New Canaan in good fiscal shape says new debt report
Published 4:43 pm, Wednesday, November 28, 2012
New Canaan has a healthy amount of debt going into the future, according to the authors of the Board of Finance's Five-Year Debt Roadmap.
The report showed that New Canaan places in the middle of the municipal pack with a 1.05 percent debt burden, meaning that the town holds debt of just more than 1 percent of the combined value of all the properties in town. This number attempts to put the amount of debt in the context of the town's assets. This number compares similarly with surrounding towns: Darien is at 1.32 percent; Westport at 1.16 percent; and Wilton at 1.08 percent. Greenwich has only a 0.18 percent debt burden.
In general, Greenwich has little debt. While New Canaan has $6,175 in debt per capita and Darien has $4,165 in debt per capita, Greenwich has only $1,310 in debt per capita. This can partly be explained by the fact that Greenwich contains more homes that have enormously high property values than New Canaan or Darien, and so takes in more in gross receipts, but New Canaan is no slouch in expensive property either.
According to Board of Finance member and co-author of the report Charles Van Vleet, this does not mean that Greenwich is in better fiscal shape than New Canaan.
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"They have a low level of debt because they haven't bonded (for as many projects)," Van Vleet said.
"Greenwich needs as many schools and roads (as we do). They chose to pay for it out of taxes. They burdened current taxpayers for things that will be used for generations."
Van Vleet explained the concept of equitable bonding: Paying for projects whose utility will be realized over many years should be paid for over a long period of time. To pay for large capital projects up front puts the entire burden on current taxpayers, many of whom will move away or die in the coming decades, unable to reap the full benefit for which they have paid. Stretching the payment out by issuing bonds better allows the taxpayers to pay for what they receive. Just as a fiscally lax policy where government takes on huge debts for immediate projects creates a burden for future generations of taxpayers, an overly conservative policy places a burden on taxpayers right now, giving future ones a free ride in a sense. Van Vleet proposes that the most equitable debt distribution is somewhere in the middle, which is where he believes New Canaan to be.
"I would say we have a full and fair complement of debt and a low equalized mill rate," said Van Vleet, who co-authored the report with Budget Director Jennifer Charneski. "If we have the same quality of schools, we have a pretty good deal on the mill rate relative to a town like Wilton."
New Canaan's equalized mill rate is 9.44 and Wilton's is 14.54. About 60 percent of New Canaan's budget goes to schools, and in Wilton about 70 percent. In terms of performance, New Canaan High School students recently did very well on the Connecticut Academic Performance Test compared to Wilton and were second in the state in average cumulative SAT scores after Wilton in 2011.
The town administration said the road map will provide a quantifiable projection of debt going forward, something that will be valuable when discussing new projects.
"This is a tool we can use to slot in changes and see what the impacts will be," Charneski said. "You can see the two alternatives of whether we should pay for (a project) in a budget or bond for it. We can actually see it."
First Selectman Robert Mallozzi said the road map offers residents and public officials a look into the town's fiscal position, which he said is within the bounds of comfort.
"We do have major projects coming up and we want to be sure that the town understands debt projects," Mallozzi said. "I think it achieved that wonderfully. ... If you look at the matrix, you understand what our grand list looks like and the amount of debt service in place, it looks like we can handle it. I know where we don't want to be, and I think where we are now is fine. We have reduced debt over the past couple years, but we're taking on more with Town Hall."
The report is available on the town's website at: http://www.newcanaan.info/controls/NewsFeed.aspx?FeedID=373
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