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Fund Balance Takes Hit from AES Thames

Montville's undesignated fund balance is now 5.2 percent of its general fund budget

Montville's financial situation was outlined starkly Tuesday, as Finance Director Terry Hart told members of the Finance Committee that the town's undesignated fund balance is at 5.2 percent of its general fund budget.

The town's fund balance policy, established in 2006, says that the town "strives to maintain as undesignated... an amount no less than 8.5 percent of the town's general fund budget and no greater than 17 percent. It is the intent of the town to aim for the greater level of 17 percent. This amount equates to a minimum one month of operating expenses from the current operating budget and a maximum two months of operating expenses from the current budget."

Hart said that the state government financial association recommends an undesignated fund balance range of 5 percent to 12 percent.

It dropped to the 5.2 percent level, Hart said, because AES Thames did not pay the $1.2 million it owes in taxes for the current year. Whatever the town loses or gains in revenue minus what it spends is the fund balance, she said.

"AES is a huge hit," Hart said.

While the revaluation and personal property inventories have been completed, the Board of Assessment Appeal has not yet begun meeting. Still, Mayor Ron McDaniel said, NRG, CVS and Stop & Shop already have given notice that they are appealing their assessments. 

McDaniel said that that town is going to negotiate separately with these three major taxpayers.

The budget proposals that have been received for the upcoming year show, in the main, zero percent increases, or are even below the current year's budget, Hart said. In cases where there are increases, they are generally contractual, she said.

Though a spending freeze has not been formally declared, McDaniel said no one is spending any money.

"It's grim, I tell you," he said.

News that Connecticut had approved the proposed Northeast Utilities/NSTAR merger on Monday did nothing to alleviate the financial gloom. McDaniel has been urging the state to require that the merged power company buy energy from a proposed NRG biomass plant in Montville.  The biomass idea was not mentioned in the merger agreement.

 McDaniel is still pushing for the biomass plant, he said.

"I'm not giving up," the mayor said.

Ellen Hillman March 28, 2012 at 09:47 PM
but according to charter the mayor is to make that announcement and the council has to come forth with a plan to fix it. Where is the mayor and the plan and the council? not at the finance committee meeting
bobbj2010 March 28, 2012 at 10:52 PM
Thats an easy jeopardy question. What is the Brown Derby?
theinformant March 29, 2012 at 12:32 PM
Town Hall Annex
Tricia W. March 29, 2012 at 05:22 PM
What do you mean by Town Hall Annex?
J. Arrington April 20, 2012 at 12:48 AM
Why does everyone miss the point? AES did not cause the fund balance to drop! The fund balance dropped because of inaccurate budgets back in 2009. Amazingly, caused by some of the same people who are on the Town Council now.

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