First Selectman’s Report

1. First Selectman’s Report 2009-2010 Fiscal Year Budget Jeremy J. Shingleton April 2, 2009

2. Table of Contents • Economic Environment: Page 3 • Financial Strategy: Page 8 • Statement of Operational Policy: Page 10 • Department Requests: Page 11 • Overview of Proposed Budget: Page 13 • Key Deliverables: Page 20 • Appendix: Page 21

3. US Economy is Shrinking

4. Unemployment is on the Rise Note: January 2009 – 598,000 jobs lost

5. Operating Costs are on the Rise

6. Revenue is on the Decline • Conveyance Tax • Permit Fees • MV Supplemental • LOCIP Funds • STEAP Funds • ECS Funds

7. Environmental Assessment • Times are tough! • Worst financial crisis since the Great Depression • Excessive taxes and poor economic outlook have a negative effect upon the local economy, particularly small businesses • Tax burden has an immediate impact upon the residents, making it difficult to make ends-meet • Taxpayers demand relief and they deserve it! • We must do everything possible to lower taxes • Goal is to decrease spending, while still maintaining the level of services provided to the community

8. Financial Strategy • Contractual obligations, insurance, and benefits represent a significant portion of budget - approximately $400K increase • Need to close revenue and expense gap any way possible • Must present a balanced budget and adhere to fund balance policy • Prepare for the worst – a recession that lasts beyond 2009-2010 Fiscal Year • Aggressively reduce spendingin all other areas, while maintaining servicelevels and making long-term investments in infrastructure • Eliminate waste, yet… • Avoid deferring necessary infrastructure expenses • Reduce exposure to volatile energy costs by locking-in favorable contracts and continuing comprehensive energy program

9. Managing Long-Term Debt

10. 2009-2010 Operations Policy • Improve productivity • Efficiently re-organize and re-allocate resources • Manage departments in a business context • Improve operational strategies • Reduce Overhead • Eliminate unnecessary expenses and positions • Freeze salaries • Aggressive negotiate 3 pending collective bargaining agreements • Impose furloughs wherever reasonably possible • Provide early retirement incentives • Keep town employees employed through re-organization and back-filling through attrition due to early retirement • Reduce exposure to volatile energy costs by locking-in favorable contracts and continuing comprehensive energy program • Overall, Find Ways to Do More with Less!

11. Requests by Department

12. Requests by Expense Category

13. 2009-2010 Budget Overview • Prioritized needs of all town departments • Supported mission-critical requests • Eliminated non-essential expenses • Reduced overall departmental expenses • Locked-in energy contracts for significant savings • Froze all non-union salaries as of 6/30 • Implemented approximately 70 furloughs • Re-organized operations for improved efficiency • Incorporated cost-saving measures for insurance expense • Reduced the bottom line expense over prior year!

14. Proposal by Department

15. Proposal by Expense Category

16. Where Your Money is Spent

17. Where Your Money is Spent

18. Sources of Revenue • Revenue largely dependent upon property taxes • Reduced supplemental revenue • Reduced state funding • Actively seeking state and federal grant opportunities

19. The Bottom Line -0.8%

20. Key Deliverables for 2009-2010 • Streamline operations of town government • Reduce long-term exposure to volatile energy rates • Develop a forward view of our organization, anticipating and responding to future problems • Improve quality of town roads, parks, schools, and municipal buildings through bond projects, state grants, and federal stimulus package • Enhance image of town, developing a cultural center around historic downtown and riverfront • Grow commercial tax base and bring skilled jobs to Cromwell

21. 2009-2010 Fiscal Year Budget Appendix

22. Annual Budget Process • Dept. Requests to First Selectman by February 1st • First Selectman Reviews and Makes Recommendations  • Board of Selectmen Workshops March 5th and 10th • Board of Selectmen Finish Work by March 14th • Selectmen Present to Board of Finance at Regular March 26th Meeting (per Charter)  • BOE Present to Board of Finance at Regular March 26th Meeting (per Charter) •  Public Hearing: April 2nd • Board of Finance Workshops – April 9th and 14th • Board of Finance Finish Work by April 30th (10 days after last hearing but no later than April 30 per Charter) • Town Meeting – TBD • Referendum Vote – TBD

23. Glossary of Commonly Used Terms • Appropriation: to set aside money for a specific use. • Adjusted Budget: Budget as approved by Town Meeting/Referendum plus any additional appropriations made during the fiscal year. • Capital/Non-Recurring (CNR) Fund: This is a special fund set up for capital or non-recurring expenditures over $10,000. Per Town Charter, the appropriation for this fund is NOT included in the annual taxation. • Debt Service: Annual payments necessary to pay down debt obligations already incurred. • Fiscal Year: This is the 12-month period that is covered by the annual budget. In our case, Cromwell’s fiscal year runs from July 1st to June 30th. • Fund Balance: Unreserved governmental funds maintained to meet unanticipated needs or challenges, such as pre-funding reimbursement grants offered by the State or other agencies or to offset extraordinary expenditures associated with natural disasters. Credit rating agencies monitor the level of fund balance to evaluate a government’s creditworthiness. • General Fund: The fund established for the general operations of the Town. Other funds are established for specific purposes, such as various building and capital projects, or special revenue situations.