By Genevieve Reilly
Staff writer Updated: 12/18/2008 10:06:45 PM EST
Fairfield struggles with $2m shortfall, pension gap - Topix
FAIRFIELD -- Town officials are wrestling with a possible $2 million budget shortfall while the specter of the $42 million hit the pension fund took in the Bernard Madoff Securities scandal looms large.
The Board of Selectmen and Board of Finance met jointly Thursday afternoon to discuss ways to close the budget gap and get an update from First Selectman Kenneth Flatto on the pension fund.
While the pension boards are pursuing all avenues to recoup some of its losses in Madoff scam, Flatto said, it could have an indirect effect on the town's budget.
It is possible that the town will have to begin making contributions to the pension funds that cover town, police and fire employees, something it has not had to do in about a decade.
After reducing the value of the Madoff fund to zero, the pension fund's value is about $230 million, with an estimated liability of about $270 million.
The Madoff fund accounted for about 14.5 percent of the total pension fund, and Fiscal Officer Paul Hiller said the boards were beginning to look at reallocating some of those funds on the advice of New England Pension Consultants because it accounted for a larger portion than recommended.
Meanwhile, the finance board and the selectmen reviewed some of the measures taken so far by Flatto to reduce expenditures in the current $245 million spending plan because of declining revenues.
For example, real estate conveyance taxes are running about $450,000 below what they were at this time last year, Flatto said. Tax collections are also lagging behind last year by about 0.5 percent.
"We're tracking this virtually daily," Hiller said, adding, "the last 10 days have been very good." He said the town will have a better handle on the tax revenues after the third quarter payments are made in January.
Flatto said he's met with the larger departments -- Public Works, Police, Fire, Recreation and the library -- to find savings in their accounts.
The library will no longer be open late on Fridays for the next six months,while the Police Department has eliminated the Citizens Police Academy and car seat installations and reassigned officers to fill patrol vacancies. In the Public Works department, overtime will be limited to emergencies.
"Each department was able to come up with some things that were fairly easy to accomplish," Flatto said. That effort will provide about $750,000 in savings. The town will also be offering an early retirement package and will continue with a partial hiring freeze put into place earlier.
Supt. of Schools Ann Clark and school board Vice Chairman John Mitola pledged the school district would look for savings as well, though they said at this point they cannot give a definitive number.
Flatto said he would like to accomplish the needed savings without layoffs, but didn't rule that out.
"That makes an argument for some type of community give-up," said finance board member Robert Mayer, if municipal employees feel it is better to "spread the pain" rather than having any employees lose their jobs.
"What is your drop-dead date for having to make the tough calls?" asked finance board Vice Chairman Thomas Flynn. "The further you go into the fiscal year without impacting the budget, the more Draconian those measures will have to be."
Flatto said anything that could be implemented immediately has been, and said the town will take stock of where it stands at the end of January.