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After a series of department presentations and workshop meetings, on Feb. 6 the Board of Selectmen (BOS) approved the proposed, combined town and Board of Education (BOE) operating budget for fiscal year 2018-’19. The budget comes to $97,960,807, an increase of $2,772,638 or 2.91 percent. However, debt service, contractual obligations, a potential reduction in state funding, and a drop in the Grand List has left the board with a series of difficult decisions as it tries to hold down the mill rate increase, which is hovering at eight percent under this proposal.
The BOE approved its proposed budget back in late January for a total of $59,747,175, representing an increase of 1.87 percent. The proposed town operating budget, as unanimously approved on Feb. 6, is $29,716,978, an increase of $1,057,979 or 3.69 percent. Debt service for this year, which is included in the total budget, comes to $8,496,654, an increase of $617,620 or 7.84 percent.
Minimizing the increase in the town operating budget was a challenge for the board because so much of the increase is tied up in contractual obligations, according to First Selectman Matt Hoey.
“Between salaries and employee benefits, our total increase is about $1.4 million in additional spending needs,” he said. “There is a net change of $1,057,979, so that means we have $250,000 of reductions on the operating and capital budget from last year’s budget. That is the hard part.”
Hoey said he went back to all of the big town departments like Public Works, Park & Recreation, Police, and Fire and asked them to make additional cuts. He said the operating budget is almost flat without the salaries and benefits.
“Almost $1.9 million of the new money is tied up in debt service, salaries, and employee benefits, and unless this board is willing to say ‘We need to change staffing,’ I am not sure where we go,” he said. “We made changes to some of the operating budgets. The major departments have stepped up and come back to the table and, let’s be honest and realistic, this still have to go through the BOF and the public. The next cuts will more than likely be personnel.”
In addition, the proposed budget includes an anticipated drop in state funding of $600,000 based on the most recent budget proposal from Governor Dannel Malloy. Hoey cautioned that number is likely to change.
“This budget presupposes all $600,000 of what the governor proposed will happen,” he said. “[Malloy’s] track record is not too good. This is, in my mind’s eye, the worst-case scenario from the state. The legislature has shown a propensity to not go in the direction that the governor has gone, particularly as it relates to municipal aid.”
Hoey said he is in contact with Guilford’s legislators and said the Board of Finance (BOF) can make adjustments to that number as more information becomes available.
The Mill Rate
While the state revenue projections may change, certain items that have a significant affect on the mill rate—which determines individual taxes—like debt service and the Grand List will not.
The adjusted Grand List for this budget is about $2.9 billion, a drop from the previous fiscal year. Finance Director Maryjane Malavasi said in a revaluation year, the Grand List typically goes up and the mill rate goes down, but this year the Grand List dropped, so the mill rate has gone up.
As it stands now, assuming a massive loss in state aid, the mill rate for the coming fiscal year is projected at 31.77, a mill increase of 2.41 or 8.2 percent compared to the current year’s rate of 29.36. All of the selectmen agreed the mill rate is not a pretty number.
“I don’t like these numbers—they are ugly, but there are no real choices,” said Selectman Charlie Havrda. “This is the perfect storm. The Grand List issue just adds to the degree of everything that was coming.”
BOS member Sue Renner pointed out that the drop in the Grand List accounts for more than half of the increase in the mill rate.
“Anything else we can do to make a significant difference would not be responsible,” she said, referring to cuts to essential services.
Malavasi said while the mill rate number might alarm some, it is important for residents to look at their revaluation and use that number to calculate their own taxes. She said those who saw a drop after revaluation will likely see a drop in taxes despite the new mill rate.
The budget now moves to the BOF. Hoey emphasized that these budget numbers represent the worst-case scenario and all town officials will keep working with the numbers over the next few months before the budget goes to the voters.
“These are preliminary numbers; these are working paper numbers,” he said. “So any numbers you see here will have the opportunity to be dramatically changed, particularly when it gets to the BOF.”
The BOF holds its first public meeting on the budget Thursday, Feb. 15 at 7:30 p.m. at the Community Center, 32 Church Street.
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