Tax rate rises to balance budget

Town Manager Bruce St. Denis’ suggested tax rate keeps rising.

St. Denis distributed a recommended budget for fiscal year 2010-11 that recommends a millage rate of 1.8872 mills to balance the budget, which is 10.7% higher than the tax rate of 1.7042 mills he suggested the Town Commission consider in June.

The town’s current tax rate is 1.5 mills and the higher millage rate, if adopted, would boost the tax rate 25.8%. One mill is equal to $1 for every $1,000 of assessed valuation.

In his budget memo dated Aug. 1, St. Denis explains that the budget, which is $1,075,772, or 8.17% higher than last year’s adopted budget, is balanced by using an adopted rollback rate of 1.6476 mills, an additional millage of 0.0503 mills to fund two reinstated police positions and an additional 0.1893 mills to fund $965,619 worth of additional pension costs.

If approved, it will be the town’s third consecutive millage increase.

The 1.8872 millage rate, St. Denis notes, is 0.0164 mills lower than the maximum millage rate of 1.9036 mills the commission set last month.

The commission, however, decided at its July 12 regular meeting that it would make a decision in September whether or not to fund the town pension costs with reserves or with an increase in the millage rate.

If the commission chooses to spend some of its $5.1 million in reserves to pay for almost $1 million in pension costs, the millage rate could fall to 1.6818 mills, which is 12.1% higher than the current tax rate of 1.5 mills.

The recommended budget was prepared based on a 9.3% island-wide reduction in property values.

St. Denis reports that the 8.17% increase in operating expenditures is driven primarily by the $965,619 in pension costs and $235,000 for additional police positions for a total of $1,200,619.

Employee health-insurance costs have also risen $54,300, for an 11.8% increase over last year’s insurance costs. To counteract the insurance costs, employees will pay more to keep their family members covered, which reduces the amount the town pays for premiums by $29,114.

St. Denis told the commission his staff has also identified approximately $104,000 in additional savings since the preliminary budget was presented in June.

By finding $104,000 in additional savings and increasing employee contributions for dependent coverage, St. Denis says the entire 11.8% health insurance increase will be covered, because additional revenues of $5,900 for next year were also found.

And the town’s building department reports expenditures that are $21,000 higher than its revenues. St. Denis hopes a building-fee study that will be presented to the commission in the fall will help reduce the $287,000 administrative fee that’s transferred to the department annually from the general fund.

The budget will be discussed on first reading and public hearing at the commission’s 7 p.m. regular meeting Monday, Sept. 13.

The budget will be adopted on second reading at a special meeting 5:01 p.m. Monday, Sept. 27.

Contact Kurt Schultheis at [email protected].

To download a PDF of the budget breakdown, click here.