We commend the Groton Town Council for making necessary cuts to prevent a significant tax increase in light of the current public health crisis. The budgets, prepared before the COVID-19 crisis, proposed a 4.5% increase and we appreciate action taken by the council, Town Manager John Burt, and others to mitigate substantial cost of living increases for Groton residents in these difficult times.

Although the Council made cuts in light of the pandemic, the original budget proposal contained several alarming revelations; the most noticeable being a 4.5% increase in the budget. Much of the approximately $5.8 million increase comes from town operation expenses ($2.2 million increase) and capital/debt services ($2.5 million increase), driven by healthcare renewal costs and debt service due for the bonded middle school project. To partially cover these increased expenses, the town will be using the unassigned fund balance otherwise called the “Rainy Day Fund” for the second year in a row.

The town’s current policy retains at least 15% of the annual operating budget in the unassigned fund balance for times of unexpected economic crisis or disaster. This ensures the town has liquid assets available to address emergencies. Responsible uses of the fund balance are: returning money to the taxpayer, paying down long-term liabilities or utilizing money for capital improvement in lieu of bonding.

Over the last few years, thanks to favorable market conditions, the town benefited from a large windfall to the fund balance. While the current council takes credit for the large increase, it is an unreliable source of funding due to the changeable nature of our economy. Using the unassigned fund balance to cover operating expenses is fiscally irresponsible and is an unsustainable practice. These expenses should be covered by reliable revenue streams, like property taxes. Although the council hangs their hat on the fact that the mill rate wasn’t increased in the last year, it was due to their irresponsible application of unassigned fund balance to artificially suppress it; effectually, kicking the increase down the road and putting Groton in a vulnerable position.

Now, as we are facing the likelihood that the town will not receive increased investment revenues because of a drop in the economy, and there is likely to be a drop in collected taxes due to the unprecedented layoffs. The town will need that “Rainy Day” money to keep us afloat. We are lucky to have that. But using unassigned fund balance for operating expenses is not a sustainable solution and the council needs to face reality.

Next budget season will be difficult because the fund balance is down to 16.9%. Debt services and benefit costs continue to increase. There will likely be transfers during the fiscal year and the total impact of the COVID-19 crisis is yet to be seen. In addition, if the drawdown of the fund balance continues, we risk downgrades of our municipal bond ratings. Both Fitch and Moody’s cite liquidity and cash reserves as reasons for our current rating, but also identify reduction in such reserves as a factor that could lead to a downgrade.

Town Manager Burt, in his budget messages, has said repeatedly that the town needs to stop funding non-town functions. This would mean eliminating or reducing certain services. Either the council needs to acknowledge that the mill rate needs to be increased to sustain these programs or make the necessary cuts. In his fiscal-year 2020 budget address Burt stated that, “growth will not prevent an increase in the mill rate without making other changes.”

The substantial tax increase that residents are going to face next year are not in whole due to the public health emergency. It is the culmination of several years of mismanaged town funds.

The Groton Republican Town Committee urges our fellow residents to consider these nuances and the long-range impacts such irresponsible delaying tactics can have on the health of our town. We hope everyone remains well, and we know that as a community we will come through this stronger.

Paul McGuirk is the chairman of the Groton Republican Town Committee executive board. The commentary was also signed by Vice Chairwoman Lauren Gauthier, Secretary Bruce Flax, and Treasurer Chase Foster.