East Haven Audit Confirms ’14-‘15 Fiscal Year Surplus of $1.29 Million –Debt Reduced by $6.61 Million Dollars to "Modern Historic Low"

FOR IMMEDIATE RELEASE

December 30, 2015

East Haven Audit Confirms ’14-‘15 Fiscal Year Surplus of $1.29 Million –Debt Reduced by $6.61 Million Dollars to "Modern Historic Low"

Today, Mayor Joseph Maturo, Jr. announced the release of East Haven's 2014-2015 fiscal year audit, which confirms that the Town ended the '14-'15 fiscal year with a $1.29 million dollar surplus and reduced its long-term indebtedness by $6.61 million dollars.

Maturo explained, “Since resuming office in 2011, we have instituted common sense budget controls and greatly reduced our reliance on bonding as part of a comprehensive, town-wide financial recovery initiative aimed at improving our credit rating and restoring our rainy day fund.  I am proud that our efforts have produced four straight surpluses, including a $1.29 million dollar surplus in the 2014-2015 fiscal year."

According to the ’14-‘15 audit, the Town had total revenues of $88,662,010.00 and total expenditures of $87,424,438,00.  The Town also had a small, positive revenue adjustment of $61,290.00.  The end result was a yearly surplus of $1,298,862.00.  As a result of the yearly surplus, the Town’s running fund balance, or rainy day fund, increased from $2,551,976.00 to $3,850,838.00– an increase of 50.8% in one year  which positions the fund at its highest level since 2007.

Maturo added, "This turnaround was not easy and it certainly didn't take place overnight.  Running consecutive operating surpluses has required sustained fiscal restraint, careful budgeting, and aggressive economic development efforts.  However, thanks to these efforts, the Town's rainy day fund now stands at a healthy $3.85 million dollars, a start contrast from the negative $5.1 million dollar hole East Haven found itself in just five short years ago."

Major credit rating agencies, like Moody’s and Standard and Poor’s, closely monitor municipalities' long term debt and recommend that municipalities maintain the equivalent of 5% of their operating budgets as a fund balance.  At present, East Haven’s operating budget is $89,097,555.00.

Maturo explained, “With a surplus in the present budget year, we anticipate we will achieve our goal of restoring the Town's rainy day fund and will surpass the $4.45 million dollar threshold recommended by credit rating agencies like Moody's and Standard and Poor's."

In the fall of 2014, Standard and Poor’s validated the Town's financial recovery efforts and raised the Town’s credit rating from BBB+ to A-.  Maturo predicts that the full restoration of the fund balance coupled with continued efforts to reduce the Town's long-term debt, will position the Town for another credit rating increase in 2016.

Maturo continued, "At the same time, we've reduced our debt from $48.1 million dollars in 2011 to a modern historic low of $30.8 million dollars as of June of 2015 - a reduction of nearly thirty-six percent (36%) in just four years.  With the Town's scheduled debt payment in the current budget year, our indebtedness will drop below $30 million dollars to approximately $26.7 million dollars by June of 2016.  Based on this success, we're certainly making a compelling case for another upgrade in our bond rating."

Maturo noted, "Debt reduction plays a critical role in the Town's budgeting.  Our success reducing debt, to-date, was the driving force behind the historic tax decrease we were able to institute this year.  Looking ahead, our ability to keep our debt low will be a significant factor in determining if we can maintain and even expand our tax reduction initiatives."

As in past years, Maturo enacted a strict spending freeze mid-way through the 2014-2015 fiscal year, resulting in modest, but widespread, savings throughout the Town's various departments.

Maturo noted, "The audit confirms significant operational savings in the general government, public safety, employee benefits, and public services line items.  I'm pleased that department heads sharpened their pencils and cut back on unnecessary spending, resulting in real savings for the taxpayers.  I am equally pleased that we achieved this success while maintaining an exceptional level of services for our residents."

Maturo explained, "Looking ahead, we certainly intend to utilize some of our savings to undertake necessary infrastructure upgrades.  At present, we are exploring the feasibility of building a skate park at the Middle School complex, re-allocating monies to re-roof and renovate the Reggie Hatch Community Center in Foxon, and identifying road and drainage projects to undertake across Town."

However, in light of the Board of Education's anticipated vote on a school consolidation plan and looming potential reductions in state aid to municipalities, the Mayor cautioned that the good budget news should not be interpreted as a green light for Town officials to plunge the Town back into debt with excessive or unnecessary capital spending.

Maturo cautioned, "We must continue to be strategic about how and when we borrow money, especially considering that we are still awaiting a vote by the Board of Education on a school consolidation plan that could cost up to $80 million dollars."

Maturo continued, "For example, some individuals have expressed an interest in borrowing between $25 million and $70 million dollars to develop the old High School exclusively for Town use.  This course of action would not only result in a significant tax increase, but would raise our debt beyond the crippling levels we experienced in the mid 1990's.  With healthcare costs rising and state aid disappearing, we must get creative about reducing operational costs to prevent future tax increases.  Bonding for a project of that magnitude, especially in light of ongoing school consolidation talks, would be irresponsible, would erase any operational savings we generate, and will require substantial tax increases in coming years."

Maturo concluded, “Throughout my fourteen years as Mayor, I have been committed to reducing debt and carefully limiting spending.  I am immensely proud that we continue to achieve these goals and that we continue to expand the level of services we offer our residents.  Looking ahead, we will continue to employ common sense budgeting principles so that East Haven remains an affordable, beautiful community to live and raise a family."

Click here for a copy of the State and Federal Single Audit Report 2015

For additional information, please contact Frank Gentilesco at 203-468-3204.