Borough side faces its own budget problems

NAUGATUCK — While most public attention has been focused on the troubled school budget, new problems are emerging on the municipal side of local finances.

The education budget, which funds 11 public schools and makes up about 55 percent of the current $103 million overall town and school budget, has people’s attention because it calls for major teacher cuts and could include eliminating the popular and historic Salem Elementary School.

But as Finance Board Chairman Ray Lennon, Jr. points out, “There is a whole other side of this budget that we have to look at here, folks.”

That’s the municipal side, which currently stands at roughly $46.8 million, compared with the school board’s $56.1 million budget. While the school board has had to make difficult decisions—and may have to make more, if borough officials don’t accept the requested $899,040 school budget increase—the borough could also have some tough decisions to make, according to elected officials.

Like the school budget, the municipal budget will have to fund contracted salary increases in many union budgets, significant increases in health insurance costs and a pension fund account that will go up $1.4 million in next fiscal year, from $6.8 million to $8.2 million. That’s because the pension fund, like most around the country, did poorly in the stock market last year. Also, Naugatuck has offered early retirements to several employees to get them off the payroll, thus putting more people onto the pension account.

Because the economy has been sluggish, the value of the grand list, which shows the assessed value of all taxable property in town, increased by just $7.1 million to $1.79 billion. That is just a .35 percent increase, meaning the borough could increase spending by just $156,600 next fiscal year without having to increase taxes or borrow from the borough’s savings account.

The borough also has to deal with a decrease from last year of about $1.2 million in revenue, much of which comes from state aid.

Mayor Bob Mezzo said the goal among those who control municipal and school spending is to have no spending increase from both sides.

“But I don’t want to mislead anybody about how difficult that is going to be, given not only the expenses we face but the loss of [state aid],” he said.

Right now, the board is facing a proposed town and school spending plan of $106 million, up about $3 million over the current level. But the Finance Board is far from setting the budget, and several cuts are expected. The board will have at least four meetings to discuss cuts before it sets a budget.

Mezzo said there are a few ideas that have been floated to cut money from the budget, but he believes many of them are irresponsible.

He said several residents have recommended not funding the pension fund, which he will not consider.

Some residents have said the borough should take money out of its reserve account, which, according to a recent independent audit, has about $8.6 million. Most financial organizations recommend a municipality have at least 10 percent of its budget in a reserve account, which would be about $10.3 million for Naugatuck.

Mezzo has asked department heads, who have now been told for a third straight year to keep spending flat, despite contracted raises, to dig deep and find further cuts. So far, the department heads have said they have already cut too much and can’t go any further without devastating their departments.

He said the joint boards could tell all department heads to make a 1 percent reduction of their budgets.

“But that is a random and easy solution because it takes the onus off us, as joint board members, who are elected to set the budget,” Mezzo said.

He said those officials need to make some tough choices.

“People are making very difficult decisions with their own finances, and we should honor them by making very prudent decisions with how we spend taxpayer money,” he said.