By Michael B. Guarco, Jr.,
Chair, Board of Finance
In early February, the governor sent his biennial budget proposal to the legislature. Facing a $1.7 billion dollar gap in each of the next two years—even after the historically massive tax increases over the past four years—his proposal shifts a significant burden onto the towns. While closing the state budget gap and bailing out the cities, the change hurts the towns financially and is influenced by the belief that the towns are fiscally stronger and can handle it. While this is basically true, a primary reason is that the towns are more efficiently managed. In the long run, this Robin Hood approach won’t solve the problems of the state government—or of the cities—if they don’t tackle their own cost drivers within their own budgets. If they do not, the same gaps will again reappear in another two years. Frankly, it is quite unsustainable.
The impact on state revenues to Granby is similar to so many other Connecticut towns. The net impact between various changes in revenue categories, as well as shifting a portion of an existing state pension obligation for teachers, would require a property tax rate increase of some 7-plus percent with a flat budget of no increase in expenditures at all. The initial operating budget requests from the municipal and education administrations would add another 2.5 percent to the mill rate change. Thus, the total budget package, assuming the governor’s proposal as well as those of the superintendent and town manager, would drive an overall property tax rate hike of 10 percent.
A charge of the Board of Finance is to manage the preparation and submittal for public approval of a combined town budget intended to meet the needs of the people of Granby at a reasonable cost to ourselves as taxpayers. The paragraph above lays out the challenges we face in doing so. Traditionally, the revenue picture provided by the governor’s budget has been a fairly reliable, if not conservative, indicator of what the final state budget package enacted by the legislature ends up providing the towns in terms of revenue. In this case, we feel that while the full impact of his proposal will not materialize, we probably will still end up with less from the state. That said, even with a flat local budget we can face a significant mill rate challenge caused solely by the impact of reduced net revenues from the state budget.
In my 35 years serving on Granby’s Board of Finance, I’ve never seen state government in such a fiscal mess that is getting worse. It cannot keep raising taxes without seeing the results of the last few years of fleeing taxpayers and businesses. Shifting the burden to the towns won’t work either and is counterproductive in many ways. Those who pay state taxes also pay town property taxes. The state has to tackle its own inherent cost drivers. The towns face similar issues but do better than the state and cities. The board of finance has already indicated the need for even tighter operating budget proposals submitted by the end of March. At zero percentage increase in spending, we still would face a major mill rate increase of 7-plus percent if the governor’s budget was to hold. But given the state’s problems, it is prudent to assume there will be some level of net revenue reduction from the state. Most likely that means a fairly flat budget with a property tax rate change more than in the last few years, but in the end, far less than the worst case scenario that would assume the full impact of the governor’s budget on our finances.