Despite Increase in D18 Spend, Budget Down Over $1M Primarily due to Reduction in Capital Costs
LYME – The Board of Finance is predicting a flat tax rate after they unanimously approved a proposed $11.37 million 2025-26 spending plan that will go to a public hearing next month.
The budget proposal is down $1.02 million, or 8.2%, from the current budget.
The Board of Finance on Tuesday voted to send the proposed budget to a public hearing on May 8. The finance board will then take a vote on sending the spending plan to a Town Meeting preliminarily set for May 22.
If the proposed budget is approved by voters, the finance board said it will set the tax rate at the current 14.5 mills immediately following the town meeting.
The budget proposal includes town operating and capital expenses, as well as Lyme’s share of the Region 18 education budget.
Education costs in Lyme’s proposed budget come out to $6.96 million for the town’s estimated 231 students. That’s up $299,504, or 4.5%, from the town’s current share. The increase is driven by debt payments on a multi-building renovation project approved by voters at a cost of $57.5 million.
The Region 18 budget, which totals $39.7 million for the district covering Lyme and Old Lyme, is set to go to a referendum vote in both towns on May 6.
Lyme’s $10.84 million town operations budget proposal is up $513,372, or 5.0%, over the current budget. Proposed capital spending comes in at $530,400, a decrease of $1.53 million, or 74.3%, from the current budget.
First Selectman David Lahm in a Tuesday interview at the Town Hall attributed the decrease in capital spending to the completion of bridge projects on Birch Mill Road and Macintosh Road that had driven up the budget in previous years.
He said the town is looking at a flat tax rate because officials are not extravagant in their budget planning.
“We take care of what needs to be taken care of, but we understand the difference between ‘I want’ and ‘I need,’” he said.
Planning for Tomorrow’s Needs Today
The town’s projected general fund balance – referred to informally as a Rainy Day Fund – amounts to $4.14 million in the proposed budget. The figure represents about 33% of total anticipated revenues, which is one of the figures credit agencies look at to gauge a town’s financial health.
Finance board Chairman Alan Sheiness at this week’s meeting said the bond agent for the school district told him S&P Global Ratings likes to see reserves in the area of at least 19% to secure a AA or AAA credit rating.
Finance board policy dictates that the town maintain a “target” fund balance equivalent to two months of operating expenses, but Sheiness in a Friday phone interview said two months’ savings is more of a minimum than a target.
Nearby towns like Old Lyme have debated how much money to keep in the Rainy Day Fund in order to save for emergencies while not overtaxing residents.
In a phone interview Friday, Sheiness acknowledged the fund balance in Lyme has historically exceeded the two months’ target. But he said the number fluctuates based on big-ticket capital expenses that may be needed in any given year.
Sheiness said the finance board looks several years ahead when determining how much money should remain in the town’s reserves.
“I do understand the number is high today for today’s needs, but it’s not too high today for the next few years’ needs,” he said.