Last week the Board of Finance met and updated the public with a summary of the financial performance for Fiscal Year 2006-'07. As Chairman I am pleased to report that Orange is in good financial standing, our revenues last year outperformed our budget of $49,959 million by $706k namely driven by proactive management of the Town's investment income.

In fact through proactive and targeted investment strategies, general fund interest income has more than tripled from $333,364 in FY 2005 to $1,016,167 for year-end June 30, 2007.

On the expenditure side, sound fiscal management led to an expense underrun to budget by $211k on a budget of $49,959 million. As a result the town's operating surplus has grown by $917k which puts the town in great financial position particularly when we get measured by outside bond agencies.

In addition to this the town has also taken a series of actions to enhance cash management, established an investment, fund balance and debt service policy which were recently approved by both the Board of Finance and Board of Selectmen. These policies were formalized and approved and will ensure that the town maintains an undesignated reserve of at least 12.5 percent of budgetary expenditures. The debt service policy ensures that the total of annual debt service (principle and Interest) shall not exceed 7 percent of the operating budget which currently resides at 2.8 percent.

The Board of Finance just recently started the process of reviewing the proposed 2008-'09 budgets for the town departments, Orange Elementary Education and Amity Education. The 2008-'09 Budget will be based on a zero based budgeting approach requiring each dollar to be justified rather than just incrementing last year's budget.

The exception to this will apply to negotiated salary increases which are contractual and energy costs such as utilities, gasoline, natural gas etc… These significant increases in energy cost will have to be budgeted based on this year's forecasted actual along with the full-year impact of increases for next year. Recently I have also been asked many questions about the impact of the State Mandated Revaluation. The Board of Finance worked last year with the first selectman and Board of Selectmen to approve a 5-year phase in of the mandated revaluation. Based on this mandate last year's average tax bill increased 7 percent rather than the projected 17 percent if we elected not to do a phase-in, thus giving taxpayers the ability to make their own decision on how to invest the savings generated (roughly $536) by doing the phase-in in year one.

By electing to do the phase in the average assessment on your residential property at $165,150 in 2005 became $278,200 in 2006 based on the new revaluation assessment. Your tax bill went from $5,268 to $5,626 or an increase of $358 or 7 percent increase. If we elected not to do the phase-in the mill rate would have dropped to 22.1 mills and your new tax bill would have increased to $6,162 or a 17 percent increase.

For the upcoming year based on the phase in your tax bill would increase an average of 3 percent even before the Board of Finance approves an incremental dollar $1 for the operating budget. This is why the Board of Finance will be working hard with the First Selectmen to manage the impact of revaluation by reducing the proposed spending plan and doing more with less.

Kevin McNabola is chairman of the Orange Board of Finance