When many towns and cities across the state are reluctantly raising the property tax to make up for shortfalls from the state funding or unfunded or under-funded mandates are cutting into budgets, North Haven has remained fiscally solvent with a Triple‑A rating.
More than that, in a budget announced this week, First Selectman Michael Freda was able to propose a budget that included no increases in tax despite increased debt from bonding on projects coming due.
Freda and Connecticut Conference of Municipalities Director of Municipal Resource and Service Center George Rafael spoke about the successes of a town like North Haven navigating a tumultuous time in Connecticut’s financial history, on the latest edition of WNHH FM’s “The Municipal Voice.”
“We’re able to do this by a formula that I was able to take out of my business career,” Selectman Freda said, “Grow the top line revenue, and reinvest the top line revenue back into improvements and maintain the same mill rate.”
One of his major successes as first selectman is due to his ability to plan properly.
Looking at the state, one might think that pensions are a problem everywhere, but Selectman Freda said North Haven had the foresight to make sure that pensions were not a burden on taxpayers.
“We fully fund our pensions, make 100 percent of the ARC, or annual required contribution,” Freda said. “Many years I’ve over funded the pension, and the rating agencies like this.”
Some of this planning was to go through the investment portfolio with the assistance of finance professionals, and readjust the investments. Taking a personal look and interest in these portfolios is paying off dividends, literally.
“Most people have to return 7.5 percent on these pensions, and below that your ARC goes up,” Freda noted. “That’s an impact to the taxpayers. The goal is, and should be, to exceed that, and we’re up at 11 percent right now.”
Good relationships also help a town handle expenses. Selectman Freda discussed how he’s been “very fortunate” to have the relationship he has with the superintendent of school and the boards of education in North Haven.
In Freda’s opinion, that’s where you have a collaborative environment to the benefit of everyone.
While each town is unique, and there’s no one-size-fits-all success manual, some common bonds affect all towns.
George Rafael noted that unfunded and under-funded mandates hit all towns pretty equally. One of the suggestions that CCM has come up with is to make it so no new unfunded state mandates pass through legislation without two-thirds legislative approval.
“The hope is that it would force the General Assembly to look closely at these mandates,” Rafael said. “If a mandate has merit, then the majority of the General Assembly will support it.”
Beyond that, Rafael said, the state has “to determine is it good policy and then who should pay for it, maybe the state should be paying for it if it’s something that impacts everyone across the state.”
Selectman Freda said that there are hundreds of mandates that he’d like to see removed.
No matter what, a town has to have a plan. There are so many variables that affect a municipalities budget that you need a lot of ideas and a lot of foresight to be successful. First Selectman Michael Freda has been successful in North Haven because of his foresight, even in a times of uncertainty like ours.
Click on the video at the top of the story to watch the full episode of “The Municipal Voice” with North Haven First Selectman Michael Freda and Connecticut Conference of Municipalities Director of Municipal Resource and Service Center George Rafael.
