1. 1 FY 2015-16 BUDGET PRESENTATION Board of Estimate and Taxation February 9, 2015

2. 2 Operating Budget Process 2/9/15 Finance Director submits recommended budget 2/19/15 Finance Committee holds public hearing 2/24/15 Common Council sets expenditure cap 3/2 – 3/11BET holds budget workshops 3/18/15BET holds public hearing on proposed budget 4/6/15BET sets tentative budget 4/21/15Common Council may adjust cap, if necessary 5/4/15BET sets final budget and tax rates

3. 3 The Economic Environment The economy is growing with GDP growth for 2015 projected at 2.6 – 3.0% Unemployment in Norwalk (Dec. 2014) stands at 5.2%, down 43% from its peak of 9.1% in January 2011. Residential and commercial real estate values remain below their 2006-07 peak, but values are now recovering modestly New development activity is picking up, but tax base growth in a lagging economic indicator, so grand list growth remains somewhat muted

4. 4 Budget Drivers: Revenues Departmental revenues have rebounded from their recession lows, and are projected to increase by $709,152 or 7% State Aid is projected to increase by $669,955 or 4.0%, due to payments in-lieu-of taxes on exempt property Investment income is projected to increase by $310,000 or 69%, from its ultra-low level Interest & penalties are increasing by $355,492 or 22.4%, and the tax collection rate is increasing from 98.2% to 98.5%, in advance of the July 2016 tax sale Use of fund balance for tax relief is budgeted at $1.0 million Tax base is increasing by $92.1 million or.8%, reflecting the impact of new construction activity

5. Budget Drivers: Expenditures Board of Education budget request is fully funded with a proposed increase of $4.5 million or 2.7% All City labor contracts are settled for FY 2016, and provide 2.0 – 2.25% general wage increases. In total, wages are increasing by $1.8 million or 3.8% in FY 2015 Debt service is increasing by $1.5 million or 5.7%, as the City finances its capital budget authorizations and is impacted by a one- time change to the City’s bond repayment structure The recommended FY 2016 budget increases the contribution to the OPEB trust fund by $500,000 or 3.6% 5

6. What is not driving the budget? Employee health insurance costs are going down slightly, due to higher employee contributions and plan design changes achieved through collective bargaining Required contributions to employee pension funds are rising only modestly (1.9%) due to favorable returns in the market, and benefit changes negotiated in collective bargaining: Higher employee contributions into the Pension fund Closed DB plan for new hires (non-public safety) Established new, scaled back DB plan for new hires (police and fire unions) Reduced investment rate-of-return assumption from 7.75% to 7.625% The City’s Insurance Fund is in strong financial shape, and does not require any supplemental funding 6

7. 7 The Bottom Line: $326,769,467 Recommended Budget 2.9% overall expenditure increase: 2.7% increase in Education spending 2.5% increase in City spending 5.7% increase in debt service (City & BOE) 2.2% increase in total tax levy 1.4% average mill rate increase Fourth District mill rate increasing by 1.2% and Median Single Family 4 th District taxes of $6,523, an increase of $57, or.9%

8. 8 Major Funding Initiatives Fully fund Board of Education entire budget request Fund one (1) new Maintainer II position in the Recreation & Parks Dept., re- funding a position which was eliminated in FY2009-10 Fund the restoration of the residential bulky waste pick up program, and the downtown street sweeping program Increase the contribution to the OPEB trust fund by $500,000 Fund nine (9) new patrol vehicles and two (2) detective cars for the Police Department Support the Head Start Program, operated by the Norwalk Housing Authority, with a City contribution of $355,000, an increase of $324,539 Fund two new grant agencies—Person-to-Person and the Carver Center’s School Transition Program, with grants of $25,000 each Fund the biennial tax sale conducted by the Tax Collector, with the next sale planned for July 2016

9. 9 Budget Summary – Expenditures FY 2015FY 2016Variance% General Government $ 5,384,266 $ 5,616,604 $ 232,3384.3% Finance $ 3,496,698 $ 3,724,939 $ 228,2416.5% Health & Welfare $ 2,100,421 $ 2,148,888 $ 48,4672.3% Public Safety $ 43,201,008 $ 45,085,005 $ 1,883,9974.4% Public Works $ 18,400,424 $ 18,325,811 $ (74,613)-0.4% Rec. & Culture $ 8,051,935 $ 8,384,933 $ 332,9984.1% Grants $ 1,871,391 $ 2,305,015 $ 433,62423.2% Employee Benefits $ 29,796,634 $ 30,188,226 $ 391,5921.3% Pension Contribution $ 11,434,148 $ 11,646,360 $ 212,2121.9% Debt Service $ 25,754,744 $ 27,233,470 $ 1,478,7265.7% Other Operating $ 1,619,621 $ 1,122,359 $ (497,262)-30.7% Board of Education $ 166,430,865 $ 170,987,857 $ 4,556,9922.7% TOTAL $ 317,542,155 $ 326,769,467 $ 9,227,3122.9%

10. 10 Where the Money Goes

11. 11 Where the Money Comes From

12. 12 Significant Revenue Changes (+/- $200,000) DescriptionDollar ChangeExplanation Current Property Taxes$7,088,732Needed to maintain balanced budget Departmental Receipts$709,152Bldg permits, RE conveyance, police Intergovernmental$669,955Increase in PILOT payments (Norwalk Hospital) Interest & Penalties$355,492Tax sale year results in increase Investment Income$310,000Investment income expected to start to increase from ultra low levels Miscellaneous$93,981 TOTAL$9,227,312

13. 13 Significant Expenditure Changes (+/- $200,000) DescriptionDollar ChangeExplanation Board of Education$4,556,992 Board of Education request is fully funded Debt Service$1,478,726 Financing associated with prior capital authorizations and impact of policy change to reduce deferral on first principal payment from 36 to 24 months Police Department$1,428,078 Impact of Police contract settlement – previous contract expired 6/30/2013 (three year wage settlement) Grant Agencies$433,624 Increased support for the Head Start Program operated by the Norwalk Housing Authority, and new grants for Employee Benefits$391,592 Includes a $500,000 increase in the OPEB Trust Fund contribution, offset by a decrease in other employee benefits Fire Department$321,907 Includes negotiated contractual wage increase and increased costs for promotional exams and recruitment Recreation & Parks$270,061 New Maintainer II position, contractual wage settlement, part time/temporary wage increases, and utility increases Pensions$212,212 Updated actuarial valuation; change in investment rate assumption from 7.75% to 7.625% Contingency($497,262) All labor contracts are settled for FY 2015-16 All other Changes - Net$631,382 TOTAL$9,227,312

14. 14 Conclusion Budget is balanced plan of operations requiring a 2.2% tax levy increase and results in an average mill rate increase of 1.4% Board of Education 2.7% budget request is fully funded City expenditure growth is limited to 2.5% Combined City-BOE debt service budget is increasing by 5.7% Recommended budget maintains all existing services; funds one new Recreation & Parks position; funds the residential bulky waste pick up and downtown street sweeping programs; funds eleven (11) new police vehicles; increases the city contribution to the OPEB Trust Fund by $500,000; funds the Headstart Pre- school program with an appropriation of $355,000, and funds two new outside grant agencies (Person-to-Person & Carver Center School Transitions Program) at $25,000/each