Selectmen in bind over tax rate

The Board of Selectmen picked the numbers required to set the town portion of the 2008 property tax rate at a workshop yesterday when they decided how much to earmark as "overlay," the contingency fund to defray tax abatements, and how much of the town's unreserved fund balance to apply against the total tax commitment. But not without some finger pointing about the size of the 2008 budget and dire warnings about the impact of the projected tax hike.

Moreover, while the selectmen have gone to considerable lengths to minimize tax rate hikes in the past, faced with more straitened fiscal circumstances they chose to retain unreserved fund balance and countenance a higher tax rate. "I'm seriously concerned with the number of people having trouble with their tax bills," said Selectman Colette Worsman. "We have a people problem with a 6-percent tax increase (in the town portion) when they have seen no salary increase."

"We have no choice," replied Selectman Miller Lovett. "We made the choices when we did the budget."

Brenda Vittner, director of administrative services, estimated that the school and county portion of the total tax burden has been established the overall rate will rise from $10.91 thousand dollars of evaluation to $11.24, or about 3.2-percent.

Vittner began her presentation yesterday by noting that property values rose at a slower pace, non-property tax revenues fell short of estimates and unforeseen expenses weighed on the budget. The total assessment rose by $22.6-million — from $1,918,269,293 to $1,940,881,763 — just 1.2-percent.

Vittner expected that revenues from sources other than property taxes, which were budgeted at $7.8-million, would close the year at $7,569,996. She said that receipts from motor vehicle registrations diminished as the economy weakened and returns from funds on deposit dropped as interest rates fell.

Finally, because of unanticipated expenses arising from the heavy snowfall in the winter and severe flooding in the summer, coupled with high fuel costs, Vittner estimated only $23,024 in surplus appropriations. The net effect, she projected, would be deficit cash flow of $112,664, which would be met by a transfer from the unreserved fund balance.

Appropriations for town totaled $15,263,119, which less revenues and plus tax credits for seniors and veterans, left $7,892,561 to be raised by property taxes. Drawing on past experience, when abatements have averaged about $50,000 a year, Vittner recommended setting aside $75,000 for overlay. Without using any unreserved fund balance to offset a portion of the tax commitment, the projected municipal tax rate would be $4.10 per $1,000 of assessed value, an increase of 40 cents, or 11-percent.

Vittner presented three scenarios, applying $650,000, $500,000 and $325,000 of the unreserved fund balance to reduce the amount to be raised by property taxes, which would reduce the municipal tax rate to $3.77, $3.85 and $3.94 respectively, representing percentage increases of 1.9-percent, 3.99-percent and 6.42-percent.

However, she cautioned against drawing too heavily on the unreserved fund balance, reminding the board that the Department of Revenue Administration recommended that retaining between 5-percent and 10-percent of gross appropriations, including schools expenses, and the Government Finance Officers Association set even more stringent guidelines between 8-percent and 17-percent. The unreserved fund balance, Vittner projected would end the year at $2,432,967, or 8-percent of appropriations. By applying $500,00 or more against the tax rate, she said, would leave the unreserved fund balance at little more than 6-percent of gross appropriations. Therefore, she recommended using $325,000 to set a projected tax rate of $3.94.

"I hate to say I told so," said Lovett, who proposed asking department managers to trim the budget by $200,000 in March, "but we should have cut the budget last year. Not by $200,000 but by $300,000. Next year tremendous cuts will have to be made in the budget."

"I'm not buying this 'I told you so,'" Selectman Bob Flanders shot back. "You have no more free pass on this than the rest of us." He reminded Lovett that the board went through the budget line by line and charged that only after approving the line items "you pulled a number out of the air."

Undaunted, Lovett replied that "we all knew the budget could have been cut last year. We're in a fix now and we have to pay our dues. We're all responsible. I'm not going to take a pass."

Worsman asked if departments could make economies to improve the situation, but Vittner answered that departments always limit purchases to essentials toward year end. "I'm not willing to throw in the towel," Worsman said. "Departments can find cuts." She drew laughs from her colleagues by suggesting that decorations and lighting for the holiday season, could be reduced. "I'm not Scrooge," she remarked. "But, if I have to put milk on my table or a Christmas tree up, I'm putting milk on my table."

Returning to Vittner's recommendations, Flanders said that he was leaning toward using $500,000 of unreserved fund balance. Calling $325,000 "too little," he suggested "something in between."

Selectman Chuck Palm disagreed. He pointed out that the unreserved fund balance will already be reduced by the amount of the budget deficit and said that instead of focusing on the tax rate, the board should determine how much balance to retain. Palm proposed 7.25-percent of gross appropriations as a target, noting that about $325,000 could be applied to the tax rate and perhaps more if revenues topped Vittner's projections.

Chairman Peter Brothers agreed, calling Palm's approach "as reasonable a position as we can take under the circumstances. I appreciate where everyone is coming from," he continued, adding that "what level of service to maintain and at what cost will be a discussion we're going to have."

NOTES: John Edgar, who shares town administrator's duties with Brenda Vittner, anticipated a heavy turnout at the polls today. He said there would be overflow parking at Prescott Park with a shuttle service back and forth to the Community Center. He reminded residents that the Town Clerk's office would be closed for the day while staff worked the polls. Vittner said that along with voting in the general election, residents will have an opportunity to vote for the photographs entered in the competition for the pride of having a place on the cover of this year's town report. The 34 entries will be on display in the game room at the Community Center. Votes can also be cast on the town town website through Friday, November 7.