Towns playing guessing game with state revenue
PROSPECT — Weeks after the town’s budget was approved, the Town Council on Monday set the mill rate for the 2017-18 fiscal year at 31.25 during a special meeting.
The mill rate is an increase of 1.34 mills, or about 4.4 percent, over the mill rate for this fiscal year. The mill rate is the amount of taxes payable on the assessed value of property. One mill equals $1 for every $1,000 of assessed value.
Under a 31.25 mill rate, a home assessed at $150,000 will pay $4,687.50 in taxes, an increase of $201 over this fiscal year.
In May, voters approved the town’s $8.45 million budget and a $40.9 million budget for Region 16, which oversees schools in Beacon Falls and Prospect, at a town and district meeting, respectively.
The town’s budget increases spending by $175,864. Under Region 16’s budget, the town’s net education cost — the amount paid with local taxes — is projected at about $18.9 million, an increase of nearly $1.15 million.
The elephant in the room remains what the state’s budget will look like and how it will affect municipalities. The state is facing a massive budget deficit over the next two years, and the legislature hasn’t approved a budget yet.
Mayor Robert Chatfield said the town did receive a bit of good news lately. He said state funding for special education, which is usually given to school districts, will be given directly to the towns. He said Prospect received $1.6 million it was not expecting and was able to keep the mill rate increase down.
“That saved us 2.01 mills,” Chatfield said.
That money is the only positive news the town has received from the state in a while, however.
In an interview prior to the Monday’s meeting, Chatfield said he finalized budget numbers based on state revenue estimates from the Connecticut Conference of Municipalities and the Connecticut Council of Small Towns.
Chatfield said the numbers could change when the state passes a budget, but that he could not hold out any longer before setting the mill rate.
“We have to be able to operate the town. We will set the mill rate based on the revenue we have. It may be an unknown, but we have to start bringing money in,” Chatfield said.
The town sends out a tax bill for both July and January on the same bill.
If the state cuts more revenue to the town than expected, Chatfield said the town would have to send out a supplemental tax bill. The tax bill would cost both the residents, who would have to pay it, and the town, which would have to find money in its budget for the additional postage, he said.
If further cuts are minor, Chatfield said the town would stretch its budget to cover the shortfall rather than send out additional bills. If the town receives more money than it is expecting, Chatfield said he will use that money to help next year’s budget.
Prospect is not alone in the waiting game for the state to approve a budget.
Naugatuck Mayor N. Warren “Pete” Hess has said numerous times during the crafting of the budget that the borough was being cautious and assuming it will get less money from the state.
The borough approved its $120.4 million budget for 2017-18 in May and is sending out tax bills. Naugatuck’s 2017-18 mill rate is 48.55 mills.
Naugatuck Tax Collector James Goggin said the decision to play it safe and get the tax bills out in a timely manner was the correct one. He said its puts the town in a good position regardless of what the state does because the borough will already have money coming in and will likely be less affected by what the state does ultimately.
When the borough does wait to send out tax bills, as sometimes happens during a referendum, it tends to negatively affect the collection rate, Goggin said.
Goggin said he was unsure of what would happen if the money from the state came in significantly lower than the borough budgeted. He said it would be up to finance and elected officials to make a decision of what to do.
In Beacon Falls, voters approved a $6.75 million town budget for 2017-18 at a referendum on Tuesday by two votes. The votes will be recounted.
The town budget doesn’t include its share of the expense for Region 16.
The town’s mill rate is estimated to increase to 35.9 and is expected to be set after the recount.
With a town budget most likely in place, Beacon Falls First Selectman Christopher Bielik said the tax bills will be going out in the first week of July.
Bielik said the town would rather use its own contingency fund to cover any shortfall in state aid rather than sending out an additional tax bill.
“The supplemental bill is one of the options in the tool box. However, it is the last tool we will pull out of box,” Bielik said. “We have a sense of how big of a hit can we weather. We have been building up the excess fund balance over the last few years. We don’t want to deplete it for this problem, but we will do everything we can to avoid a supplemental bill.”