Budget Update from the Town Manager

As you are aware, the Town of Tolland suspended its budget process until such time that definitive revenue numbers were available from the State of Connecticut.  During the interim period the State’s deficit has increased from $1.6 billion for next year to approximately $2.1 billion due to declining revenue from income and capital gains taxes.  In addition in the current year the State deficit increased to over $300,000 million.  The State’s financial difficulties are certainly significant with no easy answers available to remedy the situation.  With whatever the final budget outcome is, I am just hoping that it addresses not only the current situation but also the long term and that we will not be in a situation of making a sacrifice for a short-term solution.  Also any budget saving projections such as from labor concessions need to be realistic so that next February we do not realize the projections have not been met requiring mid-year reductions.

To address part of the current year deficit the Governor has recommended that Towns and Cities will not get their last quarter payment from the Pequot Grant which for Tolland is a loss of approximately $12,000.

On May 15th the Governor put forth a revised budget to address the increased deficit for FY 18 and FY 19.  As you will recall, the Governor’s previous budget had reduced the Town’s ECS grant from $10,699,177 to $5,677,712.  In addition, the Governor recommended that Towns pick up 1/3 of the cost of Teacher pensions currently paid for by the State, which to Tolland was an increased expenditure of $1,934,215.  Finally, current legislation, effective July 1, 2017, calls for a reduction in the mill rate for motor vehicle tax from 37 mills to 32 mills.  For Tolland this is a loss of $300,000 – $1,339,000 in tax revenue depending on our final mill rate for the next fiscal year.

The Governor’s revised budget further reduces our ECS grant to $4,436,183.  The cost for the teacher pension contribution remains and in addition Town grants are eliminated as follows:

  • PILOT payments eliminated – loss of $34,245
  • Pequot payments eliminated – loss of $35,163
  • Municipal Revenue Sharing grant eliminated – loss of $437,559

As part of the Governor’s original budget, there was a proposed new special education grant to be paid directly to the BOE, which does not serve as General Fund revenue, originally in the amount of $2,544,025 and this has been reduced to $1,516,630 with the revised budget.

The impact of the revised Governor’s budget is a loss of additional General Fund revenue in the amount of $1,712,230 and the loss of $1,027,395 in Special Education funds to be paid directly to the Board of Education.

Assuming a 0% increase in Town, Board of Education and Capital expenditures, it would require a tax increase of 7.62 mills or 22.3 increase just to make up for the loss of revenue projected in the Governor’s original and revised budget.  The total impact of the Governor’s revised budget versus the FY16-17 budget is a reduction in funding of $8,670,754 in the General Fund.

The Democrat and Republican members of the Legislature are scheduled to produce their budgets today and then meetings will have to be held with their leaders and the Governor to produce a final budget.  The impact on Tolland could be significant and as additional information becomes available I will make you aware.