As summer winds down and autumn approaches, the board of finance shifts its focus from the close-out of the FY24 budget to monitoring the current FY25 budget and developing FY26, which runs from July 1, 2025 through June 30, 2026. Many factors affect the FY26 budget in both the revenue and the expenditure side. Some factors are relatively stable and predictable, while others are more variable, if not volatile.
Local revenues tend to be fairly stable, though in the recent years, real growth in the grand list was somewhat higher than in the previous decade. This has been driven primarily by the apartment and duplex complex at The Grand across from Floydville Road, the soon-to-be-completed residential subdivision of Harness Way located on the old fairgrounds on Route 20 west of town hall, and now the Station 280 apartments just north of Granby Center. The latter two will impact the upcoming grand list update for Oct. 1, 2024, and to a lesser degree the list for next Oct. 1, 2025 as well. Beyond that, nothing significant has been approved to benefit the grand list. Thus, the projected rate of increase, running between 1 to 2 percent in recent years, will fall back to less than 1 percent annually. We need to recognize that such growth in town can have consequences affecting the cost of providing municipal and educational services.
Local revenue paid via fees through town hall, such as building permits, property conveyance taxes, marriage licenses etc. are typically fairly stable and are a small piece of the revenue picture. These revenue sources have run higher in recent years due to construction but will now fall back closer to the norm as those projects wind down. The interest earnings on cash have been higher in recent years but most likely will start to recede as financial markets adjust to the Federal Reserve rate reductions and a weakening economy.
While Granby has virtually no federal money through the general fund budget, there are a number of grants that the town and the school system operating boards manage directly. They are outside of the purview of the board of finance and its span of control over local taxpayer dollars. Many of them are state government s education-related program. Such grants appear in the springtime budget book but are not within the combined municipal and education budget that we vote on in April at the town meeting. A major federal program is the pandemic related ARPA money which the town has put to good use in numerous ways, once approved through their public meeting overview process.
Revenue components from the state are very different. Towns like Granby ultimately get back in state aid the equivalent of about 20 percent of what Granby taxpayers pay to the state. Many cities see more than half of their local budget funded by the state while an Avon or Greenwich see less than 10 percent.
The Education Cost Sharing grant has generally been flat and slightly declining for most of the past six years as the burden shifts to the towns and local taxpayers. For decades this grant steadily increased aid to the town and to a degree kept pace with increasing costs and enrollment. Even worse is how the state handles the special education excess cost grant that reimburses the towns for what they spend on an individual student that is more than 4.5 times what a town spends on a typical student. The state should cover the remaining 100 percent but uses a tiered formula that just a year ago was adjusted to provide, in Granby’s case, 88 percent of that overage. But total claims statewide came in higher than the state budgeted. Instead of reallocating money to close the gap, the state executive branch just shorted the towns. In Granby’s case, it was more than $200,000 from what we anticipated based on the state’s own formula per statute. While the governor and some legislators from both sides of the aisle called for the legislature to act, the legislature leadership opted to do nothing, leaving the towns and local taxpayers to absorb the shortfall. Rather than fulfilling the formula reimbursement commitment to the towns and taxpayers, these monies were directed to where that leadership felt were a greater priority.