BURRILLVILLE – Town Manager Michael Wood has created a fiscal plan that would make up for an expected loss of $727,000 in state aid to schools this year, without cuts to staffing or services. The average residential home, valued at $231,000, would see a tax increase of $157 under the proposal.
But Wood said that if the town continues to lose money at such a high rate in future years, it will take “drastic” action to keep things balanced.
“This is a big problem and this big problem cannot continue or we’re going to have some serious troubles going forward trying to balance budgets and keep taxes at a reasonable amount,” Wood said.
The state aid reduction is the result of a decrease in public school enrollment, partially due to a higher number of students attending charters. The town manager noted that officials will have to pay close attention to see if the trend will continue.
“We can’t absorb these kind of losses year to year,” Wood said. “The recommendations I made this year, they’re pretty much one time recommendations. If we have the same kind of problem next year, we’re going to have to take some drastic measures.”
Further complicating the town’s ability to make up the aid loss is the statewide phaseout program for taxes on motor vehicles. Vehicles across Rhode Island will be taxed at a fixed rate of $40 per thousand, and exemptions have increased from $1,250 to $2,000, an owner-friendly plan that will amount to around $44 in savings on the average vehicle. Losses for the town will be offset by state funding.
But Rhode Island also caps the amount that cities and towns can increase their levy at 4 percent, and state funding streams like the motor vehicle rebate are not included in the figure used, further hindering Burrillville’s ability to rely on ratepayers to make up for losses.
“We have no flexibility in any of this,” Wood said.
To negate the fiscal loss, Wood has recommended a decrease to the town’s overlay budget, a reserve account that typically covers unexpected shortfalls, of $350,000. Additional savings will be garnered from a reduction in the town’s debt service, to the tune of $364,000.
“We’ve been doing a lot over the years to make sure debt service is affordable,” Wood said. “That’s one of the important factors in being able to balance this budget.”
The budget plan was presented to the Town Council at a public hearing on Thursday, May 24. No members of the general public weighed in.
Wood noted that the budget plan is very close to the state-mandated cap in terms of rate increase.
“That’s the maximum you can raise unless you shift some things around, which I don’t recommend you do,” he said.
Wood’s $50,579,000 budget proposal would see the town spending a total of $61,461 more than last year.
It would see the municipal budget increased by $234,000 for a total of $11,234,000.
The School Department would receive an $807,000 increase for a total budget of $33,307,000.
The capital budget, which was already approved by the Town Council, has been set at $3,309,000 this year, but Wood said he plans to recommend that the town shift some of that money back to the operating budget.
The budget would see no staffing reductions, except for a half time position in public works.
“We have a vacancy and I’m holding off funding the vacancy until the fall,” Woods said.
The council will hold a second public hearing, on the school portion of the budget, on Thursday, May 31, starting at 7 p.m. The board is scheduled to vote on the fiscal plan at their regular meeting on Wednesday, June 13.
In all, he noted, the town can get through it without too many major changes – at least this time.
“You can’t be losing that kind of money year to year and still maintain the programs and the progress you have in your school district,” said Wood.
“This budget problem is as bad or worse than the one we experienced when the revenue is the state’s economy was falling apart,” he added. “Something like this can happen to any city or town in Rhode Island.”