New London Warns of Risk of Running Out of Money

New London's finance director said the city could run out of money in the coming year because it has no financial cushion.

The Day of New London reports that Finance Director Jeffrey Smith said no department may overspend its budget and New London must collect all the revenue it expects in the current budget year that ends in June 2013.

New London has $312,000 in its fund balance.

Smith said city departments had overspent the budget and the city collected less revenue than it estimated.

James Finley, executive director of the Connecticut Conference of Municipalities, said most towns in Connecticut try to keep at least 5 percent of budgets in a fund balance, but can't reach that goal as they' try to keep property taxes down.

He said education costs are rising and state support is decreasing.