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05/31/2017 05:43 PM

CT Budget Rollercoaster Pushes Branford Mill Rate to 28.47; Taxes Up 3.85%


Branford Board of Finance chair Joe Mooney (second from left) discusses budget revenue strategies with finance board members at a special meeting May 30 to set the town's new mill rate.Pam Johnson/The Sound
Additional General Fund Appropriation Buffers Tax Increase

With a unanimous finance board vote May 30, Branford's ride on Connecticut's budget deficit rollercoaster coasted into the station with a new mill rate of 28.47 and an annual tax increase of 3.85 percent.

The vote concludes a tumultuous annual town budget planning period for the 2017-18 fiscal year. The process involved dealing with state cuts to education spending and planning for a state bill of as much as $2.7 million for Branford's proposed share to pay into the state's Teachers' Pension Fund. Those cuts and costs were proposed by Gov. Dannel P. Malloy in February to help cover a state bi-annual budget gap touching on $2 billion. 

Then, on May 15, Malloy announced the state faced an additional $1.5 billion projected decline in tax revenues over the next two years; and proposed more than $700 million in additional municipal cuts to close that gap. That put Branford on the hook to find another $2.2 million in revenue; even though the town's $111.8 million 2017-18 town budget had already been approved on May 9 by the Representative Town Meeting  (RTM, see the story here). 

Prior to the May 15 announcment, the Board of Finance's (BOF) revenue appropriating power was expected to help decrease the proposed new mill rate of 28.87 and a 5.3 percent annual property tax increase delivered by the RTM's May 9 budget vote.

Due to Malloy's May 15 announcement, the BOF tabled its planned May 22 mill rate vote to a special meeting on May 30. Town charter requires the mill rate be set by June 1 of each year.

On May 23, Branford Finance Director Jim Finch, First Selectman James B. Cosgrove and BOF chair Joe Mooney met to strategize on how to best address the latest proposed state impacts.

"Part of our thinking was to try to work back to a mill rate that sort of tries to balance the uncertainties [from the state] but not put an undue burden on the tax payer, as an overall tax increase," said Finch.

If all of the $2.2 million in newly-proposed needed revenue was generated through additional taxation, it would have meant an annual tax hike of 7.64 percent. Instead, they recommended appropriating an additional $3.6 million from the town's undesignated general fund balance to cover the additional state cuts that could impact Branford. On May 30, the six-member BOF took up the recommendation as a motion, which was then unanimously approved.

Prior to the BOF's May 30 vote, the town's RTM-approved budget plans had already called for borrowing $2.8 million from the general fund to help absorb state impacts. Now, Branford is prepared to draw down the general fund balance by up to $6.4 million. 

The current general fund balance was listed as $24.61 million in the town's June 30, 2016 financial statement (BlumShapiro). Using fund balance borrowing as a tool allows the town to avoid further raising taxes to point that would have been painful for property owners, Finch explained.

"It would have been a 7.64 percent increase if we incorporated that $2.2 million," said Finch.

As it stands, some 2.35 percent of the next year's 3.85 percent tax increase is earmarked for state impacts. Cosgrove said using some revenue generated from taxation to address state impacts will also show external rating agencies that the town is not dipping into its strong general fund balance irresponsibly.

"With respect to rating agencies and how they would view this; those communities that are not taking such a prudent approach are going to be reacting to the crisis that could come down," said Cosgrove. "So I see this as being viewed as a prudent approach, and rating agencies [will] recognize we came forward with a plan. Some of this is being phased into the mill rate, as well. We're not ignoring what's happening or dealing with this as it comes."

Meanwhile, scenarios are still playing out in Hartford, as the state budget process continues into the coming weeks. Even as the BOF voted on May 30, the state was working on contract negotiations with unions which could deliver state budget expenditure savings topping $1.5 billion in the next two fiscal years.

"It's a tentative agreement reached with the unions that still needs to be voted on; but that vote could be delayed up until [June] 17. We need set the mill rate today," said Finch, speaking to the BOF May 30.

He added the state's tentative union agreement "...could be viewed as positive, but there's still a lot of uncertainty out there."

In a letter shared at the May 30 BOF meeting, Finch outlined the town's evolving 2017-18 budget planning process, to date, as Branford's town leaders worked to respond to proposed state impacts.

In discussing the motion to allocate $3.6 million more from the general fund, and set the new mill rate at 28.47 mills, Mooney said he felt the town was taking the best approach to an uncertain future. 

While the BOF was approving an additional fund balance allocation of $3.6 million, "...the chances of us using that are slim," said Mooney. "That seems to be a better approach, to use the fund balance to balance and offset [impacts] than to take another stab at guessing what revenues might be...we're creating a buffer by using current monies in the fund balance. So I don't think we're taking an unreasonable approach. I think it's prudent."