SOUTHINGTON - The Town Council will not be using its rainy day fund to compensate for municipal aid reductions, Council Chairman Chris Palmieri announced Monday.
Palmieri said that he and Board of Education Chairman Brian Goralski, along with Board of Finance Chairman John Leary, agreed not to use the fund in order to avoid creating a “fiscal cliff” situation.
“This is not a one-time expenditure like when we subsidized costs to clean up damages from the 2011 ice storm,” said Palmieri. “We got partial reimbursement from FEMA and that money went right back into our fund to replenish it. That was a one-time act of nature. On the other hand, we have every indication that the state will continue to cut grants to municipalities. So this would not be a one-time expenditure.”
Palmieri said that the state is in debt due to “fiscal mismanagement” and “declining revenues.”
“Bond agencies are also watching how we respond to these cuts,” Palmieri continued. “If we draw from our rainy day fund it may result in a reduction to our AA+ bond rating, which could cost us even more money.”
Palmieri said that using the fund for non-one-time expenditures would only have been a temporary fix anyway.
“It would cause more harm in the long run,” he said. “We would then need to plan for revenue to offset fund balance revenues. Each year, the fiscal cliff would only get steeper.”
Palmieri said that a summary of the reasoning behind this decision will be posted on the town website in order to help residents understand.
Palmieri also explained Monday that the town was facing a total of $5.1 million in state aid reductions. He said the town was able to set aside $3 million in a contingency fund due to the council being “fiscally prudent.” However, that still leaves Southington with a $2.1 million deficit.
“We have decided that since the majority of these cuts will be affecting the Board of Education, they will receive 85 percent of our contingency fund money or $2,550,000,” said Palmieri. “The remaining $450,000 will go to the town.”
Palmieri stressed that the council is “constantly working” with the school and fiance boards to come up with a plan for covering the lost funds.
Brian M. Johnson can be reached at 860-973-1806 or firstname.lastname@example.org