Flat budget with slight tax increase for FY17

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By Michael B. Guarco,
Chair, Board of Finance

​Each year as the spring budget process commences, the selectmen convene a meeting of the three Boards—Education, Finance, and Selectmen—for an open discussion on what the next year looks like in each board’s perspective. This helps the boards get a sense of what the operating boards are looking at, and what the fiscal ramifications and limitations are from the BOF perspective.
In the aftermath of the Great Recession, the boards have kept the mill rate changes relatively modest in line with both flat incomes and a slack economy. The operating boards and administrations have worked hard at keeping things tight while delivering quality services with the available resources.
In any given year, there are those who want to spend more on one thing or another, just as there are those who would just as soon see taxes cut by 10 percent. Striking an appropriate balance falls to the boards and is not an easy task.
It comes down to whether we’re getting a good bang for our buck. The comparison numbers and graphs say we are. That leads to a discussion about doing more—or less—to control taxes while maintaining quality municipal and educational services in a town with relatively strong property values and high desirability that makes it a place where people want to live.
This year’s debate has already opened between the boards. The Boards of Selectmen and Education have produced forecasts for next year and beyond. The municipal Plus-One projection shows essentially a flat service budget increase of 3.9 percent—2.8 percent is wage and benefit cost changes. On the education side, after reducing the current year’s base budget number to reflect the 908K savings in operational costs from closing Kearns School, the BOE forecast for next year was essentially a 3.2 percent increase back to the current-year base-budget number.
All other revenues are flat—there is a paltry 0.58 percent increase in the Grand List and essentially no change in projected state or local revenue categories. What additional spending can be incurred becomes directly tied to what the BOF can comfortably use from reserves, and ultimately what it feels is a reasonable and rational change in the tax rate. The Board of Finance’s tolerance is based upon its read of the willingness of taxpayers to pay—or indeed their willingness to vote to raise the property tax rate upon themselves.
The proposed budget changes submitted to the BOF at the Three Board Meeting would necessitate a 4 percent increase in the mill rate—far higher than the finance board’s tolerance level. At a subsequent meeting on Feb. 8, BOF set operating budget increase guidelines of 2.5 percent for the BOS and a minus 1.0 percent for the BOE from this year’s base numbers. For the BOE, after backing out the anticipated operating-cost reductions from closing Kearns, this is about a 2.23 percent increase—about 100K more than its flat operations percentage of 1.8 percent according to its Plus One budget presentation. Projections are that this would allow the BOF to bring in a budget with a mill rate change of roughly 2.0 percent—similar to recent years.