To the Editor:
A question increasingly being asked during our town’s budget deliberations pertains to how we can show specific details about what our decisions really come down to. The year-on-year percentage increase in the town’s mill rate has been referenced by the Board of Finance (BOF) as the main determinant of incremental tax burden and for comparisons in years without town grand list re-assessments (i.e not this year!), [and] there is merit to using the mill rate in this manner. That said, there are two main concerns that I and others have with being overly reliant on this metric, and for using it as the primary deciding factor in a potential survey the BOF wishes to deliver to the Town.
The first is that the mill rate effectively is a mathematical plug figure, relating the magnitude of property taxes that need to be raised to cover the Town’s operating requirements relative to the size of the grand list. The mill rate figure itself has no intrinsic value on its own. Some have argued that Wilton’s mill rate figure is already high relative to some neighbor towns (potentially suggesting that our town is more expensive to live in), and while this may be numerically true, this argument neglects the fact that some of our neighbor towns have homes assessed at values materially higher on average than those in Wilton. A resident in those towns may indeed pay a lower nominal mill rate multiplier, however when actually multiplied with a home value that is larger than that in Wilton, the out-of-pocket dollar spend may not actually be less, and may well be higher.
The second concern with the mill rate figure is that Wilton has just undergone a major re-assessment, and one specifically following the pandemic, when real estate pricing dynamics have significantly changed. It is unclear what the overall grand list will stand at when the results are fully known, and what share homeowners will have to bear relative to commercial properties. Adding to the uncertainty are new housing developments being built, which will soon grow our tax base. The mill rate will be an unknown and moving variable throughout this budget process until the final grand list is determined.
The BOF has published (as of Feb. 12, 2024) a mill rate projection spreadsheet on its public website using the latest available estimates (which as described above are very much subject to change). Using this spreadsheet, I ran a simple, two-variable scenario analysis, holding all budget items constant (e.g. Board of Selectmen expenses, debt service, reserves, etc.) other than home-assessed value and the Board of Education (BOE) budget ask. I varied different scenarios for 1) home-assessed values, and 2) the final approved BOE budget increase in percentage, ranging between 4% and the [current] school superintendent’s [proposed budget] ask of 5.6% increase. The BOF provided guidance during the Fall of 2023 on the mill rate increase at 4%, but it has not provided guidance specific to the BOE budget. I used 4% as the starting point for the low end of the increase of the BOE budget to roughly parallel the mill rate guidance, however please note this may not actually reflect the low end of the increase. Some in our town have argued that the BOE budget increase should in fact be less than 4%.
This analysis can give a homeowner a rough idea, based on where their home is assessed and where the budget increase for the Board of Education is set at, for what their incremental yearly (and monthly) spend would be in Fiscal Year 2025 vs 2024. The output of my simple spreadsheet-based analysis is below:
For example, in the last re-assessment in 2018, the town median home assessed value was just above $700,000. Finding the $700,000 value on the top row of the table, a homeowner could then look down the column below to see in simple dollar terms how much their property taxes could be expected to increase relative to Fiscal Year 2024 if the Board of Education increase was as little as 4% (in this case the increase would be $1,022 for the year), or as much as 5.6% (in this case the increase would be $1,246 for the year). When making the decision as to what increase to provide to the Board of Education, and what the incremental burden would be to the town, the spread between these two values is really the critical factor. In this example, for a homeowner with a home assessed at $700,000, the difference between increasing the Board of Education’s budget by 4%, and providing the full increase requested by the Board of Education (at 5.6%) is around $224 per year, or $19 per month if property taxes are held each month in escrow. Of course, if one’s home value was assessed at a substantially higher or lower value, this spread between the 4% increase and 5.6% ask will vary, and that is why several other scenarios for home values are shown in the table.
I must caveat that, in actuality, there are more moving dimensions to this question than my simple two-variable spreadsheet analysis above shows. The BOE budget increase could be set at less than 4%, which would increase the dollar outlay spread between that starting point and the 5.6% ask. Other town budgets, such as Board of Selectmen, will likely vary. But perhaps even more importantly, the aforementioned grand list change has the potential to change the proportion of tax burden between homeowners and commercial properties, which would affect these values as well. As such, one should take the table output above more as a ballpark thought exercise than a precise forecast of one’s incremental tax burden.
There will always be a subjective judgment call as to whether the dollar spreads shown in the table above are meaningful enough to warrant an intense debate over the level of funding provided to the BOE. It is my hope that any upcoming BOF survey includes something similar to the above analysis, translating the esoteric mill rate variable into more understandable dollar terms so that residents more clearly understand the choices they are making.
In the Feb. 8 joint BOE/BOF meeting, the BOF appropriately exercised its fiscal oversight duty, and came well prepared with an extensive list of questions for the superintendent on the existing budget, and the changes relative to past years. In my view, it was very clear that the superintendent was able to confidently respond to the questions posed to him, and that this confidence stemmed from the fact that the budget was well considered and well scrutinized for all reasonable cost savings. It was also clear that should the Board of Education not receive the budget request, that our children would be hurt by larger class sizes, fewer course offerings, and diminished extracurriculars.
During the meeting, a number of current students laid out heartfelt expressions of how the Town’s schools and extracurriculars contributed to both their academic and personal growth, and how the less-than-full funding of the prior year limited their experience. In spending the time to do the calculations explained above, I can’t help but wonder if, when we translate mill rates into real dollars, the differences we are debating about are insignificant enough as to be rendered moot? Everyone in the town should of course think this through relative to their own personal circumstances; however, for me, I can’t see any better place to invest my $20 a month than in the development of our town’s kids.
David Tatkow
Thanks for this. You’ve explained it exceptionally well!