The city ended the 2013-14 fiscal year with a budget surplus of about $2.7 million, according to city officials, which is considerably lower than the surplus the previous year.
Mayor Mark Lauretti said the surplus would have been larger but some of the funds were instead used for needed projects, such as about $600,000 to buy new plow trucks and about $300,000 on school security upgrades.
Cash was used for these purchases rather than borrowing through the sale of bonds.
“These are all one-time expenses,” said Lauretti, who prefers to use unspent budget money on non-operating costs such as capital equipment and improvements.
This is an approach that also is favored by John Anglace, Board of Aldermen president. “We try to use one-time revenue for one-time expenses,” Anglace said.
While the city’s 2013-14 fiscal year ended last June 30, the official audit usually comes out about six months later. The audit was done by Woodbridge-based Lavitsky & Berney.
The audit also showed the city has $12.2 million in its undesignated fund balance, which is like a rainy day fund. It is essentially the accumulation of past budget surpluses.
Previous year’s surplus
During the previous budget year, the city ended fiscal year 2012-13 with a $7.5-million surplus.
The size of that surplus led to criticism by some Lauretti detractors that the mayor didn’t spend funds allocated in the approved budget in certain areas. Others said the large surplus meant the city had the extra funds needed to pay for certain programs and projects, such as full-day kindergarten.
Lauretti said the city’s fiscal condition remains strong, and is reflected in the low tax rate paid by residents and businesses.
He said Shelton’s finances are the envy of most other municipalities around the state. “Everyone in the state of Connecticut would like to be in a situation like we are,” Lauretti said.
Unique items were factors
A few unique revenue items contributed to the fiscal year 2013-14 surplus.
One was almost $640,000 related to the case of Sharon Scanlon, the former assistant finance director in Shelton who pleaded guilty to embezzling almost $1 million from the city and now is in prison.
The city received about $500,000 in insurance payments due to Scanlon’s theft, and another $140,000 from when she forfeited her pension.
About $1.6 million of the surplus came through personal property audits conducted by an outside company.
The city hired an outside firm to audit companies with Shelton operations to see if all their business equipment was being properly declared and taxed. The firm is being paid $400,000 to conduct 600 audits during parts of two fiscal years.
Many municipalities use outside firms for such audits every few years, but Shelton has not.
Anglace said without these two revenue items the city surplus would have been much smaller.
Setting up reserve funds
Anglace said aldermen will consider using some surplus funds to set up reserve funds for employee health care costs, both on the city and Board of Education side, as well as for workers’ compensation costs.
Both the city and school district are self-insured for health care, so having formal reserves would be seen as fiscally prudent.
Lauretti agreed with that approach. “Being self-insured now, we have to be prepared for that,” the mayor said.