Monday, June 04, 2012

A Small Town and a Perfect (Budget) Storm

There's trouble in Hebron, Connecticut. That's Trouble with a Capital T which rhymes with B which stands for Budgets.

Hebron, a bucolic town of less than 9,000 people is in the middle of a perfect financial storm – created by a lousy economy, plummeting school enrollments offset by increasing costs for schools and government, interference from the state that limits local options, a just completed property revaluation that drove the Grand List of Taxable Properties down, and a massive reliance on homeowners rather than business or industry to fund local government expenditures.

In fact, Hebron has such a minuscule industrial/commercial tax base that more than 90 percent of local tax revenues come from home values – which plummeted in the recent revaluation as a result of the ongoing housing crisis. Thus to make up for the decrease in the Grand List on which local tax rates are based, projected taxes are going way UP for a large number of Hebron homeowners.

(In the interest of full disclosure, my local taxes, if the current budget proposal passes, will increase by about 10 percent. To put this in perspective, I already pay more each month for property taxes and insurance than I paid for a full year back in 1985 when I built my home. In the last quarter century I have not seen an iota of an increase in local services while the cost has skyrocketed! More than 70 percent of our expenditures go to the schools and most of those budgets go to salaries for teachers and administrators.)

Voters will be heading to the polls again tomorrow, June 5, 2012 for the third round of voting on the annual budget. In the first of two previous votes the municipal budget and elementary school budgets were defeated as was the Capital Improvement Budget and the regional high school/middle school budget. In Round Two the high school/middle school budget made it thorough – primarily because voters in the two other towns that comprise the region came out in sufficient numbers to vote yes – and Hebron's reduced Capital Improvement Budget squeaked through.

But the municipal and elementary school budgets in Hebron were defeated handily. These budgets are voted on as one package, despite a strong preference for bifurcation – budgets voted on individually – and when one goes down, they both go down.

Taxpayers are angry with the municipal government budget because even though we paid off a major debt last year – $688,000 - the current proposal still went UP! And even though local officials are touting more than $500,000 in reductions to the proposed budget increases - according to the local paper - it still is more than last year's spending when you factor in the savings realized by not having a $688,000 debt payment this year.

(UPDATE: I received a somewhat terse email from the Chairman of the Hebron Board of Selectmen after this article was first posted, telling me to get my facts straight on the budget reductions. Something to do with the Regional school budget and the local school budget and the right hand doing this while the left hand was doing that. OK, here it is.

According to the budget overview posted as a legal notice in our local weekly newspaper there are four one-time expenditures in the current budget that are not repeated in the proposed budget. The current municipal budget of $8,929,714 includes a debt service expenditure of $688,114 which is not repeated this year. So to make an apples to apples comparison we have to start with a proposed municipal budget of $8,241,600. After reductions the current municipal budget proposal is $8,168,684 which I think we can all agree is lower than $8,241,600.

HOWEVER - and there always is a HOWEVER. The current budget total also included $364,917 in one time "supplemental appropriations" that are not included in the proposed budget. As it stands now the Regional high school/middle school budget, which passed, is up just shy of $400,000; the proposed elementary school budget is up more than $100,000 despite various claims to the contrary in the papers, and the total we're being asked to approve is only $560,694 shy of the current total of the two school budgets and one municipal budget which is less than $688,000 and a lot less when you add in the additional $364,917 in supplemental appropriations. Did you get that?

Fine, that is what voters will be sorting through tomorrow. Who knows, maybe it will pass. But if it does, our tax rate will increase by 10 percent! In one year! In the middle of the worst economy since the Great Depression!End of UPDATE!

Meanwhile, Hebron's education community - the local BOE - also is in the midst of a heated discussion with the BOS and the BOF on the value of ADK which supporters say is necessary due to more rigorous CCSS, and also is complicated by the MBR which was sneaked through the Legislature in 2005 without so much as a peep from our now very vocal local leaders.

(OK, I did that on purpose. Everyone who has ever sat through a Board of Education BOE meeting knows you can't be cool and in the know without a major command of acronyms. They change every year too, so school board members can be smug in their self-assurance that they can talk in code while the attending members of the public are scrambling to find out what this year's crop of acronyms means.)

BOS in my town is Board of Selectmen, the ruling municipal body, and the BOF is the Board of Finance. On the education side, ADK is All Day Kindergarten. CCSS is Core Curriculum State Standards – which supposedly have made it harder to be an elementary school student in Connecticut so everyone now has to send their kids to school all day long from the get go.

Personally I see it as just another attempt to diminish the importance of the American family and I don't like it. And I have read that the "benefits" of putting four- and five-year-old children in school all day generally don't continue past grade three where everyone seems to emerge basically on the same level.

But I have friends who do have a child in ADK and I not only like them, hence the word "friends," I know them to be hard-working, concerned parents who want the best for their children and don't want them falling behind their peers. If they want their students in ADK, that is their choice as parents and I support them.

But the real issue isn't ADK or CCSS. It is the MBR which is tied to ECS. MBR is Minimum Budget Requirement and ECS is Education Cost Sharing. Most if not all towns in Connecticut receive part of their education funding from the state – ECS.

The state ties those funds in a nice bundle with a requirement that if the local education budget as passed by taxpayers is less than the previous year's budget the town will be penalized by a loss in ECS funds - hence the Minimum Budget Requirement.

From the State of Connecticut website: Under the MBR currently in effect, towns must maintain a budgeted appropriation for education at least equal to the amount they budgeted for FY 09 … . The effect of the current MBR is to prohibit towns from reducing education budgets in FY 10 and FY 11 below their FY 09 levels. By law, the penalty for failing to meet the MBR is a reduction in the town's ECS grant for the subsequent fiscal year equal to twice the amount of the shortfall.

So if last year your town spent $1 million on education and this year you budget only $900,000 due to declining enrollments and less personnel costs, the state will take an additional $200,000 away from your Board of Education. If you persist in your efforts to decrease your budget you will have to come up with another $200k in local funding because the state is going to make sure you don’t lay off any teachers or administrators.

In defense of teachers and administrators, I have counted several in both occupations as friends over the years and I even have some in my family. I like them, and have tremendous respect for their profession – especially since I spent several years teaching and advising at the high school and university levels. But most of the people I know in the education profession would never agree to manipulate the system the way we are seeing today.

So what does this come down to for the average voter tomorrow? We will be faced with a Sophie's Choice – vote for the budget to help our friends with children in the school system, or vote against the budget and help keep our own costs in check. Frankly, we never should have been put in this position.

For all the screaming I saw in the letters section of local papers last week from town officials saying we have to pass the budget or the sky will fall, I can't help but wonder why there were no similar efforts to communicate with the voters when the Legislature passed the MBR in 2005 – or changed it several times in the years since.

And I can't help but remember that many of the people now serving on various boards and commissions in our town got a lot of help from me in years past through my political strategy and communications work when they were seeking election. Or that I consider them to be friends. But with friends like these …


Anonymous said...

I posted yesterday and it never made it through (I guess). Loved the perfect storm article. Passed a printed copy to my friends. Would you consider blogging on the source of state grant money and state funding? Residents think of it as FREE money from the heavens and not from our tax dollars paid to either the state or the federal government. The Education Cost Sharing (ECS) funds is brought up time and time again. Thanks!

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