Officials set budget

Borough spending plan would raise taxes 4.6 percent

Budget breakdown

Total operating budget

2015-16 approved: $115,264,259

2016-17 adopted: $120,878,374

Increase: $5,614,115 or 4.87 percent

Current tax rate: 45.57 mills

Proposed tax rate: 47.67

Increase: 2.1 mills or 4.6 percent

Next: If a referendum isn’t forced the budget becomes official.

NAUGATUCK — After some final adjustments, the Joint Boards of Mayor and Burgesses and Finance Monday night adopted a nearly $120.9 million budget for the 2016-17 fiscal year that raises taxes about 4.6 percent.

The $120.9 million budget is an increase of $5.6 million, or 4.87 percent, over the 2015-16 budget. The budget increases the mill rate 2.1 mills, or 4.6 percent, from 45.57 to 47.67.

One mill equals $1 for every $1,000 of assessed value. Under a 47.67 mill rate, a home assessed at $150,000 will pay $7,150.50 in taxes, an increase of $315.

The municipal budget is $59.2 million, which is an increase of $5.5 million, or 10.28 percent over the 2015-16 budget. The Board of Education budget is $61.6 million, which is flat compared to 2015-16 school spending.

The budget adopted Monday increases spending $154,000 from the spending plan presented at a public hearing four days earlier. This increase stems from finalized figures for mandated upgrades to the incinerator at the borough-owned wastewater treatment plant.

Mayor N. Warren “Pete” Hess said the borough learned last Friday — the day after the public hearing — that the cost of the upgrades came in at an estimated $8.5 million, or about $2 million higher than expected. The higher cost means the borough has to pay an additional $180,000 this fiscal year to bond for the project.

Officials were presented with two options Monday: put the additional $180,000 in the budget or use some money that is no longer needed from a previous $2.1 million bond issued to pay the $180,000 this year. There is about $1 million from the bond that is not needed, officials said.

Those in favor of including the money in the budget argued that not including it would create an $180,000 hole in next year’s budget. They also contended using the entire $1 million to pay back part of the bond will reduce the cost of the bond in the long run.

Others argued that paying the $180,000 this year from the $1 million would save the taxpayers some money.

“Why raise the mill rate if we don’t have to?” Board of Finance member Andy Bottinick asked.

The joint boards approved, 10-6, putting the $180,000 into the budget.

Officials also removed $11,000 from elections and $15,000 from the fire department’s overtime budget to offset part of the $180,000 increase. The only other change made was removing $110,000 from the capital budget for seven new police vehicles and replacing it with $110,000 to pay for upgrades to the borough’s phone system.

In total, the $120.9 million budget increases spending by $930,135, over the proposed $119.98 million budget that was rejected at a referendum earlier this month. The budget also reduces the mill rate increase. The first proposal would have increased the mill rate 4.17 mills, or a little more than 9 percent.

Residents questioned the spending increase following the referendum at a public hearing July 21.

Matt Katra, the Republican registrar of voters, asked why and whether it was even legal for the borough to increase spending when voters rejected the budget.

“Ninety-seven percent of people said the spending was too high, so how can you increase spending?” he asked.

Officials simply said it was not illegal because their charge is to do what is fiscally responsible for the borough. They also noted that due to new revenue projections, the tax rate will actually be significantly lower than it would have been before the referendum.

“Our obligation is to present a revised budget. It doesn’t have to be up or down. We have to do what we feel is best for the taxpayers,” Hess said Monday night.

The driving force behind the spending increase and the decrease in the mill rate increase is the borough’s settlement with Veolia North America, the private company that runs the wastewater treatment plant.

The first budget proposal did not include revenue from the rent Veolia pays to the borough. The borough and Veolia were at odds over several issues when the first proposal was adopted. At the time, Veolia had shut down the incinerator at the plant over concerns with meeting federal mandates to reduce pollutants, and stopped paying rent.

The borough and Veolia subsequently reached an agreement, which solidified the revenue the borough will receive from Veolia.

However, as part of the negotiation, Naugatuck had to agree to take on some additional expenditures at the treatment plant. Aside from the $180,000 discussed Monday, the borough had to agree to also pay, from this budget, $350,000 toward incinerator upgrades and $285,000 for efforts to reduce phosphorous from the effluent.

Hess said nearly all of the spending increase following the referendum is directly related to the settlement with Veolia case, which he added brought more than $3 million in revenue to the borough.

He said the borough has to spend money to upgrade the incinerator and comply with federal law. If the borough is out of compliance or didn’t settle with Veolia, he said, the revenue figures would be much lower.

“To me it was a very easy decision to spend money that is necessary to comply with the settlement, to comply with federal law and bring in revenue to the town that allows us to have a 2 mill increase rather than a 4 mill increase,” Hess said.

Borough officials also added $52,000 for additional insurance costs, $19,000 for a new part-time position for the assessor’s office, and $15,000 to enforce ordinances, such as the blight ordinance, to the budget after the referendum.

The overall budget increase is driven by a $2,561,551 increase, or 55.7 percent, in debt services. Aside from upgrades to the wastewater treatment plant, the borough is also starting to pay back the $81 million Naugatuck High School renovation project.

Hess added the budget solves many problems from the past, including recently settled litigation with Naugatuck Ambulance Corp., in one package.

“I feel that it’s good we put them all together, put our past problems behind us and begin to move forward,” he said.

The budget can be forced to a second referendum if residents petition to do so. Petitions with signatures from at least 8 percent of the registered voters in Naugatuck need to be submitted within 14 days of Monday’s meeting to force the vote.

Hess, who encouraged residents to force the first referendum to buy time to resolve issues with Veolia, said he isn’t encouraging a second vote.

“If there is one I will encourage people to vote in favor of the budget,” Hess said.

The Republican-American contributed to this article.