Windsor's 2012 Budget is a Guessing Game

Finding ways to mitigate rising costs and compensate for an anticipated decrease in state aid are just some of the issues that the Town Council’s finance committee must deal with during this year’s budget deliberations.

Tuesday night the committee met to discuss the best way to prepare the 2011-12 budget, which as it is currently proposed is about 1.5 percent more than the current year’s budget. The difference may appear slight, but it translates to a 4.18 percent increase in taxes.

The increase is largely attributed to a portion of Gov. Dannel P. Malloy's decision to eliminate the tax on manufacture machinery and equipment, according to Town Manager Peter Souza.

The state has traditionally taxed manufacturers and sent 70 percent to 80 percent of the taxes collected back to the towns in which the companies are located, Souza said.

In the current fiscal year, Windsor is to receive about $1.3 million from the machinery and equipment tax program. That is a large sum of money that town officials must figure out how to make up for in 2011-12, at the same time as decrease the projected 4.18 percent tax increase for the next fiscal year.

Malloy has included several options for towns to make up for the loss in his budget proposal, including a continuing to collect real estate conveyance taxes, impose a new "bed tax" for hotels and other local guest accommodations and sharing of retail sales taxes, Souza said

The conveyance tax could generate roughly $140,000 for the town, while the bed tax could provide an estimated $246,000 in additional revenue. If you add the retail sales tax, which would give towns 10 percent of all in-town sales, or an estimated $108,000 in revenue, to the list, all three could reduce the tax increase to 3.52 percent.

The question remains, though, whether Malloy's proposed revenue streams will be adopted by the general assembly.

Until then, Windsor's town officials must deal with a perennial problem for nearly all municipalities: approve a budget before knowing for certain how much revenue will be coming from the state.

Every little bit of revenue will count next year because town officials expect a total loss of about $1.7 million in non-tax generated funding.

That loss includes the $1.3 million from the manufacturing and machinery exemption, a $143,000 decrease in school state aid for transportation, adult education, and blind and handicapped education and a loss of $375,000 from a state telecommunications grant.

However, town officials are expecting an increase in some revenue streams. There could be a $55,000 increase in conveyance fees and $45,000 in town planning and zoning fees.

Yet, water and sewage management costs will increase by $220,000, along with rising costs associated with pension and retirement, salary and wages, and liability and workers compensation.

In hopes of reducing how much the town pays for insurance, town officials are making an effort to mitigate rising costs on a local level by self-funding health insurance, saving nearly $400,000, making changes to pension and merit pay and reducing funds for pavement management by $183,000. The committee also eliminated funding for one police officer.

The budget will be presented to the Town Council on March 29, one night before the final budget workshop for Windsor residents. A public hearing is scheduled for April 4, and the town council will adopt the budget on April 27. A referendum is tentatively set for May 10.