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NEW FAIRFIELD – At its March 22nd meeting, the Board continued to discuss the proposed 2017-18 budgets and the affect anticipated cuts in State funding will have on town services, education, and the tax rate.

Initial discussion centered on the need to review the budget for areas where the town and school district can save. In light of the anticipated cut in State funding for the coming year (possibly as much as $4.3 million, or 10%), Board Chair Wes Marsh stated that the Board had to look at areas in debt service, GASB 45, and medical where the Town could save.

It was noted that GASB 45, specifically other postemployment benefits (OPEB) for retired and other eligible former Town employees, might be an area to explore. The cost to fund OPEB is $257,000. It was suggested that this might be funded out of the Medical Reserve fund, which has a surplus.

Board member John Hodge suggested checking with the Town’s actuary to see if a contribution had to be made this coming year. He thought the fund balance might already be higher than the Town needs. Board member Cheryl Reedy thought the medical fund would be a good place to pay for OPEB.

Conversation then moved to debt service. The consensus was that there was not much room to maneuver. There do not seem to be any opportunities to refinance over the next few years. It was suggested that perhaps the Town could increase its interest forecast due to the recent Fed interest hike. Rates might begin to move upward over the next year or so.

The topic that generated the largest amount of discussion, however, was tax-billing options. Not knowing the exact amount of funding the State will wind up cutting, makes budgeting extremely difficult. The Board does not want to over or under tax and/or slash the town and school budgets needlessly.

The option of assessing property taxes for the first tax payment in July and perhaps adding a supplemental tax increase to the January tax bills if necessary has been explored. However, this would play havoc with mortgage escrow amounts and elderly tax relief. Board member Anthony Yorio stated that he did not want an escrow shortfall in January for taxpayers. It was generally agreed that this option should be avoided. It was also agreed that the State most likely will not have its budget set in June and that it would not be set until as late as September.

Ms. Reedy indicated that she had had a change of heart about delaying a budget vote until the State finalized its budget. At some point, she said, the Town would run out of funding as there was no budget approved, and would have to loan itself the funds through the issuing of tax anticipation notes to pay payroll and other expenses. The cost to do this could be as much as $40,000 to $50,000 in borrowing costs and interest.

Mr. Yorio said that the Board should plan for the entire potential $4.3 million shortfall from the state. Either the budgets would have to be cut to some amount less than last year, or the Town might have to dip into the General Fund.

This led to the discussion of the budgets and various scenarios. One scenario was to submit budgets for a vote on time, figuring the worst case ($4.3 million in State cuts), make those cuts to the budget and raise taxes. If the cuts in funding wind up being smaller than anticipated, then a town meeting would be held to vote to allocate funds to areas of greatest need in the town and school budgets as identified by the BOS and BOE.

Mr. Hodge cautioned that we still do not know the real number. He did not think that the towns in Connecticut would support an increase in funding to the cities at their expense. In any event, he was against dipping into the General Fund. Mr. Yorio stated that he was not in favor of that either.

Ms. Reedy stated that she thought the Board needed the taxpayers to weigh in on which direction they preferred to go—either pay more in taxes or gut budgets. She thought that perhaps taxpayers would vote for a higher tax increase rather than cut funding for items like roads or forcing the schools to cut funding to math and science programs that have begun to show improved results over the past couple of years. She thought the BOS cut their budget too deeply and that the schools should not have to cut theirs.

Mr. Hodge expressed concern that although New Fairfield is considered affluent by many, the majority are two income households, that people in town are hardworking, making every dollar count and could not afford a 7, 8 or 9% tax increase.

The discussion boiled down to two final scenarios. One was a 7.5% tax increase, give the Boards some budget increase over last year and do the budget on time.

The second was to assume the State would not assess the $2,069 million in school pension funding. In that case, there would be a proposed 5.20% tax increase and a flat (0% increase) town and school budget. If the full State cuts wound up being made, then supplementary town and school budget cuts would have to be made as well as dipping into the Medical Reserve and General Funds.

Mr. Marsh asked the Board informally which would be preferable, a tax increase of 5.2% or more, or an increase of less than 5.2%. The Board was evenly split four to four. It was agreed that the Board needed to review the medical report before making a decision. The Board will review the report at its next meeting on March 29.

Ms. Reedy expressed her disappointment that more members of the public had not attended the meeting and said she hoped that more would make their voices heard.

Mr. Marsh noted that both Boards had put together very responsible budgets this year and that if this were a normal year, he would be very comfortable presenting them to the town for a vote.

By Greg Slomba