$148-million budget: Taxes, spending up for comment Monday night
Too much spending? Not enough for schools? With a tax increase projected in the vicinity of 3%, should the town tap into its surplus fund balance to hold taxes down?
A $148-million town and school budget proposed for 2019-20 will be up for comment at a public hearing Monday night. And while town officials are anticipating a surplus this year, they’re wary of financial surprises that may be handed down from the state — which is trying to get out of a fiscal hole decades in the making.
“We are always interested in more public input,” said Dave Ulmer, chairman of Board of Finance, which is conducting the hearing.
The public hearing is scheduled for Monday, March 25, starting at 7:30 in East Ridge Middle School auditorium. The finance board then starts a series of nightly meetings Tuesday, Wednesday, perhaps Thursday and on into the following week if needed — all starting at 7:30 in town hall.
The proposed budget as passed along to the finance board by the Board of Education and Board of Selectmen amounts to almost $148,058,000, up 2.56% from this year’s $144,360,000 town and school budget.
The boards also propose for 2019-20 a nearly $4,526,000 capital improvement plan — major projects and purchases that are expected to be paid for with borrowing in the bond market.
The proposed $148-million operating budget breaks down into two major components: just under $98,424,000 sought by the Board of Education for school operations, and $36,479,000 the selectmen are seeking for town departments — police, fire, highway, parks and recreation, the golf course, and town administrative offices.
Last week, when the selectmen approved their $36 million town departments budget proposal — a 0% increase —they also made a “non-binding recommendation” to the finance board that $460,000 be cut from the school board’s $98-million budget request. A cut of that size would trim the school budget increase from the 3.6% requested by the Board of Education to about 3.1%, according to Ulmer.
At the time, Selectman Bob Hebert said that the proposed $460,000 school spending cut would reduce the needed tax rate increase from 3.14% to 2.79% — but that calculation doesn’t include any adjustments from the finance board.
Tapping fund balance
The finance board traditionally works into its budget a “use of fund balance” line that takes some of the roughly $14 million the town has saved up from year after year of annual surpluses, and returns it to the taxpayers by using it as non-tax revenue to lower the needed tax increase. The current year’s budget has a $1.6 million “use of fund balance” built into it.
How much of the fund balance to use is a decision the finance board usually makes near the end of its budget deliberations, after the other adjustments to spending and revenues have been made.
“We will have to see where we might come to on the mill rate increase,” Ulmer said. “...We will have a revenue surplus this year of around $1.3 million due to a tax sale and ECS...”
The tax sale is an initiative by the tax collector that has already brought in a little over $612,000 in back tax collections. There’s another $65,000 in outstanding back taxes that could be paid off by the three remaining delinquent taxpayers before the sale, scheduled for Wednesday, March 27, at 10 a.m.
“I’ve collected most of what I was going to collect,” said Tax Collector Jane Berendsen-Hill.
“Maybe we won’t have a tax sale. Maybe they’ll all get paid off, which would be nice.”
The ECS that Ulmer refers to is “educational cost sharing” — funds distributed by the state to municipalities to assist with education. The finance board had anticipated the town would get no money, but it ended up receiving about half a million in ECS last year — a boost to the fund balance.
The finance board has a guideline — not a requirement — designed to keep the fund balance from dwindling down too small, or getting unjustifiably fat with the town sitting on too much of taxpayers’ money.
“The Board of Finance has not changed its guideline that the fund balance should be 8%-to-9% of budget,” Ulmer said.
On the proposed $148-million budget for 2019-20, that 8% to 9% would be in the vicinity of $11.8 million to $13.3 million. With the fund balance just over $14 million at the end of the last fiscal year, and the $1.3 million or so in surplus that Ulmer anticipates from the current year, the finance board could “match this year’s $1.6 million use of fund balance and still stay above our guideline,” Ulmer said.
“The Board of Finance will have to make that decision in its deliberations.”
State’s fiscal woes
The finance board might choose to hold money aside — keeping the fund balance above the 8%-to-9% guideline — as a way of planning for the possibility that towns will be asked to help bail the state out of some of its financial problems.
One possibility under discussion in Hartford would be to have towns and cities carry a share of the state’s teacher pension obligations. This was first suggested by previous Gov. Daniel Malloy, and is proposed again — though at a lower level — by current Gov. Ned Lamont.
“The biggest question on the state is town funding of teacher pensions,” Ulmer said.
A formula in Lamont’s proposed state budget would have Ridgefield’s contribution to teacher pension obligations at $450,000 in the next fiscal year, 2019-20, then at $950,000 in 2020-21 and $1.45 million in 2021-22.
“That is opposed by both our state representative and state senator,” Ulmer said.
That’s not to say it won’t get through the legislature, however.
And the final outcome of the state’s budget deliberations probably won’t be known until after the town’s budget work is all done — so all town officials can do is set some money aside and hope it’ll be enough.