A flat budget — one with no increase in spending from this year to the next — might be on the table as the town sizes up the fallout from the new federal tax law.
First Selectman Rudy Marconi said he was looking into the idea at a forum hosted by the Democratic Town Committee on Sept. 6.
“We’re going to have some issues next year when we do our taxes,” Marconi told the meeting. The event was nominally to discuss the issues facing Connecticut alongside Aimee Berger-Girvalo, the Democratic nominee for the 111th District. The “more affluent” he said, would lose some of the “write-offs” they had previously received for their state and local taxes.
The new tax law, the “Tax Cuts and Jobs Act of 2017,” which was signed into law by President Trump in December of last year, includes changes to the tax codes governing state and local (SALT) taxes.
Under the new law, people filing their taxes are able to deduct only up to $10,000 of taxes levied by their state and local municipality from their federal income tax, a significant change for high tax states like Connecticut, New York, and New Jersey. The cap also applies to married couples filing jointly or separately.
Marconi clarified on Tuesday, Sept. 11, that he would like to see both the Board of Selectmen budget and the school budget have no increase, but he also acknowledged that the selectmen have control only over the town side of the budget.
“I think the Board [of Education] will have to consider this as we work with the administration to build a budget,” said Chairwoman Fran Walton.
Another item affecting the schools budget is contract negotiations with the unions representing teachers, paraeducators, secretaries and custodians.
Dave Ulmer, chairman of the Board of Finance, said a 0% budget increase would involve “a lot of moving parts, and all of them would have to fall in line favorably.”
According to Ulmer, three main factors seem to weigh against the possibility of holding the town budget alone — without the school budget — at this year’s expenditures.
First, the town’s grand list; it’s total income from all tax sources would need to grow by 1%, Ulmer said — “A pretty high number.”
Secondly, the town’s debt service would have to go down. That may not be possible with an $8 million bond the town is using to finance renovations to its sewer system.
Third, the town still has to replace $1.6 million from the general fund that the town used as revenue. He called that “a stretch,” because the total money left over from the town and schools budgets, and from revenue this year only amounted to about half-a-million dollars.
Revenues from conveyance taxes, the public golf course, permits, the Parks and Recreation Department, and others have also not increased significantly, Ulmer added.
A 0% increase for the schools “is simply not possible,” according to Ulmer, due to enrollments and contracts the schools have already signed.
“Schools are still the main driver, as the Board of Education budget is a bit over three times as much as the Board of Selectmen budget,” said Ulmer.