East Lyme ― The proposed 2024-25 budget of $91.9 million comes as officials look to rely less on bonding and more on cash, even while they strive to make the town more attractive to credit rating agencies.

The Board of Selectmen earlier this week approved a $23 million town operations budget that comes in $1.5 million, or 7.1%, higher than the current budget.

Among the most high-profile changes reflected in the budget is $308,755 to establish a centralized Fire Services Department and $276,650 for the new Youth, Family and Human Services Department.

Last month, the Board of Education approved a $61.1 million spending plan that shows an increase of $3.3 million, or 5.7%. Budget documents show $2.4 million of the increase is due to salaries and benefits.

Driving the process this year is a philosophical shift in budgeting evident in what First Selectman Dan Cunningham at Wednesday’s Board of Finance meeting described as a “bold move” in capital spending. His proposal includes increasing the capital line of the budget by $500,000 so the town doesn’t have to borrow as much money.

His proposal brings the capital outlay to $1 million, doubling this year’s $499,522 allocation.

The philosophy revolves around paying for more capital projects ― which are typically large, one-time expenditures ― out of the town budget to save on interest and fees that come with financing them over many years.

“Yes, there’ll be a cost, but the savings over time of course will exceed the cost,” Cunningham told the Board of Finance Wednesday.

Examples of capital projects funded with cash include vehicle purchases, some road and park improvements, building upgrades and technology licensing.

Town Finance Director Kevin Gervais on Thursday said proposed capital projects total $13 million. With $1 million allocated to the cash capital line, that leaves the rest to be bonded, moved to another line item or dropped from the budget.

The proposed debt service budget for the upcoming year is $6.8 million, an increase of $556,063, or 9%.

Cunningham told the finance board his “conservative” approach includes efforts to better position the town to receive optimal bond ratings that will drive down the cost of projects going forward.

He pointed to the creation of a Coastal Resiliency Fund for $25,000 to help the town prepare for the future amid climate change, along with $10,000 set aside in a trust fund for retirement obligations related to health insurance.

Based on numbers provided by Gervais, the projected tax rate associated with the proposal would increase by 1.99 mills to 26.86 mills.

“This is under a 2-mill increase, by one hundredth of a mill,” Gervais said. “But still it is under 2 mills. That was one of our priorities.”

A taxpayer with a home valued at $500,000, which is assessed at $350,000, would pay $9,401 in property taxes in the coming year if the budget is approved as presented. Gervais said that’s an increase of $697 over the current tax bill for the same home.

The largest increase for existing departments is reflected in the $3.4 million police department budget, which comes in at $245,379, or 7.7%, over current spending.

Despite a Police Commission goal established in 2021 to hire two officers per year for six budget cycles, there are no new positions being added this time around. But Gervais said the increase reflects two officers hired partway through the current budget year whose positions will be fully absorbed in the 2024-25 budget.

The proposed $2.4 million salary line for the police department is up 10.1% based on a contractual raises of 2.75% plus step increases.

Cunningham in his pitch to the finance board put the idea of “wants versus needs” at the center of his strategy.

“We’re trying to take care of the needs and be careful of the wants,” he said.

He used the example of lighting for the new pickleball courts being built as part of the upgrades to Peretz Park at Bridebrook.

“Lighting is kind of a luxury, at least for now,” he said. “So we took that out of the capital plan.”

The Board of Finance over the coming weeks will hear from department heads and hold a public hearing on April 29 before finalizing a budget to send to a referendum vote.

e.eregan@theday.com

Editor’s note: This article was updated to correct the mill rate implications of the increase and the total amount budgeted for capital projects.