State budget means $1.3M less in aid for Norwich

Norwich — The recently approved state budget will bring $1.3 million less in revenue to the city this year than initially expected and will mean a second round of motor vehicle tax bills, but left school funding intact for the current fiscal year.

City Comptroller Josh Pothier this week provided the City Council with a three-page analysis of the state budget's impacts on the city. Pothier said overall, the changes in state grants to cities and towns will mean $1.3 million less in revenues from the totals included in the $123 million city and school budget adopted by the council June 12. The biggest losses were in the municipal revenue sharing fund, a loss of $1.3 million, which eliminated any gains in other grants.

But total grants for regular education, special education and the city’s $3.9 million in Alliance District funding remained intact in the budget, Pothier said, and Norwich actually gained $1 million in state reimbursement for the recently completed $40 million Kelly Middle School renovation. That money won’t arrive until an audit of the project is completed by the state, which could take two years, Pothier said.

Because the city cannot count on receiving the Kelly Middle School reimbursement in time for this year’s budget, Pothier said the current city budget will be $1.2 million short. The city’s current undesignated fund balance, now at 13.3 percent of the overall budget, will be able to absorb the shortfall, he said, and still remain within the city’s 12 to 17 percent target range.

The new state budget increased the motor vehicle tax cap from the 32 mills Gov. Dannel P. Malloy had intended for this year to 39 mills. The cap was designed to provide some tax relief to vehicle owners, with the state reimbursing cities and towns with tax rates higher than the cap for the difference. Norwich has a tax rate of 40.52 mills, with vehicle owners in the volunteer fire districts paying an additional 0.15 mills and those in the city’s paid fire district adding another 8.2 mills.

Norwich delayed issuing tax bills until Oct. 1 in anticipation of a possible change in the motor vehicle tax cap. But the new state budget did not get resolved in time to include the increase, prompting the need for a second motor vehicle tax bill for the 7-mill difference. Whether Norwich will receive state reimbursement for the difference between the 39-mill cap and the city’s tax rates this year.

“There is funding for some reimbursement (in the state budget) for the motor vehicle tax cap loss,” Pothier wrote, “but I have not been able to confirm the amounts that the city will receive.”


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