Mill rates and such – How do we stand?

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Occasionally the question arises on how Granby compares to other towns in Connecticut and what factors affect the mill rate. This is the rate per thousand dollars of assessed value in real estate, motor vehicles, and business personal property. In a nutshell, while Granby is a financially strong town owing to its twin pillars of fiscal discipline and long-range capital planning, it also has to contend with a modest non-residential, commercial/industrial/public utility component of its grand list, and the resultant negative impact on intergovernmental revenues from the state. Granby has little in terms of state buildings within its borders and additionally, we are ranked by the state as a relatively wealthy town — 24th in terms of median household income at $111K, equaling 150 percent of the state average. In comparable towns with the same spending per capita, these two factors alone would lead to a higher mill rate relative to the others.

Questions on the budget process and the mill rate?

Board of Finance Chair Mike Guarco will hold office hours on these days: 

Tuesday, Oct. 8
11:30 a.m. to 1 p.m.
Police Dept. Comm. Room

Thursday, Oct. 17:
5 to 6:30 p.m.
Town Hall Meeting Room

The mill rate set for the current year FY20 is 39.61 — 23rd statewide. The equalized mill rate, a slightly different calculation from the state, ranks us at 31st. Considering that we were ranked fourth in the mid-80s when I first joined the Board of Finance, we’ve made steady progress over time. As I’ve said previously, over the next decade or so we look to continue that slide down into the next quartile. Yet the fact remains that property taxes fund 83 percent of our budget, while many nearby towns are in the 70-plus percent because their commercial grand list component is greater than ours. Since the 80s, the non-residential component of the grand list grew from 4 percent then to 8 percent now, but Avon, Canton and Simsbury have about 17 percent in
commercial/industrial grand list components. Suffield and Somers are at 14 percent, but come out way ahead dollar-wise because they host prisons. Somers gets about $2.5M and Suffield nearly $5M relating to having state-owned property versus the $1K Granby receives for PILOT (Payment In Lieu Of Taxes) on state-owned property. Considering that Granby receives in total about $5.7M in revenue from the state from all categories, monies from other state categories would make a significant difference. But does Granby want a prison, an airport or even Route 44? It wasn’t that long ago when hundreds came out against Walmart and big box development in Granby.

That leads into the additional factors of property values and net grand list per capita. Per the January 2019 300-page Municipal Fiscal Indicators report for FY2017, the median owner-occupied home values in Granby, Canton, Somers and East Granby are all roughly $300K. Simsbury is about 10 percent higher, and Avon 25 percent more. Simply put, to raise the same amount of tax dollars with higher-valued homes a lower mill rate can apply. If the values are 10 percent more, the rate can be about 10 percent less. Add in a higher grand list component of 18 percent versus 8 percent, which means that rate could be roughly another 10 percent less. Throw in another $3.8 million in PILOT money for a significant state presence, and another 10 percent from the mill rate could be cut off. Those factors all affect the revenue side of the equation and the mill rate calculation.

The above also explains why Greenwich has a mill rate of 11.682. While having about 5.5 times Granby’s population, it has a grand list of $32 billion versus our $1 billion so that it can easily use a lower rate. The median owner-occupied home there is valued at $1.2M – four times our value per the state. I doubt a similar home there pays less in property tax than here even with the lower mill rate. I’d note as well that its overall municipal budget is just about 10 times ours with just under 1,000 full-time employees per its budget book versus our 56 full-time municipal employees. Despite the fact that Public Works now has about 20 percent greater road mileage and more buildings to maintain, Granby is essentially flat since the early 90s, except for adding police officers to provide broader coverage given their medical first responder roles.

Turning to the expenditure side of the ledger, what the numbers within the state report and from what I’ve see from neighboring towns, is that Granby does not overspend, and looks to be in the middle or lower tiers overall. What that should indicate is efficiency – being both effective as well as economical. The state current per-pupil expenditure ranking consistently puts us down in the 130-145th range, while the graph used at budget time reflects continued superior testing results versus cost. Municipal operating numbers look to be in line with the region. Long-term and pension debt per capita are about half the state averages. Even with the capital bonding recently approved by voters at referendum, our debt service line item will be roughly a million dollars less annually than it was in last year’s budget once it hits the books.

Granby has changed over the last 30 years, but it has purposefully retained its rural and farm belt feel. Voters have voted wisely to steadily meet and maintain the capital needs of the town, its taxpayers, its students. Granby can and should be proud of the quality of its infrastructure and the success of its operations. All this has occurred through the combined and cooperative efforts of the operating boards on a bipartisan basis year after year, with an adherence to the twin pillars of fiscal discipline and long-range capital planning. Isolating any affect of revaluation, for the past decade both budgets and the mill rate have risen about 17 percent IN TOTAL — an annual average of 1.7 percent over the last 10 budgets. Through these recent decades we’ve seen that the actual and equalized mill rate rankings keep falling to better positions. We have also seen that our credit-worthiness rating for bonding improve three times, with a likelihood of perhaps attaining the next step up to AAA rating for the upcoming round of bonding as our reserves steadily strengthen. Given what this town may face from various headwinds, we are in a strong position to meet those challenges as they arise — balancing the needs of the town with a sensitivity to the taxpayers who foot the bill.