Council Approves Fiscal 2014 Budget

During Monday's meeting, the Coventry Town Council voted 3 to 2 in favor of approving Town Manager Tom Hoover's proposed budget for fiscal 2013-14. (See the attached PDF to view the Town's most recent budget presentation.)

The proposed operating budget to be voted on by residents next month totals $93,218,553. This reflects an increase of $3,540,687 from the 2012-2013 budget. Of the $93.2 million, $65,118,541 is allocated as the school department's total operating budget which includes a requested $400,000 increase to fund state mandated technology updates ($300,000) and a non-recurring $100,000 to reopen Oak Haven School as an Early Learning Center. 

Coventry's current tax levy, roughly $62.3 million, will be increased by nearly $2.3 million, bringing the Town's proposed gross tax levy to a total of $64,625,926. These figures represent a proposed tax rate increase of 3.5%, raising the residential tax rate from $18.06 per thousand in property valuation to $18.69; and the commercial rate of $21.76 per thousand in valuation to $22.52, in order to maintain existing services. 

For a home valued at $150,000, the 3.5% tax hike would result in an increase of $94.35 for the fiscal year. Equivalently, a $200,000 home would show an increase of $157.25.

Coventry's motor vehicle exemption will remain at $500 per vehicle and the property tax collection rate will be increased by .5% to 99.5%. "This goal is achievable based on historical data," said Hoover.

The proposed budget recommendations will maintain all permanent positions within the Town as well as the current level of Police protection. Public Works costs will continue to be assisted by charging residents for the disposal of certain large items and the Parks & Recreation Department has made adjustments to fees in order to maintain services offered, including the seven-week Youth Summer Camp session.

An increase of $125,00 in the Information Services budget will provide the necessary replacement of outdated and obsolete computer servers currently in use by various Town departments. 

At the most recent public budget work session, Hoover stated that the Town of Coventry experienced a total gain in value of nearly $32.3 million from last fiscal year, but that growing pension liabilities have had the largest impact to expenditures. He went on to explain that as a result of a municipal pension study submitted to the state Pension Plans Study Commission, both of the Town's independent pension plans (police and municipal employees), fall in the "critical status" category, meaning any plan under 60% funded. This classification required the Town to submit a Financial Improvement Plan last year, which projected the Town's full Annual Required Contribution (ARC) within four years, allowing both plans to be moved from critical status within 19 years.

"This requirement will exert a great burden on the municipal budget, with increased ARC payments over these periods of time," said Hoover. "I am recommending increasing our ARC payment in fiscal year 2013-2014 by 25% over last year to maintain our bond rating." 

In order to increase contributions, the 2013-2014 budget proposes allocating $1.9 million from the Fund Balance reserves towards the Town's pension obligations.

Councilman Greg Laboissonniere, who along with Councilwoman Karen Carlson voted against accepting the proposed budget on Monday, expressed his concern that the move would leave the Town's reserves very close to only 10% of the total budget. Moody's Investor Services, the Town's bonding agency, has made it clear that dropping below that percentage may negatively affect Coventry's bond rating.

"It doesn't leave us anywhere to go next year in funding the pension and it creates a bad situation for us by funding that out of our reserves without making any additional changes to the budget," said Laboissonniere. 

Town Manager Hoover expressed to the Council his strong belief that savings will be achieved through ongoing collective bargaining agreements with both the police and municipal employee unions.

"I have a great deal of confidence that we're going to have a good deal of success with both of those issues and any savings that are accrued based on this budget that's before you will show up as a fund balance which would begin also to improve upon the 10 percent," said Hoover. "I strongly recommend that we approve this budget and we depend on what I really predict is going to be a degree of success with the collective bargaining process. I really believe its extremely important that we stick to the plan to maintain the financial integrity of the town."

The Council's 3 to 2 vote in favor of accepting the proposed budget will now allow it to be presented to residents for a vote at the annual Financial Town Meeting to be held at 7 p.m. on Tuesday, June 11 at Coventry High School.

Council members also approved the appointment of Timothy A. Williamson, Esq. as moderator of the June 11 meeting.