A Breakdown of the Budget Process

What does it take for the Board of Finance to review the proposed town budget? Board of Finance Chairman Thomas Harrison provided Patch with a breakdown of the process.

What is a Board of Finance?

It all begins with the question, “Why does Avon have a Board of Finance?”

Avon's Board of Finance was established in 1959.

About 115 of the 169 municipalities in the state have a board of finance, Harrison said, as a means to provide a balance of power between the “policy” and “spending” oriented boards.

“Boards of Finance seem to be a New England tradition,” Harrison said. “The idea is separating the powers and diversifying authority. That way, the people who can actually set the tax rate are different than those that are seeking tax money to spend.”

The Board of Finance, not the Town Council, is the only town board that has the authority to set a tax rate, Harrison said.

What is the role of the Board of Finance in the budget process?

 The Board of Finance’s main function in the budget process is to set the total budget number that residents vote on in May at a budget referendum.  The board also tells the Town Council and the Board of Education if a lump sum in their budget requests needs to be adjusted.

State law prohibits the Board of Finance from telling the Board of Education what to specific line items to change in its budget proposal. A line item is a single component of the budget request.

That means the Board of Finance cannot tell the Board of Education to cut or add programming, staffing or anything specific beyond whether a change in the total Board of Education budget proposal figure is necessary.

“If we deem it desirable to make reductions, we can’t tell them where to take reductions from,” Harrison said. “It protects the independence of the Board of Education from being told how to spend taxpayer money.”

There is no law forbidding the Board of Finance from giving the Town Council advice about what to cut.  Harrison said, however, that the Avon Board of Finance gives the Town Council the same treatment as the Board of Education and leaves line item alterations to the council’s discretion.

What is the role of the Board of Education in the budget process?

The superintendent of schools works with administrative staff to determine a school district operating budget request to pitch to the Board of Education. The board must vote on the budget figure and have it ready to submit to the Town Council by Feb. 15. This is the first component of the overall budget for the town that is determined.

Although the Board of Finance will not formally discuss the school board budget request until April 6, the board has known about the request since February, Harrison said.

 What is the role of the town council in the budget process?

Town Manager Brandon Robertson and town staff compose a budget request that is submitted to the Town Council.  The Town Council reviews the budget line by line. After discussion, the council decides on whether to change the amounts Robertson requested in the operating budget and the capital improvement budget.

The council also looks over the Board of Education budget request, but does not have the authority to change anything. The council is allowed, however, to pass the school board’s budget on to the Board of Finance with comments. Historically, Harrison said that the council will usually pass the budget on to the board without comment.

The Town Council does not have to set its budget request until late February, but this year, the council set it slightly after the Board of Education announced its request.

The Board of Finance has known about both budgets since February and received the official budget binder in early March.

The budget hearing

The most talked about part of the budget at the public hearing is usually the school operating budget, Harrison said.

“Most of the people who are going to be speaking at the hearing will probably be focusing on the school operating budget,” Harrison said prior to Monday's public budget hearing. “In looking at total education spending, you have to remember that a big portion of capital improvement program budget includes school projects and the debt services project includes school-related bonds.”

Including debt services and capital improvement, spending on Avon Public Schools makes up at least 70 percent of the total budget.

What are other ways people can give input about the budget?

Many people also send the Board of Finance e-mails about what is important to them in the budget.

People often also stop to talk about the budget to Board of Finance members when they see them at events around town.

“I frequently have people recognize me in the deli line in Stop and Shop, and they come up to me and talk to me about tax issues,” Harrison said.

Comments from residents are also considered when reviewing the budget, Harrison said.

“Everything people tell us is important and the weight we give different things changes,” Harrison said.

How can you ensure your voice is heard?

Ultimately, the most important thing that taxpayers can do to voice their opinion on the budget is to vote yes if they support the budget proposal and no if they 

While the projected 4.1 percent tax increase this year will not be included in the budget question at the referendum, taxpayers can take it into consideration when voting.

“In Avon, we can decide how much we want to tax ourselves,” Harrison said, acknowledging that municipalities cannot influence how much state and federal taxes will be. “It’s a wonderful opportunity. It may produce results people don’t like, but that’s democracy.”

The referendum tells the Board of Finance if residents, as a majority, agree with the budget proposal.

“Most years most years, [voters] have no qualms telling us we didn’t get it right,” Harrison said. “If taxpayers don’t like what we recommend they can defeat it.”

Last year, the majority of votes were in favor of the budget, so it passed after the first referendum.

The Board of Finance make objective decisions on the budget and the board members do not respond to threats or lobby for voters to accept a budget, Harrison said.

"We try not to get into lobbying and don’t try to make a budget decision based on ideological viewpoints,” Harrison said.

 What goes up must come down

If a budget is voted down at the first referendum, it will go to a second referendum on June 1, and possibly a third on June 22.

Usually, Harrison said, that means that the requested budget will be reduced, and therefore the tax rate increase percentage will fall, as well. Very rarely, he said, does a majority “no” vote mean that people want the budget request increased.

In 2008, three budget proposals were defeated at referendum by the voters, Harrison said, and in that case, the Town Council sets the final budget.

Board of Finance budget workshop

After the public hearing, board members will confer about making any budget adjustments at a workshop on April 6 at 7 p.m. at the Avon Senior Center.

The public is welcome to attend for informational purposes, but there is no public comment at the meeting. The meeting  is intended as a conversation among members of the boards, Superintendent of Schools Gary Mala and Robertson, Harrison said.

What Does the Board of Finance Consider when reviewing a budget?

The budget is all about prioritizing and making sure that there is a balance between what taxpayers would be most willing to pay and what Avon’s biggest needs are.

“One of failings of government, is the failure to set priorities,” Harrison said.

 Even if the town may need new fire trucks or building expansions, for example, the Board of Finance cannot focus on any single item.

“We can’t look at just one item,” Harrison said. “We have to look at the total impact and what will affect taxpayers in Avon…. In the end, we exercise our collective best judgment on what we believe is in the best interest of the town as a whole.”

Harrison said that the board considers things like whether people in Avon on Social Security have gotten the cost of living adjustments they wanted in past years. Or, maybe paving the streets is a priority for the safety of motorists, as well as the school buses carrying children to school, Harrison explained.

Each board member will speak and give his or her opinion.

The Board of Finance looks at the big picture in a budget as opposed to discussing it line by line in as much detail as the Town Council and Board of Education do, Harrison explained. The school board and council provide the Board of Finance with supplemental summaries of the budgets.

How does the Board of Finance adjust the budget?

“There is no law that says how we do it,” Harrison said. The board simply tries to act in the town's best interest.

 By subtracting the projected revenue from the total budget, the Board of Finance calculates what the property tax increase needs to be to reach the desired budget total. This year, if the budget remains unchanged, the town will need to increase taxes by about 4.1 percent to have a $75.6 million budget.

If the tax rate increase is higher than the Board of Finance thinks the majority of taxpayers agree to, then the Board of Finance would set the tax rate increase to the desired percentage.

Once the board votes on the tax rate increase and adds the non-property tax revenue to that number, the board knows what total budget the town can afford. The difference between the initial requested budget and the new number equals the amount of reductions that need to be made.

When are adjustments made to the school board and town budgets?

Based on the new proposed budget total, the Town Council decides if it wants any adjustments to be made to the operating or capital improvement budgets, or both.

Then the Board of Finance discusses what part of the reductions will come from the budgets the Town Council proposed and the Board of Education budget. Debt services and sewers usually remains untouched, so reductions usually come from the school board and town operating budgets or the capital improvement program budget.

One way to determine where the adjustments are made is to look at the gap between the town and school board operating budgets and calculating the ratio of the two to compare the spending percentage in the total budget. Any adjustments made to either would match the proportion, based on that model. A common ratio used has been 60:40, though that proportion changes year by year. The same ratio method could be applied if the council wanted adjustments only in the capital improvement budget.

Then what happens?

The night of the referendum, the Board of Finance will vote to set a tax rate based on the total budget figure approved.

If there are any budget adjustments to be made, the Town Council decides whether changes should be made to the town operating budget or capital improvement budget, or both, before the referendum.

The Board of Education does not decide what to change in the budget until after the referendum. In past years, the board has provided a “cut list” before the referendum so that people know what is at stake before they vote. If the school board determines that any items in its requested budget need to be eliminated, the official decision is made after the taxpayers vote on the total budget.

The Town Council and the Board of Education are the sole deciders regarding where to spend the budget, Harrison explained.

“The Board of Education has total discretion and can move its money around,” Harrison said.

When do Avon residents pay taxes?

Tax bills are sent out July 1, the same day that next fiscal year starts, Harrison said.

The revenue department needs to know the tax rate in order to determine individual tax bills, and it takes about a month to get taxes ready, Harrison explained.

In 2008, when the town had a third referendum and the budget still was not passed, the Town Council set the budget in late June and tax bills were not sent out until late July.

The town of Avon invests a certain part of its revenue, and because taxes were not paid to the town until August, the town lost out on gaining about two months of interest money, Harrison said.

The current property tax rate is 24.44 mills and that number is not as high as other towns’ tax rate, Harrison said.

Common myths about the budget process

When programs are cut, many people assume that the budget was cut. Harrison said this is usually not the case.

“Budget cuts are a misnomer. The Board of Education budget has gone up every year,” Harrison said.

It is very rare that the Board of Finance will propose a budget that is less than the previous year's budget, Harrison said. At most, the board may decide to keep a budget at the same amount as the year before.

It is possible that the school board or Town Council may not get as much as it asks for in a given year, and in that case, the Board of Finance refers to any changes as “budget adjustments.” Even if the requested amount is reduced, that does not mean that there were budget cuts.