Winsted sees red

WINSTED — The town of Winchester’s budget situation is so bad that there may not be enough money to make payroll next month, according to the newly elected Winchester Board of Selectmen, which voted to set up a process that would allow the town to borrow up to $2.5 million against future tax payments in order to keep the town running.

The process involves using tax-anticipation notes to pay for budget shortfalls, which may reach a critical point next month. If the town goes ahead with the plan, a special town meeting and referendum would be required to allow the town to borrow against future proceeds.

Mayor Candy Perez said she first heard about the seriousness of the budget problem on Nov. 4, the day after this year’s municipal election, when then-Town Manager Keith Robbins said the crisis was bad enough to warrant tax-anticipation notes. Robbins submitted his letter of resignation to Perez a week later.

Selectmen estimated the town may be seeing red to the tune of at least $500,000 in December, while the town’s fund balance is hovering at an unhealthy $390,000. Perez noted that state and federal funds have been slow to arrive this year, and that the fund balance is too low to provide any significant backup for budget shortfalls.

“Last Thursday we had a meeting with the finance directors of both the Board of Education and the Board of Selectmen, and they gave us what they know about reimbursements coming to the town and payroll costs,� Perez said. “The belief is by the end of December the reimbursements will come in, as will the tax dollars that people normally pay at this time of year ... which will ease the cash-flow issue that we need to make payroll.�

Winsted Purchasing Director Mark Douglass, who is serving as temporary interim town manager, said he has received word from the state’s Local Capital Improvement Program (LOCIP) that the town will receive a check for $200,000 this week and that other agencies are working to expedite payments to the town. The town and The Gilbert School are negotiating a delay in a scheduled payment to the semi-private high school, while a spending freeze has been instituted across all municipal and school departments.

“This is unprecedented, that we would have a cash flow problem like this,� said Selectman Karen Beadle.

Town Finance Director Henry Centrella recommended to the Board of Selectmen that members agree to at least set up a process for the tax-anticipation notes. That required the board to vote to schedule a special town meeting for Monday, Dec. 14, 7 p.m., to discuss the plan and adjourn to a referendum on Saturday, Dec. 19.

Perez said she hopes the town will end up collecting the necessary funds it needs to make payroll and keep accounts in the black through the end of the year, and that the town meeting and referendum will ultimately be unnecessary. In that case, the entire plan would be scrapped and the meetings would be canceled at no cost to the town.

Still, there was opposition to setting up the town meeting and referendum at all. Former Mayor Ken Fracasso said he was opposed to setting up a referendum because he believes taxpayers would vote against the plan and the entire process will have been a waste of time.

“I think we’re going to waste $3,500 on a referendum,� Fracasso said. “I think if we go to the taxpayers and ask them to authorize us to borrow money, they’re going to shove it right back in our face.�

The board ultimately voted 4-3 to schedule the town meeting and referendum, with all members expressing agreement that the process is a last resort and will be canceled if the budget can be kept in balance through the end of the calendar year.