The Board of Finance decided unanimously to advise the Board of Selectmen to use excess taxes the town levied this year to lower next year’s mill rate.
The biennial state budget had not passed when Easton taxpayers went to referendum on May 2 and approved the town and school budget of $44.9 million for 2017-18, representing a 2.72% increase in spending.
The increase in Easton’s budget was due in large part to the anticipated transfer of teacher pension funding from the state to the towns. Teachers receive their pensions from the Teacher Retirement Benefit fund in place of Social Security.
Easton wound up in better shape than it budgeted for because the Board of Finance positioned Easton to cover the probable pension liability. The pension shift was contained in Gov. Dannel P. Malloy’s proposed budget but not in the final budget he signed into law Oct. 31.
The excess taxation amounts to roughly $300 for an Easton property valued at $400,000, Finance Director Christine Calvert said.
“What we told the public last spring was we were protecting ourselves in case we got hit with extra costs,” Andrew Kachele said at the finance board’s Nov. 13 meeting. Kachele chaired the meeting in the absence of Chairman Matthew Gachi. “If the governor’s budget didn’t come to pass, we weren’t going to take the pool of money and use it on things we weren’t going to put in the budget.”
Connecticut went for four months without a budget until Malloy signed into law the bipartisan budget agreement that was finally reached by members of the General Assembly.
It fully funds teacher pensions, a source of contention as the state grappled with a multibillion-dollar budget deficit, and Easton loses only $9,000 in Education Cost Sharing under the approved state budget.
Local Capital Improvement Program funding was also a concern because Easton has two South Park Avenue bridges in need of repair and planned to use the money for that purpose. As it turns out, the town will get its $66,000-per-year allocation as pledged. The town has been accumulating LoCIP funding and will use it all toward the $1.2 million to repair the first bridge starting in June 2018 and the second bridge in June 2019.
The state budget bill contains “complicated” language that allows municipalities to adjust their budgets if state aid changed drastically, Kachele said. The bill originally said towns and cities had to make adjustment in the same manner as they passed the budget in the first place and must act before the end of the year.
However, the bill is still fluid and was revised so that as of Nov. 15, the Board of Selectmen, rather than the Board of Finance, must make the decision about the excess taxation, which was complicated to begin with. Municipalities now have until Feb. 1 to act.
Budget changes continue to be made at the state level, including language for a hospital tax to bring the state into compliance with federal funding requirements.
The finance board debated the matter and acted in an advisory role in urging the Board of Selectmen to use the excess taxes to lower next year’s mill rate rather than sending out tax rebates mid-year.
The selectmen will meet tonight at 7:30 at Town Hall to make the final decision on how to deal with the money.
“The big thing is we didn’t get the teacher retirement for $1.3 million,” First Selectman Adam Dunsby had said at the Nov. 2 Board of Selectmen meeting. “At least for me, that was extremely concerning.”
The approved 2017-18 town budget cut townwide spending by .25%. Easton Board of Education spending rose just .58%, and Region 9 funding increased 2.18%.
The town also had to adjust to lower real estate assessments, following a property revaluation that saw assessed property values fall 4.5%.
Rebate vs. mill rate reduction
The finance board discussed the pros and cons of sending out rebate checks or applying the money to lower next year’s mill rate.
Calvert said 188 people have already paid their taxes in full for the year. Kachele said many people have their taxes paid by their mortgage lending company through an escrow fund which has already been appropriated this year.
Also complicating the situation is the fact that motor vehicle taxes are billed just once a year, but property taxes are billed twice a year, and many households have both a leased and an owned car.
Easton has roughly 2,500 property owners, and to figure out the exact rebate amount and send out checks would be a timely and costly venture from a staffing perspective, the board agreed.
Holding on to the money will enable the town to use it to lower the mill rate by an estimated one mill next year.
The current tax rate is 33.38 mills. A mill is the amount of taxes a taxpayer pays per $1,000 of assessed property.
“I understand, but taking taxpayer money and keeping it will make a lot of people unhappy,” board member Michael Kot said. “They will say, You have my money. Taxpayers will complain.”
All things considered, however, Kot joined the rest of the board in voting unanimously to advise the Board of Selectmen to apply the money to next year’s taxes.