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10/16/2018 04:30 PMAt its meeting on Oct. 9, the Board of Selectmen (BOS) voted to send forward a $195,605 special appropriation for an infusion of funds to the Capital Improvement Program (CIP), but it wasn’t without contest. The intent of the money or the amount wasn’t the issue—it was how the appropriation request landed before the BOS.
The special appropriation request is to fund an increase in the CIP, a capital five-year planning tool for both the town and Board of Education, to make up a three percent increase for the current year plus three percent compounded interest for additional years.
The CIP, which replaced LOCAP, has a set cost that voters approve each year. That number doesn’t represent how much capital spending will occur in that year, it’s for how much money will be put into the capital reserve. When the CIP was created years ago, the initial plan was to increase the capital by three percent each year to try to build up a healthy reserve for longer-term projects in the plan.
However, this year the BOS voted (and the electorate later approved) to keep the CIP at $3,211,906, keeping funding completely flat from the prior year. The decision caused a split between Democrats and Republicans on the Board of Finance (BOF) in March and resulted in lengthy and heated arguments over how to proceed with capital funding.
In March, BOF Chair and former CIP Chair Jean Fitzgerald suggested a special appropriation of $97,217 from the town’s undesignated fund balance to cover the three percent loss driven from keeping the CIP funding flat this year, a move that also wouldn’t increase taxes. BOF and CIP member Bennett Pudlin suggested the board double down and increase the influx to the CIP fund by compounding the interest of the three percent, resulting in the total $195,605 appropriation put before the BOS.
However, when that appropriation request came before the BOS in September, the BOS was displeased. The selectmen pushed the approval of the appropriation, which had been approved by the BOF, to the BOS meeting in October at which First Selectman Tom Banisch said the issue wasn’t the money or what the money would be put towards, but the fact that the BOF recommended that the BOS approve the appropriation.
“It really should be coming from the BOS,” he said. “I think that is why it got held up last time and I think what we want to do as a part of this whole thing is say this is not a precedent, we are not setting a precedent by allowing the BOF to do this, we are just being in agreement with them. That this is what we want to do this for a year based on the fact that the state budget is in disarray and we don’t know what we are going to get from them.”
Putting the three percent-plus compounded interest back into the CIP doesn’t raise the base of the CIP year over year, meaning the taxpayer won’t necessarily be asked to bear a higher increase next year. The money goes into a designated fund for the CIP that is supported by but not dependent on taxpayer dollars, much like the town’s general fund, so rather than representing an increase in expenditures, it just represents a town reserve held in a different account.
Madison Finance Director Stacy Nobitz said this appropriation would just increase the amount in the CIP fund. The BOS had elected to hold the CIP flat during the budget process because of a lack of certainty regarding state funding. Now that state funding is known, Banisch said supporting this appropriation is just indicative of the times.
“We are doing strange things in strange times,” he said. “We are not setting precedents.”
Fitzgerald said both the BOS and BOF decided to hold the CIP flat coming into the budget process due to a concern over not receiving anticipated state funds and a desire to air on the side of caution. Now that state funding is set for the current fiscal year, Fitzgerald said the town has the flexibility to support the CIP, hence the special appropriation request.
“Now that we have clarity, the BOF agreed to request that the BOS approve, and send to Town Meeting, an infusion of a one-time special appropriation, from the fund balance, for a three percent increase in the capital budget compounded for two years,” she said. “This will bring the capital project fund balances to an appropriate level and keeping a three percent annual increase as a goal.”
Since the infusion won’t affect the fiscal year 2019-’20 budget base, Fitzgerald said this infusion will help protect the CIP without negatively affecting the taxpayer.
“The special appropriation will continue the BOF’s best practice of forecast budgeting in order to maintain predictability and consistency in taxes to protect the quality of life for all Madison residents,” she said.
The special appropriation is up for voter approval at a town meeting on Monday, Oct. 22 at 6:30 p.m. at Polson Middle School.