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SOUTH KINGSTOWN â€“ At Monday nightâ€™s initial budget hearing between the town council and school committee, Town Manager Stephen Alfred painted a landscape where the town must prepare its proposed $74 million budget for FY 2012-2013 in a state facing an uphill battle.
According to Alfred, Rhode Island is lagging behind other states in its economic recovery after the 2008 recession. This year, the state will likely lose aid from federal programs due to the federal budget reduction mandates and continues to experience losses in taxable property value.
Yet, while Alfred lamented the dire forecasts for the state, fortunes seem better in South Kingstown, where a report from Moodyâ€™s Investors Service released Monday found that the town has the highest bond rating in the state along with East Greenwich and Barrington. Alfred said South Kingstown continues to reduce its bonded indebtedness with debt services reductions scheduled through FY 2014.
Alfred also reported that the town has maintained a $9.3 million or 12.7 percent undesignated fund balance in the general fund and $2.1 million in the school fund.
While the state adopted the new Rhode Island Retirement Security Act of 2011 to reduce its 48 percent funded pension system, the town has less than a nine percent unfunded liability. Part of the MERS system, South Kingstown does not have a private pension plan and will not be affected by any municipal pension system proposed to the General Assembly in January. On the school side, the district projects to contribute 12.08 percent for certified teachers and 11.41 percent for non-certified teachers.
Though the school district expects a reduction in the state funding formula with a loss of its group home aid and jobs fund money and the town expects to lose portions of its investment income, Alfred said the town is not going to lose additional state aid from its municipal budget. Last year the town received $2.4 million in state aid, while the school system received $8.8 million.
For FY 2012-2013, the town expects a $74.2 million budget, a 1.18 percent increase over the current year or $864,550. The school share makes up 69.4 percent of the proposed budget or $51.5 million.
In the budget, Alfred used a two percent property tax as the starting point in developing the budget. Town Councilman Jim Oâ€™Neill, however, argued that a zero percent property tax should have been used, claiming that the budget foretells a burden on the taxpayers.
From the total of $66.1 million taxes levied this year, Alfred said 81.77 percent came from taxes on residential properties.
â€śWhen we look at the burden of increases, a profound impact is on the homeowner,â€ť Alfred said.
The property tax levy will increase by $902,558 or 1.37 percent for the 2012-2013 year. The tax distribution last year was $14.51, while for next year it will be $14.70, an increase of $0.19. The total property tax levy will be $63.8 million.
At zero percent property tax transfer, the school district will need to cut staff and programs by $1.2 million. At a two percent property tax transfer, the school district would have to cut $284,000. A four percent property tax transfer, on the other hand would give the school district a $679,000 surplus.
The property tax is restricted by a 2006 state law that reduces the percentage increase a city or town may increase property taxes over the previous year. Alfred said the town has made efforts to reduce its reliance on the tax roll. Since 2006, the property tax levy increases have bordered on one percent. In FY 2006-2007, the property tax levy cap was 5.50 percent, while in FY 2011-2012, it was 4.25 percent. The current property tax rate is $14.51.
The total taxable property roll will increase by $5 million or 0.11 percent, yielding $78,000 for the 2012-2013 year.
The motor vehicle tax roll could increase by $182,800. Alfred, however, cited that this could change at the state level if legislation is introduced to change the assessment practice. If the motor vehicle tax is reduced, this will require the town to reduce the levy or increase the real estate tax. Alfred said the townâ€™s rate could change if the state tries to unify the 39 different rates used in cities and towns across the state.
Despite these considerations, the town will maintain a motor vehicle tax exemption of $3,000 per vehicle. The state will also maintain the motor vehicle reimbursement program at $500 per vehicle.
The town has also budgeted $1,867,000 for its Capital Budget Program, an increase of $151,000 from the current year.
On the school side, the town proposed a school program of $51.5 million for 2012-2013, an increase of $446,447 over the current budget. Superintendent of Schools Dr. Kristen Stringfellow reported that the district anticipates a loss of ARRA federal funds as with the current year and federal grants remain unknown. Capital projects for the district amounted to $290,000 for the current year. Last year, $170,000 was budgeted for capital projects.
Costs per student in South Kingstown in FY 2010 amounted to $17,349, the middle range across the state.
Stringfellow also described the $200,000 in savings the school district will see in the 2012 school year when Plan 29 is implemented. Last year, the school committee adopted Plan 29, in which the Reconfiguration Committee recommended taking 120 students from the largest elementary school, Peace Dale and redistricting students so that the four elementary schools, Peace Dale, Wakefield, Matunuck and West Kingston are equal. With the opened up space at Peace Dale, the committee also recommended moving the pre-school program from the Hazard building next to the high school to Peace Dale.
Though Oâ€™Neill continued to disagree with Plan 29, suggesting to close Curtis Corner Middle School, Stringfellow explained that the committee analyzed the economies of scale in consolidating a school. These included whether savings were made through reductions in leadership, office staff, smaller classrooms and split classrooms and travel time.
The next budget meeting will be a Capital Improvement Program work session on Jan 4 and Jan. 5, 2012 at 6:30 p.m..