CHARLESTOWN — The Budget Commission has completed the preparation of the town’s fiscal year 2021 budget. The spending plan contains good news for taxpayers, but also makes provisions for the rapidly-evolving COVID-19 pandemic, which has already begun to impact the town.
The proposed spending plan is $30.5 million, a $2.4 million, or 8.8%, increase over the current budget. The town’s contribution to the Chariho schools budget will be $13.3 million, a slight 0.06% decrease from the current budget.
The property tax rate will drop by nearly one dollar, from the current $9.23 per $1,000 valuation to about $8.20. The reduction is due in part to an increase in the grand list resulting from the Dec. 2019 revaluation.
Commission chairman Richard Sartor explained that since the budget workshops began in January, the town’s financial position has been impacted not only by the increase in the grand list but also the COVID-19 pandemic. The commission’s response has been to combine relief for taxpayers with budget allocations which will reduce the town’s liabilities in the future.
“We looked back at what had happened,” Sartor said. “We projected things into the future that we have not done before and made a determination that we had sufficient funds that could be transferred into the budget that would reduce debt and reduce future liabilities.”
The town is transferring a significant amount, $3.38 million, to the budget from the unassigned fund balance, a measure which, in addition to the grand list, will contribute to the reduction in the property tax rate. The fund balance was about 30% at the start of the budget process and will now be 25%, the maximum recommended by the town's auditor.
“There are several elements there,” Sartor said. “With the pandemic, reduce the taxes, which is a valuable effort. We’re fiscally fortunate enough that we had resources available that could be brought in. The budget philosophy and approach has changed since we’ve gone through this winter and all the things that have been happening.”
Town Council President Virginia Lee said the proposed budget addresses several issues, not the least of which is the financial impact of the pandemic, which may require the allocation of additional fund balance money.
“Paying down our debt, reducing the taxes and keeping the unexpended fund balance at about 25% as the auditors have recommended,” she said. “We can see we’re going to need it [the fund balance] now. We’re going to have enormous overtime issues by the police - we’ll see how it goes, but maybe town staff as well.”
The new budget includes a payment of more than $500,000 for a land purchase by the town, eliminating the need to go out to bond.
The commission has also recommended that town contribute more to the police pension fund.
“We’re making a recommendation that $1 million be contributed to the pension fund that the state maintains and that will reduce our actuarial liability and our future contributions as well,” Sartor said. “We are also paying down a number of lease purchases and other activities that have taken place in the past so that will reduce future principal and income payments.”
The budget commission has tried to mitigate the financial impact of the pandemic on Charlestown residents and businesses, Sartor said.
“We know a number of our residents are affected economically as is everyone else in our world and essentially we are working to try and mitigate that as best we can,” he said. “One of the largest expenditures in the budget is the contribution to the pension fund to reduce the amortization of expenses in the future, which will save us money - a lot of money. But we made the recommendation that the treasurer not take that action until later in the fiscal year to determine if any expensive costs or needs arise because of the pandemic that we’re not now aware of. We’re trying to provide a little bit of breathing room within the budget.”
Among the other recommendations in the budget, Lee pointed to a request from the Town Council to the Government Finance Officers Association, which represents public finance officials throughout the United States and Canada, to evaluate the town’s current fund balance policy.
“We’ve got a fund to get the GFOA, the federal pros on accounting, to do an analysis and help us get an appropriate fund balance for the town of Charlestown, because we have such huge risk,” Lee said, noting that the town’s revenues will also be impacted by the pandemic.
“It’s very difficult, for example, to look at things like recreation revenues, which are fairly substantial, and beaches, and make a prediction as to what’s going to occur, so we needed to provide some opportunity to adjust if they need to mid-course,” she said.
Charlestown relies heavily on a healthy coastal environment, and the commission has also recommended that the council establish a committee to look at climate change resilience, adaptation and mitigation.
“Clearly, we are not going to solve the world’s climate problem, but we believe that a committee focusing on that, on Charlestown’s specific concerns, could work with federal, state, local and other agencies to make mitigation plans that would help to preserve Charlestown’s quality of life,” Sartor said.
The commission also recommends the establishment of a new environmental resiliency and mitigation fund to study and implement the measures recommended by the climate change committee.
Other large expenditures are $250,000 for the development of a new, more efficient waste water treatment system prototype, $200,000 for the renovation of the Ninigret Park tennis courts, and $400,000 for the renovation of the animal shelter.
The council will receive the proposed budget at the April 13 council meeting. The public budget hearing is scheduled for May 4 and the council will adopt the budget on May 11. The financial referendum will take place on June 1. Meeting dates and formats are subject to change, depending on the progression and status of the coronavirus.