North Stonington — While towns and cities across Connecticut have taken a variety of paths in planning their budgets around the state's budget impasse, North Stonington has been slow to pass a spending plan, hoping the legislature will come to an agreement.

According to First Selectman Shawn Murphy, this is the best way for the town to prepare an accurate budget, rather than relying on guesses or averages from the handful of budget proposals offered by Gov. Dannel P. Malloy and legislative leaders. The decision to wait also puts off making potentially devastating cuts to town government that might prove unnecessary, although it leaves residents wondering what their exact tax bills will be.

The Board of Finance, with the support of Murphy, decided to delay a decision to schedule a budget hearing until August, which all but assures that the town won't have a budget for another month.

The town sent out tax bills due July 1 like every other town, with the same tax rate as last year, but the bills had a note to taxpayers appended: "Once the budget is approved, you will receive a second installment which will reflect a Board of Finance-approved mill rate."

Revenue from the first tax bill will keep cash flowing into the town, and then the second tax bill, due in January, will balance the town's budget.

North Stonington's move is perfectly legal. Since the town lacks a charter, it operates under Connecticut state statutes, which do not require a town to pass a budget by a certain date, according to the Connecticut Mirror. It puts the town in contrast with municipalities like Groton, which passed a budget expecting large cuts to state aid.

The plan seems unique among towns in the area, according to Southeastern Connecticut Council of Governments Executive Director James Butler.

Most towns, he said, "gave it their best shot figuring it out" and passed budgets.

"I can't recall in my 19 years as executive director the state budget being adopted so late into the fiscal year," he said. "Everyone is hoping for the best."

During the budget season, the Board of Selectmen initially proposed a budget that was deliberately unbalanced, Murphy said, sending the finance board the town's expenses for the year and letting the finance board figure out what state aid the town might get.

After some discussion, the finance board developed a series of scenarios that reflected different levels of municipal aid, settling on an $800,000 cut to the Education Cost Sharing revenue the town gets, or roughly half of what the governor had proposed cutting back in February.

Included in that proposal were cuts amounting to $265,000, or no increase, in the Board of Education's budget from last year, leaving it at $12,875,068 despite a proposed 3 percent increase. A $130,000 cut to the Board of Selectmen left the town's spending plan at around $5.31 million. Both boards made the cuts.

Under that budget, the tax rate would have risen to 28 mills from its current 27 mills. Half the revenue from the one-mill increase would have been put toward the undesignated fund and the other half would be set aside for payments on the upcoming school renovation project, said finance board member Mustapha Ratib.

With the budget process still far from complete, Murphy brought a proposal to set a higher mill rate as the deadline to send out the town's tax bills loomed, citing the proposal the finance board had been working on. However, Selectman Mark Donahue questioned why that was necessary.

Basing a tax rate on a proposed budget and a guess on state revenue means the "selectmen are taxing things that haven't been approved yet," Donahue said in an interview.

State law indicated that the selectmen should set the tax rate based on the previous year's expenditures, and therefore he suggested that the tax rate be set at 27 mills. The selectmen agreed.

"Reducing the budget any further would be making drastic reductions that ... (we) can't be sure would happen," Murphy said. "So we really can't accurately determine how much we have to cut and raise taxes."

The town relies on state aid more than others, he added, so a big drop in state funding would "have a drastic effect."

The Board of Finance reacted by adjusting its proposal to include further cuts to the Education Cost Sharing grant. The new $18,361,256 budget proposes further cutting the ECS grant to $1,834,470 and raises the mill rate from 27 to 30 mills. However, members eventually decided to postpone the public hearing on the budget until later in August, hoping that the state will finalize their budget soon.

"I don't want to go to the meeting telling people: 'You know, maybe we're increasing the mill rate ... because maybe the state will cut this much,'" Ratib said. "To me, I can't explain that to the taxpayer."

"It would be helpful if the state comes up with (a budget)," he added. "If nothing happens we're going with what we have anyway."

Murphy explained the situation in a budget guidance memo, noting that "further reductions in the proposed town budget should be anticipated" and only "mission essential purchases or payments" may be made. Capital purchases are also on hold unless an exemption is granted.

Practically speaking, this won't change much at Town Hall, Murphy said. His spending plan actually went down slightly this year by 7.8 percent, he said, and the only direct result of delaying the budget is that the second tax bill will cost an extra $6,500 and the tax collector and the town clerk must do additional work reviewing those bills.

However, a company car the North Stonington Volunteer Fire Co. would like to purchase, as well as new stretchers for the North Stonington Ambulance Association will have to wait until the budget is passed.

Putting the budget on hold also means that Murphy can't hire the finance and administration officer position recommended by a town government study, which the study said would bring more continuity to town hall.

Kevin Maloney, director of communications and member relations at the Connecticut Conference of Municipalities, said he assumes other towns in the state have had similar conversations about putting off passing a budget. CCM will be releasing the results of a survey on Monday that will detail the various ways towns have reacted to proposed cuts in state aid.

"I suspect a lot of towns are going to be in that position because of the unprecedented (state) budget," he said. "This level of uncertainty we have not seen before."

n.lynch@theday.com