Democrat David Gioiello says he will create a separate reserve account in the city budget as a way to clearly designate surplus funds.

Under Republican Mayor Mark Lauretti’s administration, the reserve fund now is drawn from unspent line items in all department accounts, according to Gioiello.

This approach “mixes [the reserve] in with the operating budget, which really clouds the issue,” said Gioiello, who is running for mayor against Lauretti.

He said his approach would “take this out of the shadows” and lead to more transparent budgeting that would “truly reflect what it takes to run the departments.”

Gioiello was joined at a recent press conference in front of City Hall by fellow Democrats Wayne Bragg, a member of the city Board of Apportionment and Taxation (A&T), and former Mayor Michael Pacowta.

Budget for what will be spent

Bragg, who worked as comptroller of Sikorsky Aircraft, said department expenses now are overstated in the city budget to create the reserve.

He said while this is one way to handle budgeting, having a separate reserve fund “would provide more visibility to the reserve and hold the departments accountable to budgets that are aligned with their actual work requirements.”

Bragg said the approved budget should reflect what will actually be spent, but the current administration’s mentality is that “[department] budgets seem to represent what we’d like to have, and not what we will actually spend.”

City positions go unfilled

Gioiello and Bragg said many of the excess funds now are found by not filling municipal positions included in the budget.

“You have these open positions,” said Gioiello, pointing to those of assistant library director and — more recently — Huntington Library Branch director as two examples.

“We’ve inflated the numbers,” Bragg said of budgeted personnel.

Bragg said two prior Republican A&T chairmen have recommended the city set up a formal reserve account, “so this is not something we’re just discovering now.”

Pacowta, a CPA who now serves on the Board of Education, said having a separate reserve would “take away any suspicion of over-taxation” by clearly defining what money is being set aside.

Rating companies eye reserve funds

Municipalities generally try to have a reserve account — also called a fund balance — of at least 5% of the operating budget. This is what credit rating agencies want, and it can help a municipality get a better credit rating and therefore lower borrowing costs.

Shelton usually has surpluses in this range.

A reserve or fund balance is basically the accumulation of past budget surpluses. For an individual, it’s like having a savings account for an emergency or future major purchase.

Lauretti counters

Lauretti dismissed Gioiello’s criticism and his proposed new approach. “We have both,” said Lauretti, indicating that the budget as currently put together can accommodate operating expenses and reserve funding.

Lauretti said Gioiello’s comments “demonstrate his lack of understanding in running a city,” and it’s not his role as the incumbent to help his political opponent better comprehend the Shelton budget process.

“I’m not going to educate the guy,” Lauretti said.

Gioiello also said the city is bonding too much these days, pushing the cost into future years.

Having a designated reserve would allow these funds to be used to pay for expenses now being bonded, accoring to Gioiello.