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04/26/2017 08:00 AMAfter a lightly attended second budget public hearing on April 18, the Board of Finance (BOF) voted to send the fiscal year 2017-’18 budget of $81,885,644, a $2,084,610 or 2.61 percent increase in spending, to referendum on Tuesday, May 16.
Looking at the two major budget components, the Board of Education (BOE) budget comes to $56,919,205, representing a $1,433,001 or 2.58 percent increase in spending. The education budget includes standard operational increases, but also incorporates personnel reductions in anticipation of a loss in state revenue. Superintendent of Schools Tom Scarice said this budget reflects a reduction of 7.5 certified teaching positions across the district, a move designed to respond to declining enrollment and dwindling state funding.
The BOE budget was left unchanged by the BOF throughout the budget process, but the town budget has seen some adjustments. The proposed town budget, as originally approved by the BOS, came in at $24,738,964, a $424,134 or 1.74 percent increase in spending over the current year. After the BOF made some changes to restore part of the capital budget on March 23, the proposed town budget is $24,966,439, a $651,609 or 2.68 percent increase in spending.
As the budget moves forward to voters, total town revenue is still a moving target. With the state still in the midst of budget negotiations and firm numbers unlikely to be released for a few months, the amount of state aid municipalities like Madison can expect in the coming fiscal year is uncertain.
“One of the greatest uncertainties we have this year of course is state funding,” said BOF Chair Joe MacDougald. “One of the things that is true as we go through this budget is we do not know what the state of Connecticut will do—it is very possible we will be revisiting some of these assumptions as we get more information from Hartford.”
Under Governor Dannel Malloy’s budget proposal, Madison and many other municipalities would see a reduction in state aid and would be asked to contribute to the teachers pension plan. If the governor’s proposal were to pass, Madison would receive $2,275,237 in state aid in the next fiscal year, but would contribute $2,602,739 to the teacher pension plan, effectively netting out any sort of monetary state aid. In the end, the town would end up owing the state $327,502.
While rumors and comments from state officials suggest that municipalities taking on a portion of the state teacher pensions this coming year is unlikely, MacDougald said the town has made assumptions to account for a reduction in statutory state aid. He said the BOF has set aside funds to apply to the mill rate if the state cuts exceed current expectations.
The BOF will not formally set the mill rate for the next fiscal year until after the referendum, but the board did present variations of the coming rate at the public hearing. With the current proposed budget number, the mill rate for next year is 27.48, an increase of 0.99 mills, which equates to a 3.74 percent tax increase.
However, the board does have mechanisms to offset the mill rate increase. The board has the ability to pull funds from the fund balance (an accumulation of revenues over expenditures) to apply to the increase. The projected unassigned fund balance is $1.6 million, a portion of which can be appropriated to offset expenditures, which in turn drives the mill rate down.
MacDougald offered one option at the public hearing. If the board put $750,000 in surplus funds toward the mill rate, the mill rate for the coming year would be 27.22, a 0.73 mill increase, representing a 2.76 percent tax increase. However, MacDougald said the board will not vote on how much money to put toward the mill rate until the budget passes and more news comes down from the state.
“We planned ahead for this, but it is still going to be a very difficult time,” he said. “If nothing happens in Hartford, I think this budget is very good.”