Marcia Chambers Photo
First Selectman Cosgrove addresses the RTM.
The Representative Town Meeting (RTM) last week adopted a whopping $111.8 million school-town budget, the result of a state financial crisis that drove the legislative body to adopt a town budget increasing the taxpayer’s bill by 5.33 percent. Last year’s school-town budget was $105,891.217. But the process isn’t over.
“We are basically trying to assess the impact on us based on what we know, and we have made provisions to deal with it,” despite enormous uncertainty, Finance Director Jim Finch told the Eagle in an interview last week. The next and final step takes place a week from today, on May 22, when the Board of Finance (BOF) meets at Fire Headquarters to set the mill rate. At this juncture, the mill rate is currently estimated at 28.87 mills, but it could go lower if the BOF acts to do so. Last year’s mill rate came in at 27.41
What the taxpayer needs to know is that regardless of what other towns do Branford’s BOF will set the mill rate when it votes next Monday and taxpayers will get their tax bills from the tax assessor. Payment is due by July 1 and is considered delinquent after Aug 1. The town is required by town charter to set its mill rate by June 1, so regardless of the state’s fiscal uncertainty, Branford had to act.
Uncertainty about the state’s budget and its final impact on towns and cities has made this budget season especially difficult, both First Selectman Jamie Cosgrove and Finch said. Since February only the governor has come up with budget proposal, one that forces towns to pick up a large part of the state’s cost toward the Teacher’s Retirement Board program. Towns could have managed pension costs since they negotiate union contracts but they they gave that task to the state decades ago.
Back in February, Gov. Dannel P. Malloy advanced a bold proposal to help cut the state deficit. Towns would be required to pay a share into the teachers’ retirement fund, which the state has failed to fund over the years. So Branford’s share came in at $2,747,784. So far no alternative state budget has been proposed other than Malloy’s, so that it what the town dealt with.
However, Malloy announced yesterday that his revised budget plan will be unveiled today and is expected to cover an expected $2.3 billion deficit in the fiscal year beginning July 1. That is more than a $600 million increase over his earlier February projection, the AP reported today. Last week he announced he would now spend the state’s emergency reserve. He also said he would suspend additional financial aid to municipalities.
First Selectman Explains
The final RTM vote on the budget was 22 in favor and six against. Five Republicans voted against it along with one Democrat. One member was absent. The moderator does not vote unless there is a tie. Those voting against it were Jennifer Zambrano (R‑1), Peter Black (R‑3), Adam Hansen (D‑4), James Stepanek (R‑4), Edward Prete (R‑6) and Marc Riccio (R‑6).
Cosgrove addressed the RTM at the end of the nearly three-hour meeting last Tuesday, thanking the RTM “for approving this budget. I know it was a very difficult budget to approve because we all focus on the impact it is going to have to the taxpayers.” But for the state crisis, he said, this was a lean budget, both on the town and school side.
“What is driving this impact is the state – the change in the policies that are coming down from the state level. And we took the position to prepare ourselves for that impact that might ultimately come,” Cosgrove told the RTM and some 30 people who attended the session.
“Nobody in this room can say with a degree of certainty what is ultimately going to come out of the state, but what we can say to our constituents is that we are prepared for what will happen,” he said. Virtually all the increases are connected to state changes in how public education is funded.
Last year the mill rate, which determines the property tax, increased by 1.8 percent. If the town were not facing the current state crisis, the increase would be between 1.4 and 1.5. “Instead we are at 5.33,” Finch told the Eagle.
Branford Loses State Education Funds
In addition to the $2.7 million for teacher pension costs, the town of Branford lost its special education funds as well as its Education Cost Share funding this year, bringing the cuts up to minimum of $3.7 million, probably more, Finch said in an interview.
Finch, who has served as finance director for more than 20 years, said that if the criterion is uncertainty this has been the most difficult budget he has ever faced. “It has been the most uncertain, yes,” he said.
And it is still uncertain.
Just before the RTM meeting last week, Malloy announced that the state would withhold $19 million in outstanding municipal aid in order to help close yet another last-minute state budget deficit. And today will come a revised Malloy budget. The legislature has yet to act.
Cosgrove addressed the town’s decision making as well.
“Nobody in this room can say with a degree of certainty what is ultimately going to come out of the state, but what we can say to our constituents is that we are prepared for what will happen.
“You know the finance director made a comment the other night in a committee meeting that in his 20 years, this budget process has been the most challenging. Two budgets ago we had a declining grand list, for the first time probably in the history of the town. Last year we had reduced revenues coming in from the state. This year, by far, exceeds those challenges in the magnitude of the impact, both on the revenue and the expenditure side – due solely from changing state policy.
“I think… we have to walk out of this room and be aware, and we have to make sure our constituents are aware of that, and that we are doing the responsible thing and the courageous thing in addressing this,” he said as the RTM meeting drew to a close.
Cosgrove observed that but for the state’s new requirements, the overall budget was “a lean budget as far as the operating costs on the town side and the capital side. This budget does maintain the level of services we are providing and continues to invest in our infrastructure and fully funds our future liabilities. What is driving this impact is the state; the change in the policies that are coming down from the state level. And we took the position to prepare ourselves for that impact that might ultimately come.”
The budget keeps the $2.7 million teachers’ pension costs in the town budget as the BOF initially decided earlier this year. This assumes it will not die on the state end. It might. It might not. If the $2.7 million does not materialize or changes in some way, Finch plans to take $1.3 million of that figure and pay down the debt principal for the town.
Finch explained that after the governor announced towns would assume some of the costs of the teachers’ pension costs in February, he and Cosgrove “wanted a plan that was logical and defendable.”
Black Explains Process
Peter Black, chair of the RTM Ways and Means committee, explained the process by which the RTM arrived at funding the $2.7 million in teacher pension costs if need be.
Black said the decision was to move $1.37 million of the $2.7 million the BOF recommended for the budget into a debt payment for maturing notes due this September. That way tax dollars will be used to reduce a liability, Finch later told the Eagle.
If it turns out that the state bills the town for the entire $2.7 million then a decision would be made over the summer to roll the notes. Given the uncertainty, Finch will then decide the best course of action once the state legislature acts. It gives him some flexibility, Black told the RTM.
“In fairness anything to do with the state, we just don’t know at this time. The overall theme … at the end of the day, when the final mill rate gets set is the town is essentially looking at trying to insulate itself against possible state changes. We know from the governor’s budget what some of the philosophy is and we know some of the causes of the state’s budget problems and the teachers ‘pension deficit’ is one of them. And we know as the state’s financial picture gets worse, I think, and Jamie thinks, that some probability of some form of pension involvement is likely,” Finch told the Eagle.
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