Yikes: Norwich Has A Budget Deficit Of Over $500,000

Norwich had a budget deficit of $520,000 for the fiscal year that ended on June 30, due to overspending by about $270,000 and building cost overruns of about $250,000. The total amount is nearly 12% of the annual budget of $4,502,386

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The deficit numbers were publicly revealed at the Selectboard meeting on July 11, as viewed on CATV. There was no specific announcement and no Selectboard packet materials, suggesting that Selectboard members were already aware of the bad news. The amounts were mentioned in the course of discussions about setting the tax rate. The deficit discussion, which last about 2 minutes, begins at about the 25 minute mark on the CATV videoTown Manager Herb Durfee said the numbers were preliminary subject to audit.   

Without further explanation, this news is rather surprising, at least to me. I do not recall deficit spending being the norm for Norwich. Former Selectboard member Steve Flanders confirmed that in an email, commenting that the “town has never ended a fiscal year in a deficit condition during my time on the selectboard.” Mr. Flanders said he does not follow current town business.  Past practice, he explained “has been to never overspend the budget authorized by town vote, but instead to underspend in some areas within the authorized budget to pay for unexpected higher expenses, elsewhere in the budget.” 

Questions abound. Is this serious? Where did the money come from to cover the $520,000?  Did the Selectboard explicitly authorize deficit spending? How does the Town make that up without cuts in services? Why would the Selectboard use reserve funds of $264,000 to lower taxes for this year, instead of offsetting the deficit? Town Manager Durfee was on vacation this week and my plan is to follow-up on his return.

The Town has other upcoming expenses not included in the budget for this year. These are an undetermined amount for debt service for road repairs and $66,000 to be repaid to the State. See Ouch. Town Needs To Repay State $65,847.74.

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