Old Lyme — The Board of Finance presented its proposed 2020-21 fiscal year budget during a virtual public hearing Monday. The $38.96 million budget, which includes general government, capital expenses and education, calls for an additional $54,217, or a 0.14% increase, over this year’s spending plan.

While the town’s government spending is up by 2.6% with a proposed $9.8 million budget, proposed capital expenditures are down by 19.9%. The Region 18 school district, which is funded by both Lyme and Old Lyme, has proposed a $35 million budget with a 0.05% decrease.

But even with such a slight increase in the overall proposed budget, town officials still proposed increasing the tax rate by 0.89 mill, a 3.97% bump, from 22.41 mills to 23.3 mills. That increase is required due to a statistical revaluation this past year that lowered the town's grand list, Board of Finance Chairman Andy Russell said this week, leaving the town with a $486,687 deficit if it were to use the same tax rate as this fiscal year.

Translated into real numbers, the proposed 23.3 mill rate would mean a resident owning a home with an assessed value of $243,000 will pay $5,662, or $216 more, in taxes next year, while a resident owning a home assessed at $378,100 will pay $8,810, or $337 more, in taxes next year.

As part of its contributions into the Region 18 budget, the town plans to pay around $27.7 million, or about $160,830 more, despite the fact that the school budget is proposed to be 0.05% lower than this year’s spending plan. Lyme and Old Lyme pay a share of the district’s budget every year based on the percentage of students living in each town. Old Lyme’s percentage went up slightly this past year, as it also did last year.

In an effort “to help soften the blow” with the mill rate increase this year, Russell said the board opted to allocate $800,000 from the town’s $9 million surplus, as it had last year for the very same reasons. The Board of Finance also has proposed allocating another $328,500 from the surplus to help pay for Mile Creek Road Bridge repairs.

He said the board’s goal while putting together the budget every year is to ensure that the town keeps its mill rate increases fairly steady from one year to the next while planning for necessary wage and insurance increases, road repairs and capital projects.

“We were hoping this year not to pull out money from the surplus, but with COVID-19, we started anticipating some challenges,” Russell said. “You have to be careful with how much you dip into it, though, because our goal is to keep that (surplus) around 25% of our overall budget.”

Russell said the board did decide to push out certain capital projects, such as some related to the Lymes Senior Center, to help save some money in this year’s budget while keeping some proposed projects in place — such as financing for a needed Grassy Hill Road Bridge repair — so as to not have too many projects piled on at once in the future, he said. “We have to be very careful with our capital expenditures because if you push them out too much, they will catch up with you,” he said.

Old Lyme typically avoids bonding town projects or capital expenses and rather saves for projects or pays for them up front, Russell said, saving taxpayers money in the long run by avoiding the interest that comes with bonding.

The town also had budgeted $700,000 toward needed road repairs — up $70,000 from what was budgeted last year — in anticipation for repairs planned over the next several years, and also plans to buy two new police vehicles for a total of $74,000.

Debt service is up this year by $125,750, for a total of $478,750, in an effort to pay off grants the town has provided the Phoebe Griffin Noyes Library to help pay for renovations this year. The town already has granted the library $680,000 to help fund those renovations over the last couple years, including $355,000 proposed for renovations this upcoming fiscal year.

Now that the town has held a public hearing on the proposed budget, residents still may email the Board of Finance with comments or questions. The Board of Finance plans to finalize the budget and set the mill rate at a meeting on May 18. The town is not required to hold a referendum to vote on the budget this year per an executive order by the governor due to the coronavirus pandemic.

m.biekert@theday.com