With winter winding down and spring upon us, the budget process is in full swing for fiscal year 2026 (July 1, 2025 through June 30, 2026). An important aspect of the budget process is the General Fund—and how it does and does not work. We will look at the current 2025 fiscal year, at the budget for FY26, and we will consider the near-term years beyond.
The General Fund is essentially the checkbook for the bulk of town-wide governmental operations, whether they be municipal or educational. It is the residual of all previous revenues in and expenditures out of it to accomplish whatever is appropriated and funded within the annual budgets from the founding of the Town of Granby right up through today. The build-up in the General Fund over time shows the resulting sum of less being spent as well as more revenue coming in than budgeted. The net results of any given year fall to the General Fund balance at year end, as an operating budget only has an existence for that particular approved fiscal year. By law, a budget cannot be put into place unbalanced, and if it should be found to be unbalanced, action must be taken to close the gap, either by reducing spending or plugging the hole by a special appropriation from the General Fund. It would be contrary both to the law and common practice to not correct the fault. The annual budget is then intentionally constructed so that the budget remains in the black throughout its life, which ends on June 30.
Per Town Charter, the Granby Board of Finance is charged with putting forth for public hearing and subsequently a referendum vote, the annual overall recommended budget package, subject to revision along the way as the board of finance deems appropriate. And yes, the numbers do change throughout the process as more current information becomes available and as the administrations delve deeper into the nitty gritty. The three boards work collaboratively and collectively to meet the vast majority of the needs within a reasonable and hopefully approvable cost to the voters. In the end it is the voters’ and taxpayers’ decision to approve—or not. For example, public votes last year in a few of our neighboring towns found two budgets being defeated in East Granby, three in Avon, and one in Canton. A lack of sensitivity to the voters is unwise. Those who serve on the volunteer elected boards must consider the operational needs of our community and town-owned infastructure and physical plant
The revenues that flow through the annual budget in support of the municipal and educational operations as well as capital and infrastructure are numerous and all-encompassing. The vast majority of revenues that come to the Town of Granby within the General Fund are local property taxes, a number of categories of state aid, fees raised through town hall (i.e., building permits and document filing fees) and those brought in on the education side (such as tuition from the Hartland students whom we serve). There also some smaller funds that come in through state and federal grants that are self-contained and designated for very specific purposes that are not carried nor adopted through the budget vote.
The uses of the General Fund balance are critical in running a tight ship on a reasonably thought-out course. While some towns only use the General Fund surplus for one-time expenditures, many towns (like Granby) use it for certain one-shot items and also to draw out a portion for use in the subsequent year’s budget. For example, the current year’s use is $2.185M as a balancing revenue for the budget and another $4.6M earmarked for transfer into a capital fund for the emergency communications project. We are fortunate in that instance that $2M of the $4.6M will effectively remain in the General Fund as the state bond commission included that amount in their own bonding package for Granby. Given the tightness on the revenue side projected for the upcoming FY26 budget, we plan to draw $2.185M from the General Fund to offset the increase in expenditures. It is a significant draw, equivalent to nearly 5 percent in property tax. We will look to lower that drop year-by-year to a more comfortable level, as the difference gets built into the mill rate over time.
The General Fund also serves as the usual go-to source of funding for any special appropriation needed during the current fiscal year, for a particular unbudgeted or unanticipated item. As we near fiscal year end it is also used to backstop the education budget to avoid a deficit from mid-year special education increases if need be. Even in this year, the other elements that feed into the General Fund kick in to cover other shortfalls such as the nearly $500K difference between what is budgeted for the special education excess cost reimbursement and what is now projected.
Please note that the bonding credit rating agencies give strong consideration to what a town carries in its General Fund reserves. To maintain or improve our current S & P rating of AA+, it is recommended that the town reserves an amount around 15 percent of the budget. This helps reduce interest costs on future bonding. Granby has a long history of steadily improving and maintaining that rating and should continue doing so. It benefits everyone to work the General Fund hard while keeping it strong.