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NARRAGANSETTâ€”Town Manager Grady Miller presented the proposed FY 2012-13 operating and capital budget on Monday evening to the Town Council, highlighting a number of expenses and potential challenges, including Other Post Employment Benefits (OPEB) costs and funding new capital projects. Monday night was the first of two public hearings on the town budget, and the Town Council will hold workshops throughout this week to address their concerns, which are open to the public.
â€śI am very pleased, and Finance Director [Donald Goodrich], the department heads and myself did a super job of sharpening our pencils,â€ť said Miller. â€śWe are submitting not only a balanced budget, but one which provides for the communityâ€™s needs.â€ť
The proposed budget totals $51,411,681 for operating and capital expenses, an increase of $803,432 from the current fiscal budget. Annual debt obligations, both from general obligations bonds issued by the town and $21.5 million in school bonds approved by voters in 2009, are estimated at $2,219,278 for FY 2012-13.
The largest revenues supporting the budget will be provided from current property tax levies, which totals $45,096,207 of the total proposed budget. Goodrich had informed the Town Council at the March 19 regular meeting that property values are down by nine percent from FY2011-12 based upon Vision Appraisalsâ€™ calculations.
â€śBased on the anticipated drop in property values, it will have a corresponding increase in property tax rates in order to maintain the same levy collected in FY 2012,â€ť read Millerâ€™s introductory letter on the budget. â€śThe revaluation will impact the budgeting process because the grand list of assessed valuations is currently only estimated, so any budgetary increases or reductions will have an impact on estimated property tax rates rather than actual property tax rates until May.â€ť
The proposed residential rate is $10.14 per thousand of assessed valuation, or a home valued at $364,000 will cost $3,691 annually in property tax, an increase of $103. The proposed commercial rate is $15.20 per thousand of assessed valuation, or for a property valued at $364,000, the annual tax levy would total $5,532, an increase of $152 from FY2011-12.
Miller outlined a number of forces, both internally and externally, which will challenge and complicate the upcoming budget-making decisions.
â€śSome of the challenges we face include, for a third year, a loss of state aid, rising pension costs for retirees and employees, and new state mandates and legislation we need to watch out for,â€ť said Miller. â€śThere are no easy answers to implementing the difficult changes that are necessary in maintaining essential services.â€ť
Along with a decrease in property values, the town will take on increases in water and wastewater rates, 42 percent and 16 percent respectively.
â€śThe bad news with water rates is that weâ€™ve had increases over the past few years,â€ť said Miller. â€śIt was indicated that our water and wastewater rates are not fully covering the costs, so we are recommending these increases.â€ť
â€śThese are not easy to recommend as people are conscious of the economic times right now, but we are depleting our fund balance to pay for capital improvement projects which costs less money this way versus financing them,â€ť he added.
Rates for general liability and workers compensation will rise by approximately nine percent. Miller also stressed that pension and OPEB costs will impact the upcoming budget as significantly as it has in years past. While the town set aside $280,000 to cover pension and OPEB costs for FY2012, Miller recommended that $560,000 be allotted for contributions.
â€śThe Finance Committee, at the direction of the Council, has been having our town actuary, Nyhart, go through different scenarios and options on the townâ€™s pension plan,â€ť said Miller. â€śThey have been looking at writing different benefit levels, looking at everything from a pure 401-type plan to others, eliminating or reducing COLAs, and having a changed normal age of retirement, looking at working more years of service before retirement.â€ť
â€ś[Nyhart] has looked at OPEB and examples through this state and others for what we might do, and at some point they will be wrapping up for recommendations to the Town Council,â€ť he added. â€śThere definitely needs to be some dialogue between town employees, retirees, and the taxpayers.â€ť
A number of measures have been taken in the past year to help reduce costs. Energy improvements in town facilities through the ESCO project, for example, will save the town $1 million for the next 15 years. In November 2011, Narragansett also agreed to a four-year fixed price agreement for electricity prices through the Rhode Island Energy Aggregation Program (RIEAP), which is projected to save $37,800 for FY2012-13. Electricity prices will be 6.8 cents per kilowatt hour through the end of calendar year 2015.
Multi-year Collective Bargaining Agreements with town employees were also negotiated this year, removing a point of uncertainty from the current budget process. Miller highlighted a number of initiatives which the town hopes to undertake in FY2012-13, including continued work on implementing the Economic Development Plan. Miller has proposed making the current Economic Development Coordinator position a permanent one.
Lastly, the proposed budget includes a number of capital projects which have been discussed by various town departments and have received public input, including the street improvement program which has been vetted in recent weeks. The town hopes to allot $150,000 in FY 2013 for a study and possibly design project for the Public Safety Building in Narragansett, which contains both the police and fire departmentsâ€™ headquarters.
â€śSince the current facility needs considerable improvements to the interior and exterior spaces, the cost of reinvesting makes sense,â€ť read Millerâ€™s introductory letter. â€śThe projected cost of bringing the jail up to current standards, adding a sally port, a new HVAC system, and other major improvements, is approximately $1.45 million.â€ť
â€śRather than financing these improvements, I am recommending the one-time use of the General Fund balance,â€ť it continued. â€ś[This use] is appropriate because the proposed amount to be utilized is in excess of the townâ€™s General Fund reserve requirements of eight percent of the General Fund budget. As a facility that is used on a 24/7 basis, this is a major capital improvement program priority.â€ť
The Town Council will hold workshops on the budget on from April 24 through the 26, and the second public hearing will take place at the May 7 regular meeting. Final adoption of the budget is scheduled for June 4.