Flatto Forecasts Tax Increases From 2.7% to 3.6% After Next Fiscal Year

Most homeowners won't see a tax increase in the fiscal year that starts July 1 - even though the proposed 2011-12 town budget increases by $12.5 million - because the assessed value of their homes dropped by at least 14 percent in the recent townwide revaluation.

But revaluations only take place every five years, and First Selectman Ken Flatto is projecting annual tax increases of 3.2 percent in fiscal year 2012-13, 3.6 percent in 2013-14 and 2.7 percent in 2014-15 in a financial plan reviewed Tuesday night by the town's Board of Finance.

"I don't think we can keep taxes much lower than 2 percent or 3 percent. Three percent looks more likely," Flatto said. "No one likes to hear taxes will go up.
That's a given in life...but I think having a rate of change that has been traditionally not that different from a reasonable rate of inflation; this assumes inflation will start creeping up."

"I would like the tax increase to be lower than this if we can achieve it, but this is a plan that is supposed to have reasonable expectations," Flatto added.

The tax increase proposed for the next fiscal year is 5 percent when overall tax revenue of $226.9 million is compared to $238.2 million in tax revenue needed to finance the proposed 2011-12 town budget. But homeowners will see varying tax increases or decreases depending on how much the assessed value of their property increased or decreased in the revaluation.

Flatto said he made assumptions in preparing his financial plan regarding increases in townside and Board of Education budgets, state grants, income from interest on investments and growth in the town's grand list from economic developments and new home construction.

"The assumptions there, one could say, are a little bit rosy. I would say they are attainable," Flatto said.

Flatto's recommended $264 million town budget in 2011-12, which rises 5 percent from the current $251.5 million town budget, would increase to $274.3 million in 2012-13, $284.5 million in 2013-14 and $292.3 million in 2014-15, according to his financial plan.

The Board of Education's proposed budget in 2011-12, as recommended by Flatto, increases 3.7 percent. Flatto projects that increase in the following three fiscal years to be 3.1 percent, 3.2 percent and 2.4 percent.

"I have no doubt in my mind and my belief that there is an ebbing in student population," Flatto said, adding that he believed MGT of America's report indicating otherwise was "totally flawed" and there would be "much less likelihood of need for new staff than need for less staff" and that an operational audit of the Board of Education's budget that identified nearly $5 million in potential savings had given the school district "a lot of food for thought."

The proposed townside operating budget in 2011-12, as recommended by Flatto, increases 4.2 percent. Flatto projects that increase in the following three fiscal years at 2.6 percent, 2.8 percent and 2.8 percent.

Flatto said an operational audit of the townside operating budget had shown staffing levels to be "quite lean, if not too lean."

Annual debt service in 2011-12 would rise 4.6 percent. Flatto predicts it will rise by 6.8 percent in 2012-13 and 3.4 percent in 2013-14 before dropping by 0.4 percent in 2014-15.

Lastly, post-retirement benefits for town employees, which rise 33.7 percent on the townside in 2011-12, are projected by Flatto to rise in the following three fiscal years by 17.1 percent, 16.9 percent and 10.9 percent. This category includes pension funds for town employees, police officers and firefighters and health insurance for retired employees.

Flatto said he projected a cut of $500,000 in Hooker & Holcombe Inc.'s annual required contributions into the pension funds due to growth in the funds from a higher rate of return. Hooker & Holcombe assumed an 8 percent rate of return. Flatto said some of the pension costs weren't reflected in his financial plan because they would be in Board of Education budgets.

Flatto said his financial plan is only a guidepost and that town budgets are prepared and reviewed on an annual basis. He said members of town boards that vote on town budgets - the Board of Selectmen, Board of Finance and Representative Town Meeting - would change in the future and public needs may change as well.