Lyme ― The Board of Finance on Tuesday approved the $12.4 million proposed 2024-25 budget with a projected tax rate increase of about 1.3%.

The budget ― which includes town operations and capital expenses as well as the town’s share of the Lyme-Old Lyme school spending plan ― is down about $1 million, or 7.8%, from current spending.

The proposed $10.3 million town operations budget represents an increase of $329,045, or 3.3%. It includes education spending in the amount of $6.7 million, which is up $158,999, or 2.4%, from the town’s current regional school district share.

Driving down the proposed budget total is the $2.1 million capital expense line item, which is $1.4 million, or 40%, less than the town is spending this year.

The proposal comes after last year’s property revaluation resulted in a 37.2% increase in the grand list of taxable property. Board of Finance Chairman Alan Sheiness said that means the finance board will have to reduce the current 19.5 mill tax rate by roughly the same amount to arrive at a “virtually flat” tax rate.

A totally flat tax rate would come out at 14.3 mills, according to budget documents. But finance board member and former First Selectman Steve Mattson said the finance board typically rounds up by 0.25 mills when setting the mill rate following a revaluation.

That equates to an overall tax rate increase projected at 1.3%.

The board will not set the final tax rate until immediately after the budgets are approved, but Sheiness said it will likely be 14.5 mills.

Sheiness cautioned the lower mill rate does not generally mean lower tax bills because many home values have gone up relative to others. He estimated average homeowners in town will be looking at an increase to their tax bills in line with the overall 1.3% increase to the tax rate.

“Invariably, there will be people who see the 1% increase, there will be people who see a higher increase, there’ll be people who see potentially a decrease,” he said of the tax bills.

Tax Assessor Melinda R. Kronfeld reiterated the wide range of home values makes it hard to generalize the impact to the owners of the 1,700 parcels in town. She said someone paying $8,000 in taxes last year would pay $104 more in the coming year, based on Sheiness’s projections for the average homeowner.

The amount the town’s fund balance, or rainy day fund, is estimated at $3.5 million in the proposed budget. The figure represents about 34% of the total operating budget.

“We can get all done that needs to get done, and still have a robust general fund that makes sense to us when we look out into the future years,” Sheiness said.

Members also noted the town doesn’t owe any debt in the proposed budget.

Mattson described the town’s financial situation this way: “We went from $600,000 in the bank and half a million in debt, to no debt and $4 million in the bank. Not a bad couple of years.”

The finance board in its 2024-25 proposal declined to include a $750,000 request from the Affordable Housing Commission to purchase property for a First Responders’ Village, where as many as six volunteer firefighters and ambulance volunteers could live. The finance board, calling the request premature, directed the commission to come back with a well-vetted plan and the full support of selectmen.

The reserve fund for open space remains at $1 million in the proposed budget in accordance with a resolution approved by voters three years ago formalizing the minimum threshold. Residents that year came out in resounding opposition to a finance board move to strip the fund by half a million dollars.

The proposed budget will go to voters at the annual budget meeting on May 22.

e.regan@theday.com