Wednesday night, the Board of Finance’s subcommittee on financial planning voted 4-1 to recommend a 5.53 percent tax increase for the next fiscal year.
While the recommendation must be acted on by the Board of Finance and the Representative Town Meeting, and the budget can be cut or added to later, the subcommittee’s recommendation is usually accurate. For example, last year, the subcommittee recommended roughly a 4.2 percent tax increase for this year, and taxes increased .
“I don’t feel very good about it, but I recognize the reality of the situation,” Chairman George Peteros said. “But the alternative is to cut services. And I think the view you heard expressed today is I don’t think the town is ready at this point to accept any further reductions.”
A 5.53 percent increase would equal $78.2 million for the next fiscal year, which begins on July 1, 2012. The current budget is $74.3 million. The average taxpayer would pay an additional $196 per year in property taxes, according to projections by Finance Director Rudie Beers.
Subcommittee members Peteros, Tom Dembek, Ron Fedor and David Cattanach voted for the recommendation, while member George Kee felt it was too high. Superintendent Jerome Belair, School Business Manager Ron Melnik, First Selectman Dan Steward and Beers were also at the meeting.
Services Might Be Cut
The budget increase is partly from a $2 million increase in debt services for , according to town documents. Additionally, the subcommittee recommended a 3 percent increase for the Board of Education’s budget, bringing the total for education to $44.2 million, and a 2 percent increase for the general government’s budget, bringing that total to $28.2 million.
Still, despite the increase, Belair and especially Steward were worried they would not be able to come in at those numbers. Health insurance costs continue to increase, and that alone will take up most of the allowable budget increases, Beers said.
The town is self-insured, meaning it pays claims directly, Beers said. Currently, claims are coming in at more than $1 million a month, a pace of more than $12 million for an entire year, while the town only budgeted $9.5 million, she said.
Claims have increased dramatically every year for the last three years, Beers said. Most of it is because of serious injuries and illnesses, she said.
“Generally, you’ll see a trend like this for a couple of years or so,” Belair said. “But it's very unusual to see these numbers just continue to escalate.”
Overall, after taking away the increases for health insurance costs, a 2 percent increase to the municipal budget gives Steward $53,000 more than last year, Peteros said. Labor costs alone are expected to increase around $250,000, Steward said.
“That $53,000 goes pretty quickly,” Steward said. “I wouldn’t say it’s going to be impossible (to hit that guideline), but it’s going to be very difficult.”
If East Lyme decides to use Waterford’s new , the town could receive $100,000 in grants, Steward said. Beers also suggested fees on town services, like charging for trash pick-up.
But most likely, it will mean more attrition of town employees, Steward said. Last year, six retirements were not filled. This year there might be more of that, he said.
“It probably means I’m going to find two more (positions) that won’t be here anymore,” he said. “Or three.”
Meanwhile, Belair was not sure if he could hit a $44.2 million budget for next year. The district has to negotiate contracts with four unions along with a new transportation contract, and utility costs continue to rise, he said.