While the recently recommended municipal budget request equates to an 8% spending increase, that spending largely represents money being transferred into the town’s Capital and Non-Recurring Fund. The actual tax increase residents may be facing if the Legislative Council approves the finance board’s recommendation without any adjustments, is just over four-tenths of one percent.

Both the municipal and school district budget requests were recommended and moved to the council at the Board of Finance’s February 24 meeting.

The school district request, following a $616,540 reduction, was approved at $82,434,639. This is a $2,736,941 or 3.43% increase over the BOE’s 2021-22 budget of $79,697,698. The BOF reduced the BOE budget by $616,540, by moving $472,000 for building maintenance projects and $144,540 for Chromebooks to the Capital and Non-Recurring Fund.

Board of Finance members then approved moving $1.3 million from the town’s fund balance to the Capital and Non-Recurring Fund to keep the fund balance below its policy-driven cap of 12% of the total budget. (Note: all debt service on bonding, including school district projects, are part of the municipal budget request).

That provided a proposed spending package of $47,027,087 for the municipal budget, which was unanimously endorsed as well, representing a $3,505,231 or 8.05% increase over the 2021-22 BOS (Board of Selectmen) budget of 43,521,856.

The combined 2022-23 budget proposal totaling $129,461,726 is a $6,242,172 or 5.07% increase over the 2021-22 overall budget of $123,219,554.

Officials say that keeping below that cap helps the town maintain its “perfect” bond rating, which was just reaffirmed at AAA/Stable last month by S&P Global (formerly known as Standard and Poor’s). It also positions the town to use the funds to offset capital expenses or borrowing.

“As we build a meaningful capital and non-recurring fund we have a good start on doing more pay as we go rather than borrowing,” said First Selectman Dan Rosenthal.

Rosenthal said the transfer has to be accounted for in the budget, but does not represent an actual increase in spending. Additionally, the town has already moved $1 million into Capital Non-Recurring to help compensate for higher than normal motor vehicle values.

The first selectman noted that without those two moves, real spending would increase by 2.7%. Of that, $456,000 is increased costs of recycling and moving the cost of road paving from bonding to the regular budget. That means the general government request is only up 1.8% — and most of that is contractual increases to salaries and benefits.

“If we took that out, everything else is within inflation,” said Rosenthal.

While the spending increase looks larger than it is, the effective tax increase to the mill rate is only .44, or less than half of one percent. The mill rate is proposed to increase from 34.65 mills in 2021-22 to 34.80 mills in 2022-23. A mill represents one dollar in taxation for every $1,000 in taxable property.

Rosenthal said there was a 1.5% tax increase in 2019, taxes were flat in 2020, taxes went down three-tenths of one percent in 2021, and now they are increasing by .44%.

“Over the last four years, we’re looking pretty good tax-wise,” said Rosenthal.

The Motor Vehicle Factor

Motor vehicle valuations increased 26%, which is translating to a larger budget bottom line because Rosenthal is proposing to put the majority of the extra revenue from motor vehicles into the Capital Non-Recurring fund, expecting the increase in motor vehicle values to be an anomaly that will “revert” in the future.

According to Finance Director Robert Tait, the change in the motor vehicle grand list is $70,002,199 — a 26% increase or generating $2.4 million more in taxes this fiscal cycle.

Due to current pandemic-related anomalies in the automotive market, which is seeing greatly reduced inventories of new vehicles due to parts shortages and global shipping woes, motor vehicle evaluations, according to the sources the town uses for values, had a large increase last year.

“No resident is going to be pleased their vehicle is worth more for taxes,” said Rosenthal. “We don’t make that judgement. By law we have to collect the taxes [at their current values].”

Typically the motor vehicle grand list will increase 2% to 5% year to year, usually reflecting an influx of new vehicles.

“If we appropriate a portion of it to one-time expenditures like capital and non-recurring items we can offset a revenue loss in the near future by reducing the capital and non-recurring appropriation (to zero if need be),” stated Tait in a document concerning the motor vehicle grand list. “This will help avoid a swing in tax rates from year to year. The rest of the additional tax amount is going towards offsetting taxes.”

However, Rosenthal said he doesn’t want the town “to take the shovel and keep digging,” so he proposed that the town bank $1 million of the extra revenue into the Capital Non-Recurring fund, rather than use it in the regular budget.

The budgets will now move on to the Legislative Council for review. That is the last step for the budget process before it faces referendum on Tuesday, April 26.

Reporter Jim Taylor can be reached at jim@thebee.com.