Borrowing for road work, anyone?

A $39-million town-side budget presented to the selectmen Monday night, Feb. 3, would hold the requested spending increase to 2.99%. It increases money for road repairs by close to $1 million, but proposes to accomplish this by returning to the practice of paying for road work with borrowing.

“We need to do more roads. They’re all in bad shape,” First Selectman Rudy Marconi told the selectmen.

The total budget now proposed would require a 3.69% tax increase in 2020-21, the new fiscal year that starts July 1. That includes the more than $39 million requested for town departments and roads, combined with the $102 million school budget being reviewed by the Board of Education, and $11 million in debt service.

Road work and how to pay for it was the major topic during an opening overview discussion Monday as the Board of Selectmen began four nights of budget meetings the first week of February. The selectmen have another week-long marathon of budget meetings scheduled for the first week of March, and expected to end in a vote to approve a budget to be sent on to the Board of Finance.

After the selectmen and school board have both adopted their versions of the budgets presented by the town and school administrations, the combined town-and-school budget — currently projecting to over $140 million — would be reviewed and possibly amended by the Board of Finance.

The finance board will sent its proposed budget and a new tax rate on to town voters in May.

Borrowing?

Marconi presented the selectmen with the idea of borrowing to pay for about $1 million of some $2.8 million in road repairs that Public Works Director Peter Hill has asked to do.

Both town departments and the school system have operating budgets that are paid for directly from each year’s taxes, and capital budgets made up of construction projects and equipment purchases that are more expensive and usually paid for with borrowing in the bond market.

The informal cut-off point for the capital budget has long been about $10,000 in cost and at least 10 years of useful life — items over that are considered appropriate to be financed with borrowing, but items below either of those markers generally go in that year’s operating budget.

For the coming 2020-21 year, capital budget requests currently total $8.4 million — $3,275,000 of that from the schools.

But those are the requests. Usually, some cutting is done before the budgets get to voters.

Over the years, the way road repairs and repaving is paid for has changed in Ridgefield.

Road work had long been in capital budget, paid for with borrowing every year. About a decade back town officials undertook to move the $1-or-$2 million in annual road work from the capital to the operating budget. This was difficult and painful, budget-wise, as the change bumped up the operating budget and increased the next year’s tax rate considerably.

Now, under the plan before the selectmen, a substantial portion of road work — though not all of it —would be moved back into the capital budget. That means it would be financed with borrowing, and wouldn’t affect next year’s tax rate. It would, however, be felt in future years’ taxes as the borrowing is paid off.

39 roads

The proposed 2020-21 budget has a list of 39 public roads in need of work. The budget also proposes work on one of five private roads that are on the list.

The cost of repaving all those 40 roads is projected at almost $2,634,000. The annual roads budget also includes $250,000 for drainage work, which pushes the total request for road work to over $2.8 million.

Marconi spoke of different categories of roads.

State highways, like Route 7 or Route 35 (including Main Street), aren’t in the town budget because the state is responsible for maintaining them. There are major town roads that get a lot of use and need be repaved more frequently — Farmingville Road is an example. And then there are less-traveled neighborhood roads that don’t get as much use — and where repaving tends to last longer.

Some of these less-used roads are the ones Marconi and Public Works director Peter Hill suggest might go in the capital budget, to be paid for with borrowing. Part of the argument is that the less-traveled roads last longer.

“I asked Pete ‘What’s the life?’ He said ‘14 to 16 years,’ ” Marconi said of the less-traveled road.

That could help justifying the borrowing.

“If a road lasts 15 to 18 years, you’re spreading that cost out longer, so more people share in the debt service,” Marconi argued.

The distinction between the two types of roads touches on the rule of thumb that only projects expected to last 10 or more years should go in the capital budget and be financed through the bond market.

The length of time repaving jobs last was part of the discussion, dating back several years to when the finance board led the effort to move the annual repaving work from the capital budget into the operating budget.

“Part of it was the roads being worked on weren’t even lasting 10 years,” said Selectwoman Barbara Manners.

“My recollection is roads went into operating because the Board of Finance felt it was more of a maintenance expense — we’re not building new roads,” Marconi said.

Creating the two categories of roads and moving some of them into the capital budget is a way to substantially increase the amount of road work without a commensurate increase in the tax rate.

“They all need to be done,” Marconi said of the roads listed. “The suggestion is to move them out of operating and include them in capital.”

Ambitious

The selectmen weren’t necessarily sold.

“It’s so ambitious,” Selectwoman Maureen Kozlark said.

“It is ambitious. A lot of our roads aren’t good,” Marconi replied.

“How do we minimize the impact on the mill rate, minimize the impact on the taxpayer?” Marconi said.

“We could probably spend $10 million a year on roads — but we can’t spend $10 million, so we pick and prioritize,” said Selectman Sean Connelly.

Marconi defended the proposal as way to hold down the 2020-21 operating budget and the related tax increase.

“I have a job to do,” Marconi said. “You can’t just accept the budget and do nothing about it.”