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06/07/2017 09:24 AMNorth Branford tax payers will see a 4.7% tax increase next year – for now. On June 6, acting as the town's Finance Board, the council voted 8 – 1 to set the 2017-18 mill rate at 33.51 mills, a mill increase of 1.53 mills. However, with the state still stalling on final budget numbers, should any additional state cuts come to pass, North Branford tax payers will be hit with some form of increase via supplemental tax bills in the fall of 2017.
If the new mill increase and tax hike numbers sound familiar to residents, they are. After delaying a May 16 mill rate vote until June 6, in the hopes that some answers would come down from Hartford on whether North Branford will be on the hook for up to $3.1 million more than budgeted, time ran out for the Town Council. In order to print new tax bills in time to begin the July 1 – June 30 2017-18 fiscal year, the council had to make a best-guess decision no later than June 6.
Several scenarios were posed by Town Finance Director Anthony Esposito, who also said the town was not in a stable position to borrow the needed money from its thinning general fund. Esposito said external rating agencies would downgrade North Branford's rating if the monies were borrowed; based on input from the town's bond consultant and financial advisor, with both "vehemently opposed" to the idea.
That means that, should any additional state cuts come to pass, North Branford tax payers will be hit with some form of increase via supplemental tax bills issued in the fall of 2017. Esposito's most drastic option called for a 36.08 mill rate, up 4.10 mills, to allow for taxation to cover a $3.1 million additional state impact.
Based on a potential fix being proposed in Hartford that would eliminate the state's current 32 mill rate cap on motor vehicles, and factoring in keeping to North Branford's share of original state budget cuts and costs proposed by the governor in February, together with no additional state bill to the town for a proposed Teachers Retirement Pension expense, the lowest tax increase scenario Esposito offered was an increase of 1.26 mills. The option was dismissed by the council, making the next lowest number to consider a new mill rate of 33.34, up 1.36 mills (created by adding the 32 mill motor vehicle cap back into the 1.26 mill increase formula).
In the end, councilman Al Rose suggested reverting back to the 1.53 mill increase which went to referendum May 9, with the knowledge that supplemental tax bills may need to come out in the fall to make up for any additional state impacts.
"I'm not comfortable with going with the low number and I'm not comfortable going with the high number," said Rose, who also received confirmation from Esposito that, should the state somehow find the money needed without burdening the town, any incremental amount raised from tax revenue based on the 1.53 mill increase would flow back into to the town's general fund balance.
Eposito also said the surplus can't be refunded to tax payers, as attempting to process refunds spread over variables impacting some 14,000 tax bills, would be a "nightmare".
Results from the May 9 referendum question vote, which asked if the $50.55 million 2017-18 budget with a 1.53 mill rate increase was acceptable, too high or too low, showed the overwhelming majority of residents voting rejected the budget as too high. But, even with the one of the highest voter turnouts in recent history – 8.9 percent of the electorate – the referendum turnout failed to meet the Town Charter requirement of 15 percent minimum voter turnout at the referendum question vote for the results of to be actionable by the Town Council.
The budget which went to referendum May 9 already carried North Branford's response to the burden of an anticipated $2.2 million state revenue shortfall expected in 2017-18, based on February 2017 proposals by Governor Dannel P. Malloy. To cover the gap, the council voted spend nearly $1.5 million in debt service savings, together with using an unprecedented $750,000 from the general fund surplus. At that time, the council also decided that, if needed, the the town would issue additional tax bills, likely in the fall of 2017, to make provisions for a potential $1.4 million in additional state costs which could arise should the governor's proposed municipal funding of the state Teachers' Retirement Fund be enacted.
Then, on May 15, Gov. Malloy announced the state budget faced an additional $700 million gap and proposed gathering still more revenue from towns to make up for the deficit, including an additional $1.7 million to come from North Branford. With all of the proposals rolled into a worst case scenario that could be adopted by the state legislature when finalizing the budget (anticipated to take place in August), North Branford still stands to be impacted with up to $3.1 million in additional revenue to make up ($1.7 million added to the potential of $1.4 million needed for the Teacher's Retirement Fund).
On June 6, the nine-member council was clearly frustrated with the need to make a significant tax increase decision with no solid information returned from Hartford to help. Compounding the issue is the concern that the town's tax payers still may not be getting the message that supplemental tax bills could be on the way, and if they arrive, blame the state. To that end, in voting to set the new mill rate and authorizing Town Manager Mike Paulhus to sign the rate book, the voting statement was shaped to include language discussing that, due to the uncertainty of state aid, the potential exists for a second tax bill to be issued for the 2017-18 fiscal year.
The council's 8 - 1 vote in favor of the new mill rate included one vote against cast by councilman Anthony Candelora.