Every time election season rolls around, we are inundated with hyperbole about what the national and state candidates will do for the citizenry, with the unspoken part being what it will cost us, as if it comes without a price tag. Whether directly through taxes, or at the federal level indirectly through the inflationary impact of deficit spending, one way or the other we the people get the bill for whatever actually gets enacted. There is never a free lunch.
I’m reminded of a bumper sticker I once saw that read “They call it an election … but it’s really an auction.” This is not quite as cynical as the satire of H.L. Mencken’s quote that “every election is a sort of advanced auction of stolen goods.” Sooner or later, the citizenry pays for it.
At the state level in Connecticut, talk is building to weaken or dismiss the fiscal guardrails that were put in place through a hard but necessary round of budget negotiations in 2017. At that point there were ever-mounting future liabilities for both the state employee and state-run teacher retirement pension plans and a low level of reserves in the rainy-day fund. The governor and legislative leaders of the state house and senate (balanced 18-18 at the time) hammered out a budget agreement that put provisions in place that have proved useful in essentially not spending every dollar that came into the state coffers, and directing significant amounts into the now far-healthier rainy-day fund and into both the state employee and teacher pension funds. With federal money coming into the state through the American Rescue Plan Act and the infrastructure act both decreasing, there is talk by some state legislators to diminish the strength of those fiscal guardrails. One would hope that any such tampering has a minimally negative impact on the fiscal utility they have brought—and should continue to bring—to Connecticut finances.
As we locally begin the process of piecing together the budget for next fiscal year FY26, we find a greater level of cost stability in what the municipal government and the school system purchase, just as we all see in our home and business budgets. The news reports that the Consumer Price Index measure of inflation is up some 20 percent over the past four years. Any reductions one may see now are off that total, as opposed to what it was earlier. Any continued moderation in the inflation rate going forward has a similar impact on the town’s own costs, and therefore on taxes. With the labor contracts running at roughly 3 percent overall, and projected minimal Grand List growth once the last portion of the Station 280 apartments is finished next year, a reasonable expectation would be to see the mill rate change year-to-year consistent with inflation in the 2–3 percent range, barring any increases or decreases in program and services or an increase in ongoing revenues that cannot be predicted.
The real deficiency in any projection is the year-to-year change in cost for special education services. While those words cover a broad spectrum of programs—from the simple benefits of subject tutors/assistants to help kids progress to the expensive out-placement programs utilized when deemed necessary. The total expense does ebb and flow, and has been the most volatile and less than predictable in recent years. To make matters worse, this is where the level of excess cost reimbursement from the state has been falling, contrary to its own statute language.
As noted in recent Drummer articles, the town boards are looking ahead at capital needs over the next decade or two. Tools that the Finance and the Capital Planning group utilizes is the computer model factoring in projections for both the revenue and expenditure side of the budgetary equation. While the various capital items obviously have impact, it will become quite clear that it is the operating budgets that really drive the bus and is why they must remain a key focus moving forward.