Did Waterbury’s positive fund balances end its state-created budget advisory council?

Plain-English summary

In April 2000, Connecticut’s AG concluded that Waterbury’s Budget Advisory Council could not dissolve merely because the city showed positive fund balances for fiscal years 1997 through 1999. The special act creating the council required operating funds to be in balance or surplus for three consecutive fiscal years, as shown by audits using consistently applied generally accepted accounting principles. Accountants retained by the state office reported that the city had not met that test, including because pension and self-insurance obligations affected the operating picture.

The AG also answered how dissolution would occur if the statutory condition were met: the council would cease by operation of law. Members could adopt a resolution to record that fact, using a majority vote under the act, but the vote was not the event that ended the council. The opinion applied the supplied accounting assessment to the 2000 question; it did not set a separate political test for ending oversight.

Council members at the time

The council had to keep exercising its statutory budget duties because the three-year audit condition had not been satisfied on the information supplied.

City and state finance officials at the time

The opinion required attention to audited operating funds, not a surface reading of positive balances. It treated the dissolution trigger as automatic once the act’s accounting condition was met.

Currency note

This opinion was issued in 2000. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did three years of positive Waterbury balances automatically close the budget council?
A: No. The AG said the relevant audited operating funds had not met the statutory balance-or-surplus condition for three consecutive years.

Q: Did council members have to vote to dissolve it?
A: No. The opinion said dissolution would occur by law once the financial condition was met; a resolution could memorialize it.

Q: What records controlled the three-year test?
A: The special act called for audits of operating funds on a consistently applied generally accepted accounting principles basis.

Background and statutory framework

The state budget secretary asked whether Waterbury’s reported balances triggered the council’s sunset and whether a council vote was needed. The AG read the special act’s financial condition in light of accountants’ analysis and distinguished automatic statutory termination from a later recording resolution.

Citations and references

Statute: 1996 Conn. Spec. Act No. 96-3.

Case: Caulfield v. Noble, 178 Conn. 81, 96, 420 A.2d 1160 (1979).

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/2000-formal-opinions/mr-marc-s-ryan-office-of-policy-and-management-2000016-formal-opinion-attorney-general-of-connecticu

Original opinion text

Mr. Marc S. Ryan, Office of Policy and Management, 2000-016 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

April 25, 2000

Mr. Marc S. Ryan

Secretary

Office of Policy and Management

450 Capitol Avenue

Hartford, Connecticut 06106

Dear Secretary Ryan:

You have asked this office for our opinion as to

the exact conditions under which the Waterbury Budget Advisory Council ceases to exist and whether Waterbury's positive fund balances for Fiscal Years 97, 98, and 99 trigger the sunset provisions. An interpretation of the method of dissolution (i.e., a vote of the WBAC members on dissolution) would also be welcomed.
Based upon the analysis that follows, the Waterbury Budget Advisory Council (hereinafter "WBAC" would cease to exist by operation of law when the operating funds of the City of Waterbury are in balance or have a surplus for three consecutive fiscal years. However, according to the information provided to you by letter dated April 20, 2000, Scully & Wolf, LLP, Certified Public Accountants retained by the Office of Policy & Management ("OPM") to assist OPM in this matter, have concluded that the results of operation in fiscal years 1997-1998 and 1998-1999 demonstrate that the City of Waterbury "has not met the thresholds of the legislation to enable dissolution of the Waterbury Budget Advisory Council."

According to the information supplied by the certified accountants, under generally accepted principles of accounting the City funds which comprise the "operating funds" of the City have not been "in balance" and have not shown "a surplus for three consecutive years," a statutory prerequisite for termination of the WBAC. 1996 Conn. Spec. Act No. 96-3(d). It is our opinion, therefore, that the Waterbury Budget Advisory Council may not be terminated but, instead, must remain in existence and fulfill its statutory duties set forth in 1996 Conn. Spec. Act No. 96-3.

I.

Our legal analysis begins with 1996 Conn. Spec. Act No. 96-3, "An Act Authorizing the City of Waterbury to Issue Certain Bonds"(the "Act"). This special act created the WBAC, a three member body. See Act, §3(a). The WBAC was granted various powers, duties and functions pertaining to the annual budget and financial plan of the City of Waterbury. See Act, §3(c). The WBAC is mandated to

review the budget with respect to determining whether budgeted expenditures are reasonable and accurate estimates of the expected expenditures of the city, and whether budgeted revenues are reasonable and accurate estimates of expected revenues, and if so, whether budgeted revenues are at least equal to budgeted expenditures.
Act, §3(a). The WBAC was established as an integral part of the process for deficit funding bonds and interim funding obligations issued in anticipation of deficit funding bonds issued under the Act by the City of Waterbury to balance its budget.

Section 3 of the Act describes the conditions under which the WBAC shall cease to operate and it plainly states:

(d) The budget advisory council shall remain in existence and exercise the powers, duties and functions granted to it by this act only until such time as the operating funds of the city shall have been in balance or with a surplus for three consecutive fiscal years in accordance with audits conducted on a generally accepted accounting principles basis, consistently applied.
(Emphasis added.)

The relevant provision, subsection (d) of section 3 of the Act, is clear on its face. It states that the WBAC "shall remain in existence" and exercise its powers "until such time as the operating funds of the city shall have been in balance or with a surplus for three consecutive fiscal years in accordance with audits conducted on a generally accepted accounting principles basis." Statutory language must be given its plain and ordinary meaning. West Hartford Interfaith Coalition, Inc. v. Town Council of Town of West Hartford, 228 Conn. 498, 508, 636 A.2d 1342 (1994). In construing a statutory provision the question is never what the legislature actually intended but what intention it expressed. Hartford Elec. Light Co. v. Water Resources Commission, 162 Conn. 89, 98, 291 A.2d 721 (1971).

The information you provided to this office by the certified accountants states that under "generally accepted accounting principles" the General Fund balances for the fiscal years ending June 30, 1999, 1998 and 1997 would show a deficit because of annual budgetary operations, inadequate funding of pension obligations and deficits in the City’s Self-Insurance Internal Service Fund. According to the accountants: "Although the General Fund reflects an undesignated fund balance during the years of our analysis, the adequate funding of employee pensions and health benefits would have created significant General Fund deficit balances for all periods."

The issue is whether the operating funds of the City ended any of the last three fiscal years in balance, with a surplus or out of balance (i.e., with a deficit). Our State Supreme Court has construed the term "surplus" in the context of municipal budgets as "any cash surplus remaining in the current expense fund at the beginning of the fiscal year." Caulfield v. Noble, 178 Conn. 81, 96, 420 A.2d 1160 (1979).

The information supplied to this Office shows that in fiscal years 97/98 and 98/99, "on a generally accepted accounting principles basis," the "operating funds" of the city have not been "in balance or with a surplus for three consecutive years" and the conditions for the expiration of the WBAC's existence have not occurred. 1996 Spec. Act No. 96-3. Under the statute and the Supreme Court’s interpretation of the term "surplus," this conclusion is unavoidable no matter how cogent might be the policy arguments to the contrary. The statutory prerequisites for terminating the Waterbury Budget Advisory Council simply have not been met.

II.

Your second question asks by what method the dissolution of the WBAC could be achieved. Once the conditions set forth under §3(d) of the Act are met, the WBAC would cease to exist by operation of law. The WBAC could undertake to memorialize its termination by the adoption of a resolution. Such adoption must comply with the procedures for the conduct of the WBAC's meetings and the exercise of its powers as provided in §3(b) of the Act. In particular, any such resolution may be adopted "by affirmative vote of a majority of its members." Act, §3(b).

We trust the foregoing answers your two questions.

Very truly yours,

RICHARD BLUMENTHAL

ATTORNEY GENERAL

RB