Capital Planning—the Granby way

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Since the 1980s Granby has utilized a rather unique workhorse for capital planning, the Capital Program Priority Advisory Committee, commonly referred to as CPPAC. Advisory to the Board of Selectmen, it consists of two members each from the Boards of Selectmen, Finance, and Education; the Town Treasurer, and as ex-officio members, the chairs of these three boards, the Town Manager and the Superintendent of Schools. Its function is to formulate a prioritized multi-year capital plan that integrates the operating and capital budgets to provide a rationale and measured projection for meeting the needs of the town over time in a balanced and costconscious manner. It takes the long view in maintaining the physical assets of the town over time at a reasonable cost to taxpayers.

We utilize a homegrown computerized model for forecasting what future town government budgets may look like, and how and when to best bring capital projects forward through the boards and to the public for approval. The assumptions within the planning process tend to be intentionally conservative, so that what unfolds for the years in the planning period tends to come out better—meaning costing taxpayers less than forecast.

Evolving at a time when Granby had been experiencing rapid growth, the infrastructure was strained and budgets were growing faster than today. The CPPAC process provided a level of certainty if not comfort, in knowing what could be reasonably expected over the next few years in terms of changes in local property tax bills, given the underlying operating assumptions and the capital projects if approved. Part and parcel of the CPPAC process was, and continues to be a Memorandum of Understanding. It provides the boards with the key elements and assumptions within the capital plan the boards are considering. In addition, a Statement of Commitment has been the public commitment by the members of the Boards of Selectmen, Education, and Finance to do their part in keeping within the parameters set forth in the memo and the capital plan in order to secure board and public approval for the priority capital projects of the plan itself.

Three times, the boards signed on in supporting five-year capital plans. In all three cases, the tax consequences ended up better than had been projected. Implicit with the board-member-level signing on is the individual commitment to do one’s part in meeting if not bettering the numbers in order to set the groundwork for seeking approval of the capital items under consideration.

The current capital plan has three key components, and it has been coming together over the past year. Elements of it have been covered in the Drummer over the past year or two as they were discussed at various board meetings. First, they address five town bridges that essentially need to be reconstructed in whole or part to below the streambed. Second is a solar array that not only covers its own debt service expense but also significantly reduces the BOE electricity-cost line item. Third is a school improvement project which meets educational needs of the 21st century, addresses items that didn’t fit in the high school project budgets in the past, and deals with roof and HVAC replacements as the high school nears 20 years since its last major renovation.

While more detail has been discussed at the informational meetings held by CPPAC in mid-March and more that will be heard in late May at Town Meeting prior to any referendum vote, these three major capital components aggregate to a bonding need of some $23 million. After the applicable state and federal bridge grants and school construction reimbursements, net borrowing for Granby is projected to be just under $11 million on 20-year notes.

By phasing in this bonding over time, we project that mill rate changes will be in the 2 percent range for the next half dozen years. Without any bonding included, we anticipate being in that same 2 percent range. This highlights how the operating budgets really dominate the numbers. Already factored in are two of the new governor’s budget proposals—the drop in educational funding from the state, and the shift of part of the teachers’ pension funding from the state to the towns, which will cost us about $1.5 million annually by FY25. The cost in the current fiscal year is approximately $300K and will increase in similar increments to the FY25 amount. That alone equates to a loss of about 3.5 percent of equivalent property tax money. Compare that to the net cost of about 1.6 percent in property tax for the three major capital items after reimbursements and the projected solar revenues. All these factors are built into the CPPAC planning forecast so that we have a reasoned view of what the future may hold. The only caveat is if the state continues to shift its expenses and reduce revenue to the towns.