In February the Board of Finance reviewed revenue and expenditure projections for next year, as submitted by unanimous votes by the Boards of Selectmen and Education and prepared by their respective administrations. After duly considering all relevant information, the Board of Finance, without dissent, set operating budget guidelines of under 3 percent for the FY21 budget that will be submitted by the other two boards to the Board of Finance on March 30.
For a decade now, the mill rate change has averaged below 2 percent. It appears this rate could stay the same for the next three years barring any significant shocks in state revenue loss or in costs mandated by the state. Beyond that period it depends upon a host of factors that could make it harder for us as a town to keep the tax rate change as flat as it has been. These include: a) While growth in town brings new tax revenue, it can also bring expense; b) The state can continue its slow reduction of aid to the towns in favor of the cities or its own gaping structural deficit, or it could accelerate it as the governor proposed last year. c) Last but not least is the simple math that property tax equates to 90 percent of the operating budgets, so for an operating increase of 3 percent it takes an overall increase in taxes of 3.33-plus percent. Some of that comes from growth in the Grand List and the balance from the change in mill rate.
The driving force within the budget over time is operating (90 percent) as opposed to capital that is represented by both Small Capital infrastructure and the bonded Debt Service line items. The combined capital for the most part is fairly flat over the next few years, with Small Capital at about $2M and the combined new and existing Debt Service at a similar amount.
The biggest component of the two operating budgets is compensation (salaries and benefits) that comprises roughly 75 percent of the operating budget totals. As the contracts go, so goes the budget. In Connecticut, the state sets the rules for negotiations as well as the process the towns must follow. This leads to an environment where overall municipal and school system salaries for Granby are pretty much in the middle third, and statewide the going rate for all settlements – negotiated, mediated, or arbitrated – is in the mid 2 percent range. Combine that with the year-to-year average increase in health insurance costs of nearly 10 percent, and it becomes readily apparent that the internal rate of increase just from these line items drives a mid 2 percent increase in cost year to year for the overall budget. This is without adding people or programs – just providing the same services and program year to year. Complicating the budget this year is the increase of about $100K in trash tipping fees and recycling being talked about by the regional entity in Hartford and the roughly $400K increase in Special Education costs the school system is already dealing with in this current year. The items just mentioned in the last three sentences essentially chew up the 3 percent guideline cap.
While our population is fairly flat and school enrollment seems to be leveling off, are there programs one may jettison or reduce in scope, or are there more efficient ways to deliver whatever services or programs? It doesn’t hurt to see how other towns do certain things, just as some have learned from us in Granby. It is also true that one person’s non-essential program is another’s gotta have—and that is the dilemma—and the weighing the boards must do.
By early March the respective administrations will submit their budget proposals to the Boards of Selectmen and Education. During March those two boards will review components of the budget requests in their scheduled workshop sessions. Once each board has adopted a finalized budget request for FY21, they will submit them to the Board of Finance for review on March 30 at 7 p.m. in the Senior Center. That night the Board of Finance will finalize a budget package for transmission to the annual Public Hearing on the budget that by Town Charter is held on the second Monday of April, which is April 13. It is at that meeting that the Board of Finance in conjunction with the other two boards will present and take comment, input, and questions on the total budget recommended for FY21. Subsequent to the Public Hearing, the Board of Finance will forward a final budget—as is or revised—to referendum to be held on the fourth Monday of April (April 27) as called for in the Town Charter.