Revaluation a Factor in Budget

Looming shift of tax burden motivated Town Council in budgeting.

Board of Education Chairman Mary Grace Reed told the Town Council March 7 that behind every budget is a story, of students, programs and the future. But the council was looking at a different story as it passed its 2012-2013 Saturday with a 2.95 percent tax increase: revaluation.

The state of Connecticut mandates that real estate revaluation — the reassessment of market value of all property — is done every five years. Farmington’s last revaluation was done in 2007. Assessments for the 2013 Grand List are being done now, as assessors visit homes and businesses to verify the details and condition of properties.

What impact could it have on taxes?

The value of a resident’s property determines how much tax he will pay because the mill rate, or tax rate, is multiplied by the assessed value of his home. Also, revaluation serves to redistribute the tax burden to those properties where values have increased relative to others. The 2013 revaluation is expected to shift the tax burden away from commercial properties, on which values have sunk, to residential properties, which have remained comparatively steady.

“The numbers coming in for different towns are dramatic; towns like ours with a strong commercial base are getting hit the hardest…. Values have gone down considerably,” Town Manager Kathy Eagen explained Saturday during the budget workshop.

“They’re looking at a town which just came through with a makeup similar to ours — and we’re going to work to defer that a year — but they had a 10 percent tax increase… with a 0 percent increase in the budget, that’s what a town like ours just came through with,” she said.

The revaluation issue set the stage for a debate over whether the council should spend what the town needs to maintain services or to conserve money to help alleviate the tax burden next year.

In previous years, Eagen said, the council has used money from its fund balance, a town savings account, to defray the effects of revaluation. It has previously used that money to pay for things like capital improvement projects to lessen the amount of tax the town needs to collect that year. In addition, Eagen said, the town has historically curtailed work done on the capital plan in revaluation years.

However, the fund balance this year, leading up to revaluation, is not what it has been in the past, explained Town Finance Director Joseph Swetcky. The town is required by the state to maintain a fund balance at 8 percent of its total budget. Not doing so also threatens the Town’s Moody’s rating as a AAA rated community.

“The amount over the required fund balance is razor thin — just $240,046 — and that’s if all the FEMA comes through for storms,” Swetcky said.

Normally, the town rolls over any surplus at the end of each year to grow the fund balance, but the unforeseen expense of Tropical Strom Irene and the October snowstorm have eaten away at this year’s anticipated surplus.

And the $240,046 the town is expected to have in excess of the required fund balance depends on reimbursement of storm costs by the Federal Emergency Management Agency. Funds for the storm weren’t taking out of the fund balance, though, but out of a fund for Rails to Trails work and the West Woods Upper Elementary School account.

The West Woods account holds money the town bonded for construction of the 5-6 school that is leftover. The town forgot it had the money, rediscovered it in 2011 and has been debating whether to use or save it ever since.

In November, the council voted to borrow $500,000 from the account to cover storm costs. Eagen said that just over $500,000 remains.

In 2011 and this year, Democrats Mike Demicco and John Vibert have advocated spending the West Woods money in the budget. Both the town and board of education have dozens of capital projects like a leaky roof at Irving A. Robbins Middle School and a failing HVAC system at Town Hall that it has put off for years. The West Woods account must be used for capital projects but any money put toward capital projects from another source frees money to be spent in the operating budgets.

“I understand it’s fiscally prudent to save money,” Demicco said Saturday. “But I kind of liken it to saving all this money in my bank account and not giving my kids enough to eat. We’re keeping money set aside and I know we’ll need it for the reval but how much do we need for the reval?”

“During the last reval, you appropriated a million dollars,” Swetcky answered. “Right now we don’t have anywhere near a million to appropriate from the fund balance; right now we have 230,000 – that’s all you have.”

The councilors have likened the money to a rainy day fund. During the 2011 budget process, the Democrats repeatedly pointed to the difficult economy and said ‘it’s raining.’ This year, they pointed out that the town has just come through the worst storm in 100 years.

“We said ‘it’s raining,’ and I said you never know when the tornado comes and look what happened this year,” said councilor CJ Thomas. “I will never support something that spends that money this year… certainly in light of next year when we know there is another issue coming up [revaluation] we’re going to be in need of funding to help balance that up.”

Council Chairman Jeff Hogan had the last say and the money remained untouched in the 2012-2013 budget.

“We can’t anticipate peril but we can and we should anticipate the peril that is on our plate, which is reval,” Hogan said.

Farmington’s state Rep. William Wadsworth has been working for two years to defer revaluation. Wadsworth submitted House Bill 5424 to allow Farmington, along with Windham, Norwich and Stamford, to put off implementing the new assessed property values for one year.

"This year I submitted another bill that allows the town to delay implementation for one year and that had a public hearing last week,” Wadsworth said Monday. “It’s not yet out of committee but four or five towns are looking for this kind of relief, and there are a number of co-signers. It makes it look like it may have some energy to get out of committee.”

Leonard Vice March 21, 2012 at 04:09 PM
In terms of housing, revaluation has always been a big factor - especially in many housing values that tend to change overtime and has a really big impact in the housing market. <a href="http://www.agentcampus.com/new-york-real-estate-license/continuing-education/">new york real estate school</a>
Robert Parker March 21, 2012 at 06:07 PM
By definition, a revaluation is revenue neutral. Why is it scaring everyone? I also find it unbelievable that Farmington's commercial properties have dropped in value. We should be pursuing the state to increase Farmington's PILOT grants. We receive pennies on the the dollar for the numerous state owned properties in our town. Deferring the results of a revaluation is fruitless and a waste of time. It was not successful in West Hartford a few years ago and would not be successful here.
John Haffner March 21, 2012 at 10:46 PM
Newington's taxes after the reval in several homes of friends and family I know dropped because of it (keeping in mind they have the tpke, the only comparable town other than Manchesters commericial area that comes to mind). I have no idea whatsoever after the economic drop between 08 and 2013 why anyone would be scared of revaluation. Odds are it will help the average taxpayer in Farmington. This quote made me think twice... “They’re looking at a town which just came through with a makeup similar to ours — and we’re going to work to defer that a year — but they had a 10 percent tax increase… with a 0 percent increase in the budget, that’s what a town like ours just came through with,” she said. What town?? Why do they keep saying these circumstances without naming the town. There is no reason to keep that secret. This is all politics and scare tactics. I would strongly consider NOT defering it for a year, as that would make it worse potentially. Republicans will use any excuse to find a reason to drop the budget, democrats will find any reason to use that 500k from West Woods and keep the budget as is. This is all a negociation... That is it. They will meet somewhere in the middle after 500 patch comments, TC meetings, and outrage on both sides. Just like the do pretty much every year.
Robert Huelin March 22, 2012 at 05:00 PM
John-- I think you severely overstate the degree to which any negotiation takes place. I cannot think of a single year since 2005 in which the Republican majority on the Council negotiated with the Democrats on the Council over the budget. We might have negotiated a little in 2006, but as I recall there was a party line vote at the end in favor of the Republicans and no compromise, so if we did negotiate it had no impact on the budget. Right now, I can't remember a single time the Republicans have compromised their own budget proposal to accomodate a request from the Democrats. This budget, like all the budgets of the past decade and more, reflects only the priorities of the Republican majority--the Farmington budget never meets in the middle. Further, even if a negotiation took place this year (and I know it did not) the time for such things is over. The Town Council has finished its role in ths budget process and will only be allowed to take action to further reduce this budget proposal if it fails at the referendum. The Democrats on the Council no longer have any opportunity to increase the budget or to change the budget allocations.
Saul Freedman March 22, 2012 at 05:21 PM
Wait, so the majority of the elected officials on the council are driving their agenda and this is a negative? Only a Democrat partisan could reach such a conclusion.
leslie stevens March 22, 2012 at 07:57 PM
What I am reading here is a lot of whining from Mr. Huelin. Obviously, if the republicans are in the majority, the democrats impact will be nil. Perhaps he should focus on winning elections to gain the majority, and gain a voice, rather than whining about it.


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