Faced with dire budgetary predictions, officials are considering the option of dipping into the city’s rainy day fund next spring to keep property taxes from skyrocketing.
A “tidal wave of taxes” looms, city Comptroller Glenn Klocko said, unless the economy turns around.
This may be the time that fund balance is tapped into,” Klocko said.
The city is struggling to hold spending in check enough to prevent a deficit during this fiscal year, but the real crisis is likely to take hold next year when the state’s fiscal collapse could mean sharp cuts to the aid Bristol and other municipalities depend on.
With the state eyeing shortfalls that could top $6 billion over the next three years, the city is worried its finances could take it on the chin, too.
Klocko said that he “can’t see how we’re going to sustain” education funding the way things look now. “It’s scary,” he added.
Both Mayor Art Ward and Klocko said that Bristol is fortunate to have more than $17 million in its rainy day account, about 10 percent of its overall budget.
That money can perhaps be tapped somewhat to lessen the mill rate increase that appears likely next year simply to preserve existing school and municipal services, officials said.
As city departments begin to look at possible budgets for the next fiscal year, which starts July 1, they have been told to keep increases to 2 percent or less.
“It’s not going to be a normal year,” Klocko said.
To keep the city’s education system going at the same level as this year will require an additional $5 million, officials said. Combine that with a possible $5 million reduction in state school aid, Klocko said, and it would take a 2.5 mills increase just to leave the school system the way it is.
That means residents would face a 10 percent tax increase for school spending alone unless something gives in the meantime.
With the state deficit at unprecedented levels and unemployment rising steadily, Klocko said the situation is dire. He said he’s worried there may be mid-year cuts in state aid tha would be “very scary” for local finances across Connecticut.
In Bristol, Klocko said, the city can hold out this year because it’s got a healthy reserve.
But after that, things look pretty bleak.
At this point, “the doom and gloom” of big city leaders doesn’t fit with Bristol’s situation, Klocko said.
But, he said, it’s likely to get a lot worse.
“Next year, I have no clue” how to deal with the financial crisis if it remains so dire, Klocko said.
Budget woes already hitting home
Budget woes already hitting home
The city may face as much as a $1.6 million deficit during the current fiscal year.
City Comptroller Glenn Klocko said that $900,000 of the shortfall is the result of the extraordinarily high utility and fuel costs the city has had to shell out.
The rest of the potential red ink is the result of a slowing economy.
The lack of new construction means that building permit revenue is coming in well short of projections while lagging home sales have sliced conveyance taxes.
In addition, the city isn’t earning much on the cash it has sitting in bank accounts because interest rates are so low.
All told, the three revenue categories are projected to come up $700,000 short of expectations, Klocko said.
Officials are watching closely to see whether property tax collections fall off in January, which would make the situation worse.
Klocko said the city has seen 98 percent of its tax bills paid so far this year, which is excellent. Whether it will stay that high, though, is unclear given the struggling economy.
Copyright 2008. All rights reserved.
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