At its meeting on Feb. 15, the Board of Finance reviewed all available projections for revenue and expenses as known at that time. Acknowledging both the increase in costs of operating, as we all are experiencing at home, and the tight finances many families continue to experience, the BOF narrowed its focus to limiting the upcoming FY23 overall budget to an increase in the mill rate of 1 percent.
Several key pieces of information became known in recent weeks — the growth in the Grand List, the Governor’s proposed budget numbers, and an update on the health plan cost projections. Finance had posted meeting dates for both Feb. 8 and Feb. 15, dependent upon when the Governor’s budget proposal would be known with his address to the opening session of the state legislature. Traditionally the legislature convenes on the first Wednesday in February but this year the opening session was a week later.
While the standard categories of state revenue for Granby are proposed to remain flat, the Governor’s budget does include a new line item that would reimburse the town for limiting the mill rate on vehicles at 29 mills statewide. However, the state used a base of the prior year’s auto list and that would short the town by a bit more than $225K — the equivalent of about half a percent in taxes. Whether it is enacted and if the final numbers are adjusted to the actual difference remains to be seen. The greater issue is that in recent decades the state’s revenue commitments to the towns seem to be forgotten over time, as the reality of what they say will happen over time comes up short in practice. When they shake your hand, you better count your fingers.
Grand List growth of 3.53 percent was reported by the Assessor’s office, reflecting primarily the increased values of vehicles during the pandemic. This bump goes a long way in covering the increased costs in operating budgets driven this year by salaries and health care as well as special education, energy and the scheduled increase in Debt Service. However, it will still take some reduction in the initial projected expenditures for the next fiscal year to make the math work as we endeavor to balance the perceived needs of the town with what it costs us as local taxpayers.
As the budget process unfolds over the next couple months and the numbers firm up, the level of reserves in the General Fund and contemplated draws from it over time, are part and parcel of our planning work. As noted periodically in the Drummer, the bonding advisors and credit rating agencies recommend municipalities of our size in Connecticut retain a reserve of 10-15 percent of the budget. With the 15 percent level being about $7.5M, we are well-positioned with about $7.8M in the General Fund currently.
We anticipate drawing roughly $1M this year and in each upcoming year in balancing the budget. This is an amount equivalent to what, in most years, falls into the fund from lapsed spending authority and unanticipated revenues. It is also held in contemplation of having to make a significant outlay for the communication system needs affecting fire, police, ambulance, and public works.
As we look to shape the upcoming FY23 budget, we also have an eye on the subsequent years as well, keeping in mind the importance of mill rate stability while maintaining quality town and school services as we enter a time of relatively high inflation. Therefore, we take steps today in preparation for tomorrow.