New Milford struggles to reach a workable revenue stream

As the New Milford Town Council struggles to bring in a realistic budget for 2010-11, the $91.76 million figure proposed by Mayor Pat Murphy is being scrutinized for potential sources of revenue.

Director of Finance Ray Jankowski told the joint Council/Board of Finance meeting on the budget on Wednesday that "this town doesn't have a spending problem; we have a revenue problem."

The second highest part of New Milford's revenue -- after taxes -- comes from state grants, Jankowski said. Roughly $16.1 million may be coming to the town for 2010-11 -- that is the number the state Legislature is telling Jankowski to expect.

"I don't know if there are stimulus talks happening between the federal government and the state or if the state plans to bond," Jankowski said. "I don't know where the state expects to find the money."

State mandated programs, like the PILOT (payment in lieu of taxes) program are being prorated: where initially the PILOT program reimbursed municipalities 100 percent for taxes not paid on manufacturing equipment by businesses, it no longer does. That leaves individual municipalities to make up the balance, Jankowski explained.

"A lot of businesses came into town using the PILOT program," Jankowski said. "Things like this, we can't do anything about. The state made the PILOT program available and then cut back on the amount it is funding of it."

Town Council member Peter Bass said that next year the town will be looking at a similar revenue loss while, again, facing increased costs of running and maintaining the town.

"We're looking at a $1.2 million shortfall at the start, along with escalation of costs," Bass said. "People have to realize that as we look at budget cuts."

Council member Ray O'Brien said he is "very uncomfortable working with numbers and creating a budget when we're not even sure they (the state) is giving us the money they said they will."

Jankowski noted that all municipalities are looking at similar scenarios and struggling with what to do.

"It's been this way for the past five years," he said.

Asked what this path will eventually mean for the town's bond rating, Jankowski said that bond rating agencies realize these economic realities and allow for adjustments.

"It's a tough road," Jankowski said. "Communities borrow. That's the only way we can really fund major improvements. The town has always stepped up to the plate and done what the rating agencies have expected us to do."

Jankowski said bond rating agencies look at a municipalities' ability to fund infrastructure and to have a "rainy day" fund. These things make a bond rating agency comfortable that the town will repay what it borrows, he said.

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