In Waterford, a dose of budgeting reality

February 27, 2010 11:00 pm • Last Updated: February 28, 2010 4:10 am

By By STEPHEN CHUPASKA Day Staff Writer

Dominion's Millstone Nuclear Power Station in Waterford, seen in this 2005 aerial file photo. Its share of Waterford's tax base is still impressive at about 30 percent, but that's down from 80 percent in the mid-1980s.

Waterford - In time, Jan. 7, 2010, might prove to be a seminal date in the history of Waterford - the end of the Millstone era.On that day, town officials learned that health insurance costs had ballooned by $1.5 million, throwing the calculation of the already tight 2010-11 budget into disarray.

On that day, town officials learned that health insurance costs had ballooned by $1.5 million, throwing the calculation of the already tight 2010-11 budget into disarray. Superintendent of Schools Randall Collins announced the news to the Board of Education in ominous tones that night.

Superintendent of Schools Randall Collins announced the news to the Board of Education in ominous tones that night. "This will take you to places you have not been," Collins said.

"This will take you to places you have not been," Collins said. For decades, Waterford's budget has been buoyed by tax dollars from Millstone. But the depreciation of the 42-year-old complex, its sale in 2000 after energy deregulation to Virginia-based Dominion, and a tough budget season worsened by the unexpected health insurance bill has already led to staff furloughs and could mean layoffs and cuts to school programs.

For decades, Waterford's budget has been buoyed by tax dollars from Millstone. But the depreciation of the 42-year-old complex, its sale in 2000 after energy deregulation to Virginia-based Dominion, and a tough budget season worsened by the unexpected health insurance bill has already led to staff furloughs and could mean layoffs and cuts to school programs.It's a financial situation that would have been unthinkable in Waterford a generation ago, when Millstone accounted for 84 cents of every tax dollar, when homeowners were drawn to town by the low tax rate, when Waterford police famously prowled the streets in Volvos.

It's a financial situation that would have been unthinkable in Waterford a generation ago, when Millstone accounted for 84 cents of every tax dollar, when homeowners were drawn to town by the low tax rate, when Waterford police famously prowled the streets in Volvos. Now, according to the 2008 grand list, Millstone makes up just 30 percent of the town's tax base. And it's created a new reality in Waterford.

Now, according to the 2008 grand list, Millstone makes up just 30 percent of the town's tax base. And it's created a new reality in Waterford. "We're now in the same situation as every other town in southeastern Connecticut," said John "Bill" Sheehan, a Board of Finance member who also blogs on local issues.

"We're now in the same situation as every other town in southeastern Connecticut," said John "Bill" Sheehan, a Board of Finance member who also blogs on local issues.Finance board member George Peteros admonishes that "dark days" are ahead.

Finance board member George Peteros admonishes that "dark days" are ahead. "The day of reckoning is here," Peteros said. "Too long (town departments) have been feasting on prime rib; now there's only hamburger."

"The day of reckoning is here," Peteros said. "Too long (town departments) have been feasting on prime rib; now there's only hamburger."No more subsidy

No more subsidyOn Monday, the Board of Finance will begin monthlong hearings on the proposed $73.84 million budget, a 5.56 percent increase over last year's spending. If the proposed budget is approved, property owners would face a 10 percent hike in taxes.

On Monday, the Board of Finance will begin monthlong hearings on the proposed $73.84 million budget, a 5.56 percent increase over last year's spending. If the proposed budget is approved, property owners would face a 10 percent hike in taxes. The 2010-11 budget will be the last year the town will receive funds from the Systems Benefit Charge, or SBC, the state subsidy negotiated by former state Sen. Melodie Peters and then-Rep. Andrea Stillman that eased the drop in property taxes caused by Northeast Utilities' sale of Millstone to Dominion.

The 2010-11 budget will be the last year the town will receive funds from the Systems Benefit Charge, or SBC, the state subsidy negotiated by former state Sen. Melodie Peters and then-Rep. Andrea Stillman that eased the drop in property taxes caused by Northeast Utilities' sale of Millstone to Dominion.In 2001, the town was reimbursed for 100 percent of the difference between the regulated and deregulated value of the property. The agreement stipulated that the reimbursement amount would decrease by 10 percent annually.

In 2001, the town was reimbursed for 100 percent of the difference between the regulated and deregulated value of the property. The agreement stipulated that the reimbursement amount would decrease by 10 percent annually. The payment was $19 million in the first year of the SBC. This year the town will get just $1 million, which will likely be transferred to the capital budget.

The payment was $19 million in the first year of the SBC. This year the town will get just $1 million, which will likely be transferred to the capital budget.To plan for the gradual loss of $20 million in revenue, the Board of Finance formed a long-range fiscal planning subcommittee that produced a report in 2000 concluding Waterford residents could tolerate a 6 percent rise in taxes each year.

To plan for the gradual loss of $20 million in revenue, the Board of Finance formed a long-range fiscal planning subcommittee that produced a report in 2000 concluding Waterford residents could tolerate a 6 percent rise in taxes each year."That has been the guideline," Sheehan said. "It works out that a 3 percent increase in the budget is about a 6 percent increase in taxes."

"That has been the guideline," Sheehan said. "It works out that a 3 percent increase in the budget is about a 6 percent increase in taxes."But former First Selectman Tony Sheridan is critical of the town's fiscal policy since the SBC took effect.

But former First Selectman Tony Sheridan is critical of the town's fiscal policy since the SBC took effect. "It was meant to be a soft landing for the town," said Sheridan, now president of the Eastern Connecticut Chamber of Commerce. "We really squandered an opportunity.

"It was meant to be a soft landing for the town," said Sheridan, now president of the Eastern Connecticut Chamber of Commerce. "We really squandered an opportunity."The town has not really adjusted to tax increases. We should have been more conservative with our spending."

"The town has not really adjusted to tax increases. We should have been more conservative with our spending." Sheridan worries that as Waterford's population ages, seniors on fixed incomes will find it hard to cope with rising property taxes.

Sheridan worries that as Waterford's population ages, seniors on fixed incomes will find it hard to cope with rising property taxes. A flood of investment

A flood of investmentMillstone first appeared on the town's tax rolls in 1968, two years before the first reactor began generating energy.

Millstone first appeared on the town's tax rolls in 1968, two years before the first reactor began generating energy. In the ensuing years, residents enjoyed moderate tax rates. From 1975 to the present, the tax rate in Waterford has most often been under 20 mills and higher than 30 mills only once (33 mills in 1975). Over the same period, the tax rate went over 30 mills 14 times in East Lyme and 11 in Stonington.

In the ensuing years, residents enjoyed moderate tax rates. From 1975 to the present, the tax rate in Waterford has most often been under 20 mills and higher than 30 mills only once (33 mills in 1975). Over the same period, the tax rate went over 30 mills 14 times in East Lyme and 11 in Stonington.With tax revenues rushing in from Millstone, Waterford invested in upgrading - or in some cases creating - its infrastructure, according to current First Selectman Daniel Steward.

With tax revenues rushing in from Millstone, Waterford invested in upgrading - or in some cases creating - its infrastructure, according to current First Selectman Daniel Steward. "We did sewers and road reconstruction," Steward said. "It allowed us to build more dense housing."

"We did sewers and road reconstruction," Steward said. "It allowed us to build more dense housing." Since the 1970s, the town has laid sewer lines underneath about 140 miles of roads, an investment that made Waterford more attractive to real estate developers and businesses.

Since the 1970s, the town has laid sewer lines underneath about 140 miles of roads, an investment that made Waterford more attractive to real estate developers and businesses. "It was a very wise thing to do," Steward said. "They were built to the best standards (at the time)."

"It was a very wise thing to do," Steward said. "They were built to the best standards (at the time)." Unlike most towns, which would need to issue bonds to fund large-scale projects, Sheehan said Waterford would issue anticipatory notes, then just pay them off immediately at the end of the fiscal year.

Unlike most towns, which would need to issue bonds to fund large-scale projects, Sheehan said Waterford would issue anticipatory notes, then just pay them off immediately at the end of the fiscal year. During the late-1970s and 1980s, the town also built additions to the public schools, including the field house and auditorium at the high school, constructed a new police station on Avery Lane and acquired land for open space, including what would become Stenger Farm Park and Leary Park.

During the late-1970s and 1980s, the town also built additions to the public schools, including the field house and auditorium at the high school, constructed a new police station on Avery Lane and acquired land for open space, including what would become Stenger Farm Park and Leary Park.Waterford also tucked away money for capital building projects, such as the current school reconstruction, according to Peteros, the finance board member.

Waterford also tucked away money for capital building projects, such as the current school reconstruction, according to Peteros, the finance board member. "We knew we had some school construction on the horizon," Peteros said.

"We knew we had some school construction on the horizon," Peteros said.The town also had a five-year court battle with Dominion over the assessment of the plant, which was finally settled in 2008. Waterford received a $9.25 million settlement for back taxes between 2002 and 2006, a sum that was also put toward paying down the debt on the new schools.

The town also had a five-year court battle with Dominion over the assessment of the plant, which was finally settled in 2008. Waterford received a $9.25 million settlement for back taxes between 2002 and 2006, a sum that was also put toward paying down the debt on the new schools. A period of transition

A period of transitionIn the future, Peteros said, the town must address the largest expense in the budget: employee salaries and benefits.

In the future, Peteros said, the town must address the largest expense in the budget: employee salaries and benefits."We've already squeezed all the fat out of the budget going after supplies," he said.

"We've already squeezed all the fat out of the budget going after supplies," he said. Peteros predicts that as town departments scramble for funds in future years, it could make Waterford a more politically charged town.

Peteros predicts that as town departments scramble for funds in future years, it could make Waterford a more politically charged town."I can see politics becoming more contentious as residents become more agitated as their tax rate goes up," he said.

"I can see politics becoming more contentious as residents become more agitated as their tax rate goes up," he said. Still, as Waterford and its residents adjust to shrinking revenues from Millstone and higher tax bills, Steward did not discount Millstone's largess.

Still, as Waterford and its residents adjust to shrinking revenues from Millstone and higher tax bills, Steward did not discount Millstone's largess."Having one business pay 30 percent of the taxes is pretty good," he said. "That's not true in most towns."

"Having one business pay 30 percent of the taxes is pretty good," he said. "That's not true in most towns."