Lyme ― While the proposed $13.4 million budget for 2023-24 calls for a 7.5% increase in spending compared to the current budget, the Board of Finance has a plan to reduce the tax rate by 2%.

Voters will be asked to approve the proposed budget at Thursday’s annual town budget meeting scheduled for 6 p.m. at Town Hall. The $9.9 million operating budget represents an increase of $696,583, or 7.5%. It includes the town’s share of the $35.8 million Region 18 school district budget, which is $6.5 million. That’s an increase of $584,257, or 9.9%.

Capital expenses driven by the planned renovation of the Lymes’ Senior Center come in at $3.4 million, a $336,822, or 10.8% increase.

Board of Finance Chairman Alan Sheiness on Tuesday said members of the finance board agreed to lower the tax rate from 19.95 to 19.50 mills. The board will officially set tax rate following the annual town meeting.

The new tax rate means a property owner with a home assessed at $250,000 would pay $4,875 in the coming year, $112 less than their current tax bill.

Sheiness credited the town’s healthy unassigned fund balance for allowing officials to reduce the tax rate despite rising expenses.

The Government Finance Officers Association recommends keeping the undesignated or unassigned fund balance, otherwise known as a Rainy Day Fund, at a level equal to two months of operating expenses. That cushion is needed in case a town ends up spending more money, taking in less revenue than anticipated or has an emergency.

The fund balance based on the proposed budget would amount to 3.6 months of operating expenses rather than 3.8 months if the town didn’t reduce the mill rate, according to Sheiness.

“We concluded it was entirely appropriate to offer a modest mill rate decrease and still have a very sufficient general fund balance at the end of the year,” he said.

Sheiness said the biggest budget driver remains education spending. Old Lyme will pay 81.3% of district costs in the coming year, while Lyme will pay 18.7%. Both towns are billed by the regional school district based on enrollment.

Superintendent of Schools Ian Neviaser has explained the figure is determined by calculating the average number of students over the course of the current school year based on enrollment data from Oct. 1, 2022, and April 1, 2023. Old Lyme gained four students during that time period, while Lyme gained three.

The increase means Old Lyme will pay $727,820, or 2.6%, more than it spends currently, compared to Lyme’s $584,257 or 9.9% increase.

“Three students for Lyme, when you only have 240 of them, is a pretty significant jump,” Neviaser said.

Voters approved the 2023-24 education budget early this month by a vote of 373-108 at a referendum. The vote was 97-11 in Lyme.

Capital projects

The proposed renovation of the senior center accounts for $1.3 million of the proposed capital budget. Lyme is responsible for 25% of the $5.3 million project, while Old Lyme picks up the rest.

Lyme’s capital spending also includes $90,000 to complete the $1.1 million Birch Mill Road bridge repair project and $1 million toward the $1.2 million in repairs to the MacIntosh Road bridge.

Officials since 2020 have been saving for the projects in the town’s capital reserves. The federal government will reimburse the town for 80% of the cost of the Macintosh Road bridge replacement, while the state will pay for half of the Birch Mill Road project.

Sheiness said the capital budget proposal includes $355,000 to widen Mitchell Hill Road to make it easier for two-way traffic and larger vehicles like buses and plow trucks to pass.

First Selectman David Lahm said the budget includes $47,000 for a new, part-time finance director. He said the move to hire a permanent staff member will allow for more continuity.

“Right now, the first selectman does the entire budget, from soup to nuts,” he said. “First selectmen are elected officials, and I could be gone by November.”

Lahm said the position would also be able to spearhead projects that Lahm and his two predecessors haven’t been able to get to, such as modernizing a payroll process that currently relies on paper paychecks.

e.regan@theday.com