Budget challenges in a very untraditional year

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While mid-January is traditionally the time when the Three Boards—Selectmen, Education and Finance—come together to collectively review budget projections for the next fiscal year of FY22, pandemic restrictions preclude the 18 members of these boards from physically meeting. Instead, the two operating boards have forwarded to the Board of Finance the look-aheads at next year—the Plus One budget forecast—as prepared by their respective administrators. In response, the Board of Finance sent the following letter to the BOS and BOE reflecting its stance while we await further information as it materializes throughout the process.

“To the Members of the Boards of Selectmen, Education, and Finance:

“In lieu of the Three Board meeting that the pandemic precludes from occurring in its usual form, I write to acknowledge receipt from both of the operating boards the Plus One budget submission from their respective top administrators. At this juncture we await their refinement as the ongoing process unfolds. Key components in shaping the overall will soon become available, including an update on the health plan rate requirements, growth in the Oct. 1, 2020 Grand List, and the state revenue picture as reflected in the Governor’s budget which traditionally comes out on the first Wednesday in February.

“All else held equal—the impact of the Plus One operating budget projections if fully funded as they stand for FY22 would call for a tax rate change of 2.5 percent or an additional use of $1 million dollars from reserves beyond that already contemplated in our last worksheet from September. The former is DOA and the latter a bridge too far.

“Since last May, the Board of Finance has stated its intent to hold the mill rate flat again for FY22, given the then anticipated and now very real negative impact of the pandemic on the economy going into 2021, on the overall family income picture, and on businesses large and small that employ the people of Granby, that target still holds. While the challenges to both operating budgets given the pandemic are not insignificant, and while we don’t anticipate raising that mill rate at this unique point in time, we will consider a stronger use of the General Fund than initially projected to meet more of the forecast needs as outlined in the Plus Ones.

“We look to meet the challenge of picking up the OPEB expense within the next budget, and both have referenced the amounts called for within the Plus Ones. We have been fortunate for years to have been able to cover it internally but now it has grown to be much more of a challenge than it initially was. We recognize as well, the case being made for additional special education support given the pandemic.

“That said, we understand fully that any significant use of the General Fund is not a one-year gambit as it has multi-year consequences. In the subsequent years one must draw the same additional amount from reserves just to stay even and therefore deplete reserves for operating, or gradually drop the extraordinary use by picking it up in the mill rate over time. While we approach this challenge fiscally strong, we look to remain so long-term.

“As this process unfolds, it is incumbent upon each of us to be cognizant of both the needs and constraints we face in meeting the needs of the townspeople of Granby.”

On Feb. 8, after the Grand List change is known and the Governor has published his budget with its impact on town revenues from the state, the BOF will finalize operating budget guidelines with the intent to keep the mill rate flat for another year, barring any unpleasant surprises from Hartford.