BERLIN – Municipal officials face a more than $300,000 deficit as budget development gets underway in Berlin.
At a work session Monday, town officials started reviewing the proposed $11 million general fund budget. While revenues are increasing due to increasing property values, as proposed the budget still features a roughly a $350,000 shortfall with, according to staff, little left to cut.
“Speaking for this budget I don’t think there is a wish item on this list at all,” Finance Director Natalie Saleh said.
Saleh told the council this week most revenue sources were increasing. Property tax revenue is set to jump 7%, bringing in about $4.2 million total. Highway user revenues are projected at $299,000 and slots income is estimated at $418,000. Expenses, however, have also increased. Officials plan to use the majority of the slots revenue to fund enrollment in the Law Enforcement Officers Pension System, a move that was just approved earlier this year. The town’s trash collection is not currently paying for itself. EMS costs have gone up, as staffing was increased last year. The town’s information technology costs are also set to increase. The police department’s budget as proposed is up more than 20%. Expenses are also up in public works and inspection costs are up in the planning department.
Mayor Zack Tyndall said initially, the budget featured a close to $600,000 deficit. Staff level meetings, however, resulted in some cuts. As far as the EMS funding, he said officials had asked the Worcester County Commissioners if they could use money previously set aside for a Flower Street roundabout to instead support the EMS funding.
“If that doesn’t materialize, we’ll have to have a discussion about what our commitment will look like,” he said.
While there is a $200,000 contingency in the administration portion of the budget, Tyndall said that was set aside to be used for salary adjustments. Officials are in the process of a reviewing a salary and compensation study conducted by Paypoint HR.
“We do want to make sure we implement as many of those changes as we can for the upcoming fiscal year. That’s to give us a little more flexibility,” Tyndall said of the contingency.
Councilman Steve Green asked about the stabilization category of the town’s assigned fund balance, which currently contains more than $2.3 million. Tyndall said that fund, recommended by the Government Finance Officers Association, had been set up two years ago in case casino revenue or property tax revenue ever decreased unexpectedly. He said it wasn’t a fund he felt comfortable using to balance the budget.
When Green asked what would happen to the surplus officials expected to have at the end of the current fiscal year, Saleh indicated it would go into the unassigned fund balance. She said using that to balance the budget wasn’t a long-term solution.
“The expenditures that we have, they’re ongoing…,” she said. “Advancing from your cash account for prior year is just fixing one year, not looking forward.”
Green said the budget appeared to be too tight to make many cuts. He recalled the 18% tax increase officials approved in 2019 and said he didn’t want to see the town’s finances get to the point that was again necessary.
“I’m not scared of an adjustment to the tax rate as long as it’s incremental and reasonable, with the goal being able to avoid the situation a year or two from now when we’re facing a double-digit increase,” he said. “That’s what upsets our citizens. It upset me.”
Green said if officials increased the tax rate by 2% from the current 81.5 cents to 83.5 cents, that would equate to about an additional $7 a month in taxes for someone with a $400,000 valuation home. He said he didn’t take the topic of a tax increase lightly but didn’t see any easy answers to addressing the deficit without compromising town services and infrastructure.
“I think we should discuss it,” he said.
Saleh noted that when the town did end the year with a surplus, that typically wasn’t because of increased revenues or decreased costs. Instead, it’s typically because a capital project was delayed. Town Administrator Mary Bohlen agreed and said often the town set aside money for a capital project but realized the funding wasn’t sufficient once actual bids came in.
“The money was saved in that sense but the project didn’t get done,” Bohlen said.
Councilman Jay Knerr agreed there was no easy answer. Councilman Dean Burrell concurred but said residents were already facing a tax increase because of the rise in assessments.
“I hear people talk about not being able to afford to live in the Town of Berlin …,” he said. “It is a heavy weight to carry when you have to juggle quality of services with folks’ livelihood and continued way of life. It’s just a lot of weight.”
Knerr said his main concern was the fact that as Burrell had mentioned, residents will already be paying more because of the increase in assessments. He said last week the assessment on his home will be increasing 7%.
“It’s a double hit,” he said.
Councilwoman Shaneka Nichols said she’d like to see the town consider restructuring its fees, particularly since growth did mean increased expenses for the town.
Green agreed with his colleagues, saying, “I don’t want to come across as the raise taxes guy. It’s not something to take lightly. Affordability should be front and center.”
Nevertheless, he said significant cuts had already been made to the budget by department heads prior to even coming before the full council.
“There’s no waste,” he said. “That’s what concerns me the most. I think we’re going to need some new revenue personally.”
Tyndall agreed the cost of business was going up and the needs of the town were changing. He thanked department heads for all of the work they’d put into their portions of the budget.
“It is going to be a painful year,” he said. “It doesn’t make any of us happy having to move on fees, having to move potentially on the tax rate. But that’s the year we’re in. We’re going to literally pull every lever we can this year. It’s shared pain but hopefully we’ll get through this.”
