NAUGATUCK — The Board of Mayor and Burgesses voted last week to transfer $500,000 from the reserve fund to offset decreases in revenue from the state.
When the state legislature passed a bill to cap car tax rates several years ago, it did so with a promise to reimburse municipalities with higher rates for the difference. However, the recently passed state budget sets a higher cap than expected at 39 mills.
“In our budget, we assumed that we were going to be reimbursed on cars for the difference between our mill rate and 37 mills and they only reimbursed us down to 39 mills,” Mayor N. Warren “Pete” Hess said.
The transfer avoids the necessity to send out supplementary tax bills to cover the two mill difference, which amounted to $364,000. The borough’s mill rate of 48.55 mills will remain unchanged and cars will be taxes at 37 mills this fiscal year.
A mill is $1 in taxes for every $1,000 of assessed property value.
The 2017-18 state budget also failed to include reimbursement for the elderly circuit breaker program, costing the borough $208,000 in planned revenue, Hess said.
With those big ticket items and a few smaller changes in the state budget, the net effect was a $428,000 shortfall in revenues for the borough, Hess said.
He said last year’s borough surplus of $800,000 will cover the cost. The town still maintains a healthy fund balance of about $12 million, he said.