Letter To The Editor: Budget Approaches That Should Be Considered By Madison’s Government

Editor's note: This is a letter drafted by Madison resident Charles Elliot last year. He has provided updates to it and has asked that it run again this year as we consider the town's budget. See footnotes at the end of the letter for this year's updates.

The Honorable Fillmore McPherson

First Selectman

Town of Madison

Eight Campus Drive

Madison CT 06443

Dear Mr. McPherson:

My wife and I have enjoyed our seasonal residence at 12 Parker Avenue for over forty years.  While our permanent residence is in South Carolina, we do have two grandchildren in the Madison Public Schools.

Past year’s difficulties in obtaining voter approval of both the Town and school budgets prompted thoughts on new approaches to both possible revenue increases and cost reductions for the Town.  Let me add that my experience includes six years on a local school board in Westchester County, New York; over twenty years as a pharmaceutical industry executive, and fifteen as a locational and economic development consultant.

Here are my suggestions for your consideration:

Revenue Increases

• Fees for parking at railroad station and meters for downtown.  Most Westchester communities and many in Connecticut charge annual fees for parking near their commuter railroad stations.  They also have provisions for daily parking.  Meters are common for downtown shopping areas.  I gather that the railroad station lot is owned by the State, so negotiations at that level may be necessary.

• Fees for local government programs, including the Senior Center, summer concerts, and for participation in athletic and other extracurricular school activities.  Many communities in Connecticut have instituted such fees to offset the rising cost of providing such services.

• Automatic gates and related toll-collecting methodologies for the East and West Wharf town beaches.  From personal observation, the West Wharf beach kiosk is staffed, at most, about half the time during the summer.  Is this cost-effective?  Beach communities in our area in South Carolina have automatic collection systems for beach parking; I suggest that the Town investigate same.

Any such system undoubtedly would require some form of land swap with Ric Duques so that the Town can regain control of mooring posts and adjacent beach frontage.

• Raise revenue from Town-owned properties.  Per the Appraisal Resource data base, the Town owns 79 properties.  I suggest an analysis to determine whether all are necessary and, then, sale or lease of excess properties not needed.  This analysis certainly should include the two acres (more or less) at the Griswold property for which commercial development is allowed by the covenants governing the property.

• Examine assessment practices to correct, by the next revaluation, instances where properties currently appear to be underassessed.  A prime example involves the Madison Beach Hotel property at 88 West Wharf Road and comparison of this property to other beach front properties of approximately the same size.  The above-referenced hotel property was sold in 2006 to Mr. Duques for $5,357,680 and is assessed (at 70%) at $3,710,000.  The land alone, 40,436 sq. ft., is valued at $l,750,306  or $43.30 per sq. ft. By contrast, most other privately owned beachfront properties of about one acre or more (I identified ten others) are assessed at square foot values in the mid-30’s.  Two glaring exceptions are the Madison Beach Club property at 128 Island Avenue ($18.05 per sq. ft.) and property at 251 Neck Road ($13.12 per sq. ft.).  I do understand the principle in appraising property that larger properties generally, but not necessarily, are appraised at lower unit values than smaller properties.  However, the valuations attributed to 128 Island Avenue and 251 Neck Road certainly seem to be understated.  This observation pertains, in particular, to The Beach Club, with 200 feet of shoreline compared to the hotel with its 40 feet of pebbly sand. Please note that I telephoned the Town Assessor, on October 7, 2010 at 3:40 p.m. to request a meeting to review the above findings.  As of October 18, when I had to leave our unheated house, the courtesy of a return call had not materialized.

• Review the possibility of Payment in Lieu of Taxes (PILOT) programs for properties not now paying taxes or which enjoy dramatically reduced assessments.  Hammonasset Park is a prize asset of the State of Connecticut.  However, I do not believe that Madison receives property tax revenues from the State.  Perhaps an agreement could be reached whereby Madison shares in the admission fees levied by the State.  And the Madison Country Club enjoys a low assessment ratio on its property, 4% I believe, vs. the usual 70%, under a program designed to preserve open space.  Why not attempt a PILOT program for this acreage?

• Selectively attract industry to the Town.  Unlike almost every other community, Madison has virtually no industrial base to provide tax revenue; the sale and subsequent demise of Garrity Industries leaves only a welding operation on New Road as an industrial operation.  The town consistently has rejected applications for industrial use, including, as I recall, an upscale R & D operation some years ago.  But…can we afford to continue “business as usual “?  Surely, some vacant land parcels could be identified for economic development without compromising the Town’s quality of life.

Reduce Cost

• School expenditures account for, by far, the greatest part of Madison’s budget.  Personnel expenditures represent 70-80% of the school budget.  The school lobby is entrenched.  But Madison taxpayers need to be certain that the proper cost/benefit balance is achieved in the schools.  To this end, I think a small but high-powered blue-ribbon panel be charged with a “zero-base” budget analysis of each non-instructional position in the school system, applying (at least) four questions to each position:

1. What is the purpose of this position?
2. Can it be combined with another position?
3. Can it be out-sourced at a lower cost?
4. What would be the effect of eliminating the position?

Instructional staffing in the elementary and middle schools is primarily a function of class size, but some savings could be obtained by use of volunteer classroom aides.  In the high school, staffing is related to electives offered; elective courses should be subjected to the same scrutiny as non-instructional staffing.

The results of the committee’s work should be completed by budget time in the early spring.  Please note that I tried to obtain an organization chart for the school hierarchy but was told by the receptionist/clerk that no such document existed.

• The same approach can be applied to the town budget, although I think substantial reduction in personnel expenses were achieved in the final, approved budget last year.  Still, opportunities for out-sourcing and sharing of services with neighboring towns deserve in-depth study.

Summary

Unlike most American communities, Madison has virtually no industrial base.  The Town relies primarily on residential property for tax revenue.  At the same time, the Town’s boundaries include properties – such as Hammonasset, the Madison  Country Club, and Town-owned properties - which produce little/no tax revenue for the Town.  The Town’s recent acquisition of the Griswold property serves to put upward pressure on the annual mill rate. With this in mind, this letter presents budget approaches that should be considered by Madison’s government in order to bring down next year’s mill rate.  Revenue-raising measures include:

• Imposition of fees for services.
• Producing or increasing income from government-owned properties in Madison as well as properties that enjoy very favorable assessments under local/state laws.
• Addressing anomalies in assessments of real properties that result in lower income for the Town. 
• Attract industry that enhances the tax base without a commensurate increase in expenditures
• The major possible cost reduction involves the school budget.  The Board of Finance should advise the Board of Education that it will insist on a zero-base budget next year.

In conclusion, I hope that the Town will take steps such as outlined above, to assure Madison taxpayers that Town and school budgets reflect intense cost-benefit analysis.

Sincerely yours,

Charles K. Elliott, Jr.

Madison, CT

Author’s note, Updates as of April 2011

Since this letter was written, I have determined that the State of Connecticut has made statutorily-mandated PILOT payments to Madison in the range of $500-$600,000 annually for the past three years.  The PILOT concept certainly could be extended to other tax-exempt properties and properties enjoying low assessment rates.

While the number of teaching positions in the schools has been reduced, per the proposed budget for next year, this action is a function of declining enrollment.  I see no evidence of zero-base budgeting for the non-instructional segment of the school budget.  And, while the school has initiated fees for participation in some sports programs, these could be expanded to include other extra-curricular activities.