May 25, 2013
Written by Macklin Reid, Press Staff
Tuesday, 20 March 2012 04:33
“There’s something magical about zero, where people will feel ‘we got something back,’ ” First Selectman Rudy Marconi said.
“That zero, psychologically, is the target.”After the Board of Selectmen voted unanimously last week to recommend a 2012-13 budget with a 1.98% tax increase, Mr. Marconi told the board that he and Controller Kevin Redmond were looking at whether the coming year’s tax increase could be brought down to zero by use of the $4.3 million that CL&P refunded to the town after discovering eight years of electricity overcharges at the high school.
“If we were to use part of the $4.3 million to reduce this increase to zero — which I personally agree with — it would require a use of approximately $2 million of that $4.3 (million),” Mr. Marconi said.
The idea will take shape as a presentation to the Board of Finance. It is the finance board’s job not only to approve final spending plans, but also to propose a means to finance that budget with the combination of taxes and non-tax revenue.
Many years, the non-tax revenue includes money from the town’s “fund balance” — a multi-year surplus that is up to more than $13 million, thanks to the CL&P refund.
Potential use of $4.3 million from CL&P to hold down taxes will be part of Mr. Marconi’s presentation on the selectmen’s three-year budget projections — possibly at the finance board’s March 26 public hearing.
He noted that, “If we were to use $2 million for the ’13 budget, we are utilizing one-time revenue to cover recurring operating expenses. Which means next year, 2014, we will not only have to cover what increases we are given — i.e. health insurance, salary increases etc. — but also the $2 million that we covered in 2013.”
Use $2 million to hold the tax increase to zero, and the following year’s budget starts $2 million — or just under a 2% tax hike — in the hole.
“So, what we are working on now is a three-year model that shows the use of the CL&P refund for 2013, but also what the demands will be for ’14 and ’15,” Mr. Marconi said. “Because this is not a one-year decision, it is a three-year decision.”
The first selectman’s thinking is to use $2 million next year, and then smaller amounts from the surplus the two following years, to ease the climb back to a budget that supports day-to-day operations without any money from the fund balance.
“If we use $2 million next year, we have to wean ourselves off of that,” he said. “We can’t use $2 million next year and nothing the year after, or else it will result in a spike of the mill rate.”
To put together a plan for zero tax increase next year and a stepped retreat from that $2-million infusion of fund balance money, Mr. Marconi and Mr. Redmond are projecting both spending and revenues three years out.
“We’re building this, and looking — what do we anticipate salaries to be, what do we anticipate insurance will be, our revenues coming in,” Mr. Marconi said.
“What do we anticipate the growth of the Grand List to be? What are we looking at from our Parks and Rec? What about our building permit fees? What are our conveyance taxes going to be two years from now — which is truly a guess, given where we’ve been.
“What are we looking at from the State of Connecticut? What it appears is, at the very least, they’re going to keep us flat funded.
“And if we assume similar to this year for all of these areas — school, town, revenues — we’ll get an idea what the potential impact on the mill rate is, and allocate from the CL&P refund and additional amount of money, to help soften that impact.
“Bottom line is, if you use $2 million of fund balance to reduce the mill rate this year, you’re starting next year with the need to cover that $2-million expenditure. You’re not starting at zero, you’re starting with a $2-million hole.”
And, then, there’s relentless rise in salaries, insurance, all the town’s costs.
“Let’s say it’s 2% again,” Mr. Marconi said. “We’d be looking at a 4% increase in the mill rate, which we don’t want to do. That’s the spike we’re looking at.”
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