Managing the FY23 Budget will have challenges

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The annual town budget process for fiscal year 2023 has begun with elected officials again seeking to find a balance between what people want with what people can afford in their property taxes. This balancing presents several challenges. The Boards of Selectmen, Education, and Finance met on Jan. 18 to discuss initial projections for the FY23 budget. The first cuts provided to Finance by the other two boards represent a 5.26 percent increase on the municipal operating budget and a 4.29 percent increase from education. The municipal estimate is driven by contracts in the 2-plus percent range, a projected increase in health plan costs of 20 percent due to experience and COVID, numerous increases in supplies and materials and a keener focus on updating the computer system and its security. On the education side the estimate reflects a 2-3 percent increase in contracts as well as a similar initial bump in health plan costs, rising special ed costs, and staffing adjustments for enrollment and program changes.

The multi-year budget planning sheet that Finance uses estimates annual operating budget increases at 3.0 percent overall, reflecting recent trends in year-to-year costs that impact local government budgets and utilizing additional revenues from Grand List growth, the state and other sources to manage the mill rate impact to 2.0 percent or less over time. Over the past two years Granby’s officials have held the mill rate flat. That occurred because of a drop in the Debt Service line item of about $700K in each year as well as the above average growth in the Grand List from the first phase of the apartment complex across from Floydville Road on Salmon Brook Street. This year, the Debt Service line increases reflect the bonding costs from the bridge replacement and school projects approved in 2019.

The Plus One budget projections for FY23 as presented to Finance show a million dollars in expense greater than contemplated, offset by $400K in additional revenues. If fully funded through taxes, this gap would generate a mill rate change of about 3.2 percent. Reductions in budget line-item requests could lessen the initial cost estimates by 1.25 percent. Hence, the challenge the three boards face over the next couple of months is to better understand the perceived needs while managing the mill rate into a more reasonable spot.

Two major pieces of information will come out shortly that are key to the revenue picture. By January 31, the assessor’s office will provide the Grand List growth number, and on the first Wednesday of February, the governor traditionally addresses the legislature and provides his budget, that includes most of the state revenue numbers for each town. A final item will evolve over the next couple of months as health plan cost increase projections are updated…hopefully downward.
After the governor presents his budget, Finance will provide final operating budget guideline numbers to the two operating boards. The Finance Board will meet on Tuesday, Feb. 8 at 7:30 p.m. in the meeting room at the police station and take public input at that time. The public can also provide input via mail or email to Town Hall prior to that date.

Throughout the month of February, the town manager and the school superintendent will continue working on their proposed budgets for FY23. Once submitted to the two operating boards, the board members will review the proposals in public meeting workshops. By late March, the Boards of Selectmen and Education will adopt for submission to Finance their actual budget requests with any revisions from the original administrative requests.

On Tuesday, March 29 starting at 7 p.m. in the Senior Center, Finance will receive the budget requests from the two operating boards. After reviewing the proposals and discussing the revenue picture and implications to the mill rate, Finance will recommend a budget package to be sent to public hearing. Per Town Charter, the budget public hearing will be held on April 11, with a referendum vote on Monday, April 25.