Bd. of Finance Explores Possible FY’24 Budget Scenario with 4% Mill Rate Increase

photo: Town of Wilton Zoom recording, Nov. 15, 2022

Though the FY2024 budget planning process will not begin in earnest until early 2023, the Board of Finance (BOF) is already examining potential budget and mill rate scenarios that could impact Wilton taxpayers.

The Board of Selectmen (BOS) and the Board of Education (BOE) — whose respective budgets represent the two key components of the overall Town budget — have both been warning the BOF that higher-than-usual budget increases are a distinct possibility in the next round of budget planning.

As a result, the BOF is anticipating that its work on behalf of Wilton taxpayers could be very challenging in the coming months. In addition to trying to gain an early understanding of how the FY2024 budgets might be shaping up, the BOF is even reexamining its own internal meeting procedures to ensure upcoming budget deliberations go smoothly.

But First, Some GOOD News

As reported to the BOS on Nov. 7, First Selectwoman Lynne Vanderslice informed the BOF of favorable FY2022 budget results.

On the revenue side, Vanderslice reported FY2022 revenues were higher than planned by $923,000. Revenues were driven by higher-than-expected conveyance fees ($692,000) and building permit fees ($234,000).

“That’s good news for [FY]2022 but also good news for [FY]2023,” Vanderslice told the BOF.

That’s because those higher revenues go to the Town’s Excess Fund balance, which can be used to help minimize mill rate increases. Vanderslice estimated $652,000 would be available to reduce FY2023 taxes and $271,000 to reduce FY2024 taxes.

The BOS FY2022 budget was also favorable in terms of operating costs, which came in $760,000 under budget. Those savings will be moved to the Town’s Infrastructure Improvement Fund.

Key Assumptions in Mill Rate Discussion

In a discussion led by board member Matt Raimondi, the BOF reviewed budget and mill rate scenarios that could emerge in the upcoming budget process. (The spreadsheet model used as the basis for the discussion can be found on the Town website.)

For the purposes of the discussion, the following annual growth assumptions were factored in:

  • BOS budget growth of 2% — a higher annual increase than FY2022 (1.7%) and FY2023 (1.4%)
  • BOE budget growth of 3% — also a higher annual increase than FY2023 (2.2%) but in line with the budget increase in FY2022 (3%)
  • Grand List growth of 1% for FY2024 and 1.25% for FY2025‐2026 — which Vanderslice says are higher than historical increases (averaging around 0.7% annually) and will eventually reflect expansion by ASML and commercial development projects such as 141 Danbury Rd.

While the BOS and BOE have yet to provide a clear indication of what their proposed FY’24 budget numbers might be, the estimates used in Raimondi’s model hardy seem farfetched given past budgets, recent budget developments, and expected “headwinds,” namely inflation.

Another Key Assumption: Debt Service Increase

Debt service costs, which had declined by 2.2% from FY2022 to FY2023, are expected to begin climbing in FY2024. Vanderslice advised the BOF in July to expect this critical change, but she has also emphasized that Wilton’s overall level of debt will still be in line with historical levels.

Compared to approximately $9,025,000 in debt service cost for FY2023, the debt service is expected to increase to roughly $9.7 million in FY2024; $10.8 million in FY2025; and $11.5 in FY2026.

Resulting Mill Rate

In the scenario presented at the Nov. 15 meeting, the mill rate would grow by 4% in FY2024. That’s in contrast to the 1.3% mill rate increase in the approved budget for FY2023 and 1.5% in FY2022.

“I think we should discuss this,” Raimondi said. “A 4% mill rate increase seems like a lot. We should make sure we’re all comfortable with what the assumptions are, and what the expectations could be on [the BOF] going into the budget negotiations next year.”

Rich Santosky questioned Vanderslice on the Grand List, which grew by roughly $57 million and $62 million per year, respectively, in FY2022 and FY2023, compared to the model’s projection of $44 million for FY2024.

“Aren’t we in a period of unprecedented building and growth compared to two years ago?” he asked.

Vanderslice responded that a significant portion of the recent Grand List growth was due to motor vehicles, which will not be assessed in the same way going forward and are likely to decrease. In addition, commercial development getting underway now will not fully impact the Grand list until work is completed.

Santosky also expressed a desire to fine-tune the mill rate scenario with more insight and precision on the BOE budget estimate, and avoid the last-minute wrangling that occurred in the previous school budget review process.

Stewart Koenigsberg agreed.

“I think we should invite [Wilton Public Schools Superintendent] Kevin Smith back for our next discussion,” Koenigsberg said. “By that time, we will have some results from the union negotiations, and more direction, [including data on] school population change. That might be a beneficial exercise. They can give us a range of what they’re thinking.”

BOF Chair Michael Kaelin thanked Vanderslice for her guidance and Raimondi for putting the mill rate projections together.

“Even though we don’t know where the [budget] is going to come in at, we do know that if there’s a 3% increase in the BOE budget and a 2% increase in the BOS budget, we’re going to have a 4% increase in the mill rate,” he said. “That will help us when we do see their budgets.”

Internal Procedure

The BOF seems to be taking steps to keep its own house in order as the FY2024 budget process approaches.

“Internal Governance and Rules of Procedure” were on the agenda at the Nov. 15 meeting.

Kaelin expressed a desire for board members to come to an express agreement on procedural matters such as “who gets to talk when, and what they get to talk about.”

“We’re a six-member board. We’re all supposed to have an equal vote and equal say,” Kaelin said. “But as we saw last spring, there were fierce conflicts, people talking over each other. That’s what we can’t have. That’s what we have to avoid.”

While Kaelin would prefer to conduct meetings with simple rules, he believes the board should recognize the authority to enforce agreed-upon procedural rules during meetings.

After some discussion as to whether previous internal conflicts were “isolated incidents” or justified the need for tighter rules, the board eventually voted (with Sandy Arkell abstaining) to review Roberts Rules for small boards and draft some proposed rules, to be discussed at the next meeting.

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