Meriden's Budget, 2006-07

The City Council will be voting tomorrow night on the budget recommended by the Finance Committee. Barring any major changes proposed and debated on the floor, this budget will produce an increase of 1.99 mills, or an overall tax increase of just under 5%. A good portion of this increase, near 78%, is due to increases in education and public safety. Increased cost of health care, and energy increases are also significant cost drivers.

The BOE is receiving a little over $2 mllion from last year's original approved amount, a large amount no doubt, less in percentage than recent years. (Last year's appropriation was adjusted up due to a return of a part of the BOE's surplus, but this figure was not used as a "base.").The committee considered the excess paid to ACES for Edison School tuition, both in the current fiscal year and the proposed budget request for FY2006-07. The Finance Committee also factored in an expected increase of funds to come from the State for both special education and increased energy expenses. If the State does not grant these funds to the BOE, the Finance Committee will need to consider other appropriations for these costs to the BOE.

One of the few areas where the Finance Committee increased the City Manager's recommended budget was in the Police Department. Based on a recommendation from Council leadership, an increase of $170,000 to the Police overtime budget was inserted. This amount was approved by the Finance Committee as a necessary expense to increase the operations of the Crime Suppression Unit, in order not only to suppress crime in our inner city, but also to prevent it. The Finance Committee also added in $30,000 to assist funding of next year's Daffodil Festival, a line item that was not funded in the City Manager's recommended budget. Although this year's event enjoyed superior weather and crowds, which will raise funds for all involved, it is important that the City continue its support for this signature event.

This is my 11th budget since first elected to the Council. They get tougher every year, and I hear the constituents' pleas to cut. Unfortunately, the "Big Idea" for cutting taxes was not forthcoming, either by the City Manager, the Finance Committee, or the public. Unfortunately, the costs of government are impacted by many areas where we do not have control. The War on Terrorism, Katrina rebuilding, an unstable energy environment, and the Bush Administration's tax cuts all seem to require that the Federal Government decrease appropriation to the states. The states in turn must decrease the level of fundings to the municipalities, without reducing previous mandated legislation from both the federal and state level that cities and towns must implement. The ones left at the bottom of the hill are the local property owners, you and me. I pay the taxes too, and wish there were a way to reduce them. At best, we were able to minimize the increase. And next year brings revaluation....

HB 5525 and the City's Power Plant

On a separate front involving the power plant that is yet to be completed in Meriden, there is a bill in the General Assembly that, among other things, would allow the regulated utilities, (read CL&P, UI) to re-enter the energy generation market, one that was de-regulated several years ago to improve efficiencies and stabilize rates. In reading the bill, I think this section is detrimental to Meriden, in that it would forestall and perhaps eliminate the completion of this plant, one that was allowed in the first place for the taxes it would generate, and the land that would be transferred to the City. After a long hard-fought battle, it appears the land will be Meriden's soon. With this bill, however, the tax part of the deal is now in danger. I wrote the following email to our delegation and copied the Council tonight.

It is my understanding that this bill, "An Act Establishing an Energy and Technology Authority" contains provisions that could be detrimental to Meriden. If approved as proposed, it could seriously delay and even suspend the completion of the independent power project in Meriden currently owned by NRG. (Detailed status on the bill can be tracked here).
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Specifically, allowing the regulated utilities back into the generation business will upset the capital markets that have financed existing efforts by the private sector since energy deregulation was implemented, and will increase ,not decrease rates. Currently, private investors have several billion dollars invested in generation in CT as designed by de-regulation. The incremental re-regulation envisioned in HB 5525 will serve to put all of those assets at greater risk in the market. Lenders will respond as they always do by requiring higher return for their investment. Cost of debt service will increase at the vast majority of the plants in CT.

Consequently, allowing regulated utilities back into generation will cause the cost of capital for proposed approved projects, not only in Meriden, but also Oxford and Middletown, to increase to the point that they cannot be competitive. The result is they will not be built now or ever. Meriden's reason to allow its plant to be built was to assure a strong and increasing tax revenue over time. Passage of this bill will negate Meriden's efforts to accomplish that goal.

Another part of the bill, as I understand it, specifically excludes natural gas as a fuel for a plant proposed under the RFP. (Meriden's plant is designed to be fueled by natural gas, which is why it was located where it is, near the Algonquin Gas Line). It mandates that coal, utilized as fuel for an IGCC plant, be the only fuel allowed. This despite the fact that integrated gasification combined cycle technology (IGCC) is not a competitive source of energy and cannot be financed without a placing most of the risk (as much as two billion dollars of risk in the bill) on rate payers. Financial markets / lenders will not underwrite an unproven technology, constructors will not guarantee operation or performance and component manufacturers will not guarantee more than their individual component's operation. The risk of technology failure rests on rate payers. $2,000,000,000.00 of risk! I strongl believe that the state's rate payers, if asked, would pass on that risk. They are relying on their legislators to make that decision for them.

Buddy, I know you voted for this in committee, and there are parts of the bill that make sense for the state, I'm sure. But I think the delegation should work to remove language that allows the re-entry of the regulated utilities into the generation business, one the state was compelled to de-regulate because they were not efficient when they DID generation before, and let the private markets do their job when the energy industry and its financing stabilizes. Otherwise, Meriden will have a mausoleum on its hillside, instead of a tax generator.

Thanks for considering this long post. I do not speak for the City Council, but am copying them as they should be interested in how this bill could reduce the possibility of future tax revenues they worked hard to obtain, over a difficult 6 years.

This is one of those issues discussed at the State level which isn't sexy, but could have a real impact on our City in the long run. A lot of money is on the table surrounding energy (just consider what it is costing us to heat our homes, light our rooms, and fuel our cars, and the punishing changes occuring there on a daily basis, not just monthly or yearly). A lot of Meriden's future revenue is on the table with this bill, and we need to make sure Meriden's interests are protected. What do you think?

NRG Land Transfer update

The City Manager advised City Council leadership yesterday that we are one step closer to obtaining the land owed to the City by NRG. The City is due approximately 330 acres as part of an agreement with NRG when they received approval to build a power plant on the former Summitwood property. Earlier this year the State Attorney General's office filed an injunction on behalf of the Siting Council to enforce their order given in 1999 to complete the transfer. (see the 1/14/06 R-J article reporting on the AG and Siting Council's action here.).

The City has completed its environmental assessment and title search as part of the agreement and will formally request the transfer from NRG next week. At that point, according to the agreement, NRG has 60 days to transfer the land. NRG has a number of encumbrances to remove, but that should not forestall the transfer, otherwise the Siting Council can take further action, including revoking NRG's permits for the power plant. That action could have severe financial consequences for NRG, and not in their best business interests.

Once again, the City has done what has been required, as we have ever since the power plant project began. It is time for NRG to complete their part of the deal.

Bulky Waste

It's been a little quiet here, so I thought it might be time for a new poll.

The mayor and Councilor David Salafia submitted a resolution last week for consideration by the Finance Committee. They recommend that citizens who are current with their tax payments be allowed two free drop offs at the landfill. Currently, payments must be made when dropping off any bulky waste: $20 per carload, $40 per truckload, each time a dropoff is made. For the past two years, this service has undergone a lot of debate during the budget vote. It is a large ticket item in the budget, and when trying to cut costs, it's an easy target to eliminate. But it's a service that many residents expect and use. Take the unofficial poll and let us know how you feel. Remember, it's not a scientific, statistically valid exercise, but it will be interesting. And, if you have better ideas, post them here in the comment section. Who knows, your suggestions may be implemented.

Council Meeting Roundup: 4/3/06

Last night's meeting was proceeded by a Special Finance Committee meeting, which took up the matters of public hearings for both the Capital Improvement Plan (CIP) and the Falcon Field project. With the exception of the usual rant and rave of Frank Rotella (yes, he's back after a lengthy vacation courtesy of the State), virtually all speakers approved of the City spending for the proposed sports complex. Even Arline Dunlop jumped on board the bandwagon, with a challenge to all the old jocks to have an Old Timers game on the turf field. Not a bad idea, but I'm not paying the liability premium! The bond resolutions passed, both in committee and ultimately on the Council floor, after extended discussion on the cost analysis prepared by the City Manager at my request. After all is said and done, the net cost to the City would be about $400,000, when taking into account the cost avoidance of upgrades to grass fields at Ceppa, and bleacher/press boxes at Ceppa and Falcon, as well as field maintanance savings. With the increased usage expected for football, soccer, band competitions and Washington Middle School's students, this is a good deal. We'll await the final costs once the design and plans are prepared and bid out. The expected total cost is estimated at $3.3 million at this stage, with 50% coming from the State.

The CIP was approved, (including seed money for the Hubbard Park playscape), but still below the Council's self-imposed bonding cap. The goal here over time is to pay for capital improvements out of operating funds, instead of paying interest. It is a conservative and fiscally prudent path to follow, but takes discipline to manage the costs.

On the Economic Development side, the Council approved a zoning regulation change that will eliminate building homes in rear lots. The intent is to deter unnecessary over-development and reduce density in residential areas. Public safety was also a concern, as fire equipment often cannot reach buildings in rear locations. It is a good change for Meriden. The Council also approved the City to dispose by sale certain properties downtown on Main Street. Currently, they house tenants including Castle Craig Theatre and Kitchens by Glen. The Council directed that appraisals be conducted to determine a market price, and then have several proposals that had been solicited to be considered. It is my hope that any successful proposal include plans to keep the theater intact, and that market-based housing be developed on the upper level. More to come.

The police and fire budget will be considered this Thursday evening at City Hall. Come one, come all.