Passero recommends 4.48% Mill Rate Reduction for New London in 2020-21 Budget Presentation

NEW LONDON — Mayor Michael Passero’s budget recommendation for fiscal year 2020-21 calls for a 4.48 percent decrease in the city’s property tax rates, made possible by growth in overall taxable property and the retirement of some city debt. Passero presented his budget recommendation to the City Council by teleconference Wednesday night.

“Despite the remarkable improvement in the City’s fiscal health over the past few years, this budget reflects a continued emphasis on lean spending to minimize year-to-year growth in expenses,” Passero wrote in his budget message to the council. “This philosophy has allowed us to continue the goal of walking back the mil rate while maintaining the city’s economic expansion and enhanced quality of life initiatives.”

This is the fifth annual budget that Passero has presented as mayor, and he said that each of those year’s has seen an increase in the town’s reserves, a decrease in its mill rate, or both.

Passero’s overall recommended expenses for 2020-21 amounts to $94.93 million, a 1.48 percent increase over the current 2019-20 fiscal year’s budget of $93.55 million.

Passero proposed for 2020-21 a mill rate of 38.19, meaning property owners would pay the city $38.19 for each $1,000 of the taxable property that they own in New London. This is a decrease of 4.48 percent from the current fiscal year, in which the mill rate is set at 39.90.

The city’s grand list — the total of all taxable property in town — grew by 2.85 percent, or about $41.3 million, in the year before its most recent reassessment. The value of property increased from $1.450 billion in October 2018 to $1.492 billion in October 2019. This expanded tax base allows the city to collect more in tax revenue while taking a lower rate from individual property owners.

Another “big factor” in allowing the mill rate to decline, according to a presentation by Town Finance Director David McBride, is that the city “retired about $800,000 of debt this year. That’s an $800,000 savings.”

He said that interest rates currently being “extremely low” will also help with the city’s debt services in coming years.

Passero and McBride did not speak in detail about the effect of the coronavirus pandemic on the city budget at this meeting. Passero acknowledged that social distancing had increased the logistical difficulty of compiling the actual budget, but he included an optimistic message in his budget document.

“This budget is largely the product of economic conditions that existed prior to unprecedented and still emergent consequences of the global Novel Coronavirus pandemic on our country, our state, and our city,” Passero wrote in his budget message. “As of today, we have not experienced any significant financial impact from the coronavirus crisis, and we hope any negative impact is short term and can be rectified during the upcoming fiscal year. However, if this pandemic results in unanticipated losses in revenue, be assured that all appropriate measures will be taken to mitigate any potential financial ramifications to the City.”

McBride said similarly during his presentation, “Some things will change as a result of the pandemic that’s happening, but we feel this is a good budget to go forward with for the city, and we’re very comfortable with it.”

What’s in the budget

New London’s education budget makes up $44.22 million of Passero’s overall budget recommendation. The general government budget consists of the other $50.71 million. The school budget represents a 1.47 percent increase from 2019-20, and the general government budget would increase by 1.49 percent.

As explained by McBride, the most significant increases in the government budget are mostly tied to salary and fringe benefits — in particular, healthcare and retirement — for employees.

The police department, which McBride said has about 90 employees, would have its budget increased by about 6 percent, or $702,000, from $11,566,000 in 2019-20 to $12,268,500 in 2020-21. About $407,000 of that increase accounts for health care costs and about $220,000 for salaries, according to McBride.

The fire department would receive a $320,000 increase related to salary and health insurance, and the public works department would see an increase of $479,000 related to payroll, supplies and maintenance, McBride said. 

The finance department would see a decrease of $227,000 by reducing some unfilled positions for an accountant and an IT technician, according to McBridge’s presentation.

To gather about $94.93 million in revenues for 2020-21, the biggest source of revenue for the New London is taxes on real estate — estimated at $36.45 million. The second biggest source of income is intergovernmental revenue, which is estimated at $31.38 million.

The biggest source of governmental revenue is New London’s education cost sharing (ECS) income from the state, which McBride said is expected to be $22.48 million in 2020-21. ECS funding won’t change significantly between the current year and 2020-21, McBride said, but he did say that New London has seen an overall drop of state aid by about 1 percent per year over the last decade.

The meeting Wednesday night was brief, about 45 minutes, of which the majority was McBride’s presentation.

The City Council will be reviewing the budget and meeting with city government department heads over the coming weeks. The next scheduled teleconference meeting is Tuesday, April 7. Information on how the public can view the meeting will be posted onto the city’s website.

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