This post has been updated from the print version of March 24, 2017, to include the dates of upcoming council and committee meetings.

After a brief public hearing March 22, the Legislative Council held a closed session with school and law enforcement representatives before reopening the session to discuss budget scenarios and "what ifs" relating to how potential state budget actions could impact Newtown's spending plan.

On March 8, the council accepted a proposed budget requesting a 1.6 percent increase in spending over the current year. If approved without adjustment by the council, voters will weigh in on a spending request that would increase the mill rate on real estate from 33.60 to 34.24, increasing taxation by 1.9 percent, and factoring a preliminary anticipated reduction in intergovernmental revenue of 21 percent.

A mill equates to one dollar in taxation for every $1,000 in taxable property.

The school district has requested a 1.6 percent increase adding $1,162,373 to the current year's budget of $73,665,065 that would send a $74,827,438 request to referendum if no further reductions are taken by the council. Selectmen have proposed a $41,251,019 municipal budget - a $733,705 or 1.8 percent increase - which also carries town debt service for capital borrowing on all town and school projects.

That proposed debt service cost in next year's spending plan is $9,125,474, a decline of almost $200,000 from the current year.

The spending proposal that the council took up following the public hearing March 22 increases the current year's $114,182,379 budget to $115,992,078 - representing a $1,809,699 bump officials say is driven primarily by labor and contractual commitments.

Council committees assigned to review specific parts of the proposed local budget have already begun meeting, and will continue to do so before the full panel begins meeting to consider recommendations on municipal operations, finance and administration, public safety, and education requests.

The Municipal Operations Committee meets Monday, March 27 at 7:30 pm; the Finance & Administration Committee meets Tuesday, March 28 at 7:30 pm; and the full council reconvenes the following evening, March 29, as well as April 5 at 7:30 pm. All meetings are at the Municipal Center.

The council has also put forth six capital spending requests that have to be individually endorsed or rejected by local voters, a change in the April budget referendum that goes into effect this year following a 2016 charter change.

This year's referendum is set for Tuesday April 25.

'Walking A Knife's Edge'

The council hearing opened with resident Karyn Holden thanking officials for their volunteer service, and then reminding them that on a number of occasions in recent years, they came to the process armed with data and reports justifying school district spending and budget actions, only to see the council make reductions that target those departments.

While the council has no line item authority over the Board of Education budget, they can make a net reduction and justify it based on perceived areas council representatives feel are too high or unjustified.

"I've been coming to these budget meetings for some time now, and I've seen a pattern. You ask the Board of Education and the town to look for shared services, they do and you're not happy with the results," Ms Holden lamented. "You ask for an enrollment study, and you don't agree with the results. You ask for a transportation study, and you still think buses can be cut. You share concerns around escalating costs for special education, and the administration does a really good job streamlining special education resulting in a savings, which is amazing. And now you want to take that savings because the state can't get its act together."

Ms Holden went on to reference the town's $10 million fund balance as being available to help offset budget inflation, noting it is taxpayer money, and asked the council to leave the proposed school budget intact.

School board member Michelle Embree Ku was next, stating that she was speaking as a resident and noting that since her election to the board, she has opted out of speaking at council hearings because she felt she had a voice and role in finalizing each year's school spending plan.

"But this budget season is unique, and the town has had a lot of unsettling news since we passed the Board of Education budget on to the Board of Finance," Ms Ku noted. "You now have an incredibly tough job."

She acknowledged that the council was saddled with the burden of settling on a budget request that takes possible worst case state revenue shortfalls into account, while at the same time not overtaxing residents.

"You're walking on a knife's edge, while at the same time peering into a cup, trying to read the tea leaves," Ms Ku said. She noted that voters passed a 2.9 percent school budget increase in 2016 by more than a two to one margin. She also asked the council to consider looking at the fund balance for possible budget relief, saying that while a higher bond rating is achieved from fortifying the local fund balance, a well-funded and supported school district helps increase property values of every Newtown homeowner.

In closing, she urged the council to not overreact to early stage proposals coming out of Hartford, saying that those onerous proposals will likely change "in very significant ways before the state budget is complete."

Next was Julia Conlon, who also supported the school budget as proposed. She expressed dismay over the council's Education Committee refusing to accept any budget increases after the Board of Education voted against closing a school.

"To suggest [making] damaging cuts to the Board of Education budget because the Board of Education did its job, but did not make the choice one wanted, is irresponsible and just plain wrong," she said. "Why bother having a Board of Ed, or a Board of Finance for that matter."

Ms Conlon closed urging the council to not make cuts in anticipation of proposed state revenue reductions that may never happen.

Jason Zetoff, a local educator, closed the hearing reminding the council, "We have a Board of Education and a superintendent that we put our trust in, and I think we should trust them. Put the budget to the voters and let the voters decide."

Before the council settled into its regular meeting business, resident Kristin Alesevich appeared asking the council to turn the school district budget over to taxpayers to decide its fate, rather than making cuts in anticipation of state revenue cuts that she believes will not happen.

"I'd rather see us do what we need to do, than cut because we might need to," she said.

'What Ifs' Reviewed

Part of the challenge local officials in Newtown and across Connecticut are facing this spring is in many cases passing local budgets before the state budget is finalized. According to Town Attorney David Grogins, that means any significant intergovernmental reductions taken in Hartford could trigger a need for cities and towns to either bond, cut local spending, or issue supplemental tax bills to cover the shortfall.

Attorney Grogins was on hand to review a memorandum he prepared for the council, outlining the little that is known so far, and reviewing how Newtown might respond in the worst case scenario - which is based on initial proposals put forth by Governor Dannel P. Malloy in early February.

The current state budget proposal, if approved as presented by Gov Malloy, would reduce Newtown's Education Cost Sharing (ECS) grants from $5,080,129 in 2017, to $969,688 the following year - a difference of $4,110,441, which would fall on local property owners to make up. That state budget proposal, if approved, would also reduce local tax revenue by about $900,000 through a proposed mill rate cap on motor vehicles.

The governor is also calling for all communities to contribute one-third of the expense related to fortify a statewide teacher pension fund. Locally, that impact would be $3.9 million in year one, with the likelihood that local liability would double in year two, according to Benjamin Barnes, secretary of the state Office of Policy and Management. All told, if the current state budget proposal passes, Newtown's loss in combined state aid would approach $7 million in 2018.

Council Chair Mary Ann Jacob kicked off the discussion by asking Mr Grogins to affirm what could happen if the local town and school budgets pass and the state subsequently ratifies a budget with many or all of the proposed reductions intact.

The town attorney replied that because of new charter changes, if Newtown faced a significant 2017 budget deficit because of a substantial drop in state revenues, or because the state is requesting Newtown cover one-third of the state teacher pension contributions, that voters would have to approve either bonding to cover local operating cost shortfalls, or vote to dip into the fund balance.

Mr Grogins noted that the proposed Education Cost Sharing reduction is quite substantial.

"But it could be substantially diminished," he offered. "It is a revenue source to the general fund, so if it's cut and the budget is adopted, the issue is how can that loss be equitably divided between education and general government."

He said that while the town can hedge against state cuts by reducing services and expenses, the school district cannot be required to reduce its spending under state law. So if the district was asked to help offset a significant state revenue reduction, the administration would need to work with the school board to help cushion the local budget impact voluntarily.

In response to a question about seeking taxpayer authorization to tap the fund balance to help offset revenue reductions, which was also suggested by several of the residents at the hearing, Mr Grogins said, "There's problems taking it from the fund balance.

"To the extent you vary from your plan, you are punished [by the ratings agencies]," he said. "It can be harmful at a later date if bond rating is affected and costs for borrowing escalate."

That concept was later addressed by town Finance Director Robert Tait, who affirmed that Newtown maintains its fund balance as a best practice, with the collateral benefit of high bond ratings that have reduced capital borrowing over the past decade by millions of dollars that would have been the taxpayers' responsibility to cover.

"Sometimes we say we're doing the right thing to get a good rating, but we're doing the right thing," Mr Tait said.

Mr Grogins suggested that the prospect of being asked to cover the teacher pension contribution was likely dead this year, because there appears to be a statutory provision that prevents the state from mandating such a payment. He said the state treasurer's office apparently concurs.

"It can only be changed by the legislature," Mr Grogins said. "If it stays as is, it would be illegal for the towns to make a contribution. I think the state treasurer has come out with a statement that disagrees with the governor."

Turning to First Selectman Pat Llodra, Ms Jacob asked what her thoughts were on possible reductions.

Mrs Llodra replied, "I think we're at a $2.5 to $3 million decrease in revenue, so we should plan our budget around that."