One of the key responsibilities the town boards have is to maintain the physical condition of the town’s assets such as town-owned roads, bridges and buildings. Year in and year out this is accomplished through the maintenance component of the operating budgets as well as through the capital budget. Within these components are the expenditures that include the upkeep – service and repairs – for mechanical equipment in the buildings as well as for the trucks that plow the roads and the outlays for road reconstruction and putting down asphalt.
Periodically, there comes a time when it makes sense to take on larger capital needs that are more reasonably bonded rather than putting a more direct and immediate pressure on the General Fund and taxes. Generally, these are items with long useful lives, so that it makes sense to finance over time rather than drawing down cash or raising the mill rate more. We on the Board of Finance feel this is an appropriate time to tackle the greater priority capital needs as identified through the Capital Priority Planning Advisory Committee (CPPAC) process, particularly as we enter a time of declining existing debt service. Even with the new debt in place —if approved by voters—we will find ourselves in five years with the annual debt service expenditure running a million dollars less than it is currently. Note that the current year’s outlay for debt service is nearly a million dollars less annually than it was six years ago.
At a town meeting to be held in late May followed up with a referendum a week later as prescribed in the Town Charter, three capital questions will be discussed. They entail: 1) replacement of five bridges built after the ’55 flood; 2) a solar array that should pay for itself and then some by reducing the BOE electricity costs by some $2-3 million over the 25-year estimated lifespan, and 3) a multi-faceted project at the high school/middle school complex that meets key educational program needs as well as addressing infrastructure needs on buildings nearly 20 and 30 years old.
The anticipated cost of all three capital questions bonded over 20 years, and offset by the two solar revenue components, is anticipated to require about 1.6 percent in property taxes at the time of maximum impact in FY25. This is built into the CPPAC capital plan projections that show annual mill rate changes in the 2 percent range for the next few years. Even not factoring in the proposed new debt service, those mill rate changes would still be in the twos, just slightly lower. That said, if we, as a town, decline to approve the three capital questions, we would then look to pay for many of the projects through the only tools we have left: a combination of the General Fund and property tax. That is an inferior route to go. The credit rating agencies are looking for towns in Connecticut to build their reserves, and the pressure on the mill rate could easily put us at similar or higher rates than those shown under the proposed CPPAC plan. That’s what they mean by “pennywise but pound foolish.”