Iino: No Magic Pot of Money
Until last year, about 12 percent of Killingworth’s annual budget—including what we spend on our school system—came from state funding. For the fiscal year we are now in (July 1, 2017 to June 30, 2018), we currently expect to receive less than 10 percent from state funding, and possibly much less, if the governor is forced to hold back more funds.
Put another way, last year, our mill rate would have been 3.3 mills higher without the state funding. This fiscal year, FY18, we are using some reserve funds to make up for the state funding cuts. We cannot continue to do this, because we need to maintain adequate reserves, both to meet contingencies and to maintain a good bond rating.
It’s important to understand that “state funding” is a misleading expression. The funds come from our tax dollars; they are by no means a grant or a handout. Under state law, towns are allowed to tax in only one way: the property tax. The state can raise funds through many other forms of tax—the sales tax, the income tax, the gasoline tax, and others. In 2016, Killingworth residents paid more than $14 million in state income taxes alone. So “state funding” really means funding through taxes other than property taxes.
This year, of course, any increases in property taxes will be particularly burdensome, because of the new limits on the deductibility of state taxes in federal income tax filings.
The state legislature has begun its 2018 session, and once again, funding for towns is on the agenda. The governor has proposed additional cuts of $287,000 in Killingworth’s funding. No one sees the governor’s proposals as final, but they do point to real issues in the state budget. And if the legislature does not act quickly, some funding in the present fiscal year will also be in jeopardy, as will many state road and transportation projects in our region.
Our town runs well, if I do say so myself. We have kept our town operating budget level, when you account for inflation. We have already regionalized many of our functions. We have funded our pension obligations, and we have bonded only long-term capital projects. We have put a program in place to make sure that our infrastructure is maintained, and we are sticking to that program. We benefit—gratefully—from the work of the scores of volunteers who serve on town committees, fight our fires, respond to emergencies, help staff our library, provide help for the needy, and on and on. And we maintain a level of reserves that allows us to deal with contingencies such as the lack of a state budget.
Our state legislators must recognize that cuts in funding to towns will be felt immediately by taxpayers. Killingworth has no magic pot of money that it can dig up to make up for the loss of non-property tax revenues.