% increase. Tetreau pointed out the relevant
issues but noted that there will be “substantial changes to the original budget
proposal,” and urged all residents to be involved in the process.
In the same paper a letter writer castigated the Fairfield Taxpayer Association for failing to come up with any
meaningful ways to cut taxes, and urged that the proposed budget be accepted
“unless Fairfield Taxpayer or other well-intentioned individuals can come to
the table with palatable cuts.”
I’m not a member of the Taxpayer Association but as
a well-intentioned taxpayer, I would like to offer some suggestions. In the
first place, I would like to discuss the method of arriving at a budget
proposal. I question the argument that it should be up to the Taxpayer
Association or well-intentioned individuals to do more than complain about a 6%
increase in taxes. At that rate everyone’s taxes will double in the
next 12 years.
Budget cuts should be the responsibility of the
town government but experience has shown that government’s never cut their
budgets from one year to the next. No department chief would ever submit a
budget decrease. It is more likely that even if they won’t need more money,
they will ask for more so that their boss can get credit for trimming the
budget.
At the same time our elected town representatives on the
RTM (Representative Town Meeting) rarely have the time or the expertise to deal with complicated budget
issues. After all, they are unpaid volunteers who spend hours and hours away
from their own jobs and families to attend interminable meetings. Moreover, as
a recent public meeting has shown, they are caught in the middle between angry
taxpayers and parents alarmed by potential school budget cuts.
However, a possible solution appeared in another
recent news item. It was recently announced that a Stamford Superior Court had
just entered a $2.88 million judgment in favor of the Town of Fairfield against
Maxam Capital Management of Darien, an investment advisor who had placed town
retirement funds with the now infamous Bernard Madoff. This was the last of the
town’s Madoff related lawsuits and First Selectman Tetreau announced that all
the town’s lost retirement funds, over $15.4 million, had now been recovered.
Actually, only 80% of that figure was recovered
since 20% or $3 million had gone to pay attorney fees and litigation costs. For
the moment, we will leave aside the question of why the Town’s officials
initially handed over the money to Maxam and paid it 3% each year just to hand
the money over to Madoff. Let’s just say that the Town made a good decision to
pay 20% to the lawyers in order to recover the 80%.
I suggest that these or other lawyers and
accountants also be hired on a contingency basis to review the budget and that
we pay them 20% of cost savings that they come up with. The Town’s proposed
budget called for a $15 million increase. It’s hard to believe that a team of
lawyers and accountants working for a 20% contingency fee wouldn’t be able to
make a substantial dent not only in the increase but also in the total budget.
Here is how things turned out in Fairfield. Predictably, in subsequent announcements First Selectman Tetreau indicated that he had found a way to lower the budget increase to 4.8%. Then he and the other Selectmen approved a budget with less than a 4% increase, and sent it to the Representative Town Meeting for approval. Sure enough, the local newspaper headlined that the Selectman had cut the budget even though he had merely trimmed the inflated increase.
Here is how things turned out in Fairfield. Predictably, in subsequent announcements First Selectman Tetreau indicated that he had found a way to lower the budget increase to 4.8%. Then he and the other Selectmen approved a budget with less than a 4% increase, and sent it to the Representative Town Meeting for approval. Sure enough, the local newspaper headlined that the Selectman had cut the budget even though he had merely trimmed the inflated increase.
The Town has also apparently taken a significant step in the new policemen’s contract and adjusted the
formula for calculating police pensions. If the initial report can be believed,
a police officer will now retire on 70% of final pay and not the former 80%.
This tweaking of the benefit formula can save millions in the long run.
Yet, there are many other questions. Why are
firemen and policemen able to retire on a pension based on final year’s pay
when every one else in town retires on Social Security where the benefit
formula is based on a worker’s average pay over 30 Years? Why does the town
provide pension benefits for salaries over $100000 per year? Employees making
more than that should be able to supplement their pensions on their own. Social
Security benefits are only based on income up to a cap of around $100000.
###
###
###
No comments:
Post a Comment