Richmond Town Council Update for April 18, 2023 PART TWO

By Cynthia Drummond for BRVCA
April 22nd 2023

RICHMOND – The first of two public hearings at the Town Council meeting Tuesday offered residents an opportunity to express their opinions on the town’s proposed 2023-24 budget. Many of them urged the town to do more to reduce their property taxes.

The fund balance in the new budget will be 15%, the lowest level under the town’s existing fund balance policy, which requires a surplus of 15% to 25%. The Town Council, at its budget workshop, already reduced the fund balance from just over 16% to 15%.

At Tuesday’s hearing, councilor Michael Colasante proposed further lowering the fund balance, which would require the council to amend the town’s fund balance policy.

“It’s up to the council to set the policy on what the fund balance is going to be, because I know that prior councils, even under President [Henry] Oppenheimer, they went and they adjusted the fund balance percentage… When the auditor came in, I asked her, statewide, what is the average fund balance that a lot of municipalities are holding and she said 10%,” he said.

Finance Director Laura Kenyon interjected.

“I don’t believe she knew about the organizations,” she said. “I have actually reached out.”

The consequence of reducing the fund balance to 15% would be felt next year, Kenyon explained.

“It’s a one - time use of funds, so you would have to do something in your budget the following year to offset that $250,000,” she said. “Either your fund balance is going below that 15% which means that the third year during the policy, you then have to replenish that as well, or you just make it to the level that it becomes the 15%, but you’re going to raise taxes for whatever the differential becomes.”

The numbers

Kenyon presented an overview of the proposed budget at the start of the public hearing.

The total proposed budget is $29.4 million, an increase of just under 5%, or $370,000.

The municipal budget is $7.8 million but the town’s share of the Chariho school budget is up by 4.85%, or just over $1 million. The total amount paid by Richmond to Chariho will be $21.7 million.

The new budget contains no property tax increase.

 “They offset the $228,000 with fund balance. The estimated tax rate is $14.75,” Kenyon explained.

However, the final property tax rate is still to be determined.

“All of the assessments and exemptions are still being evaluated,” Kenyon said. “Just for everyone’s information, the assessments, with the reval [revaluation] went up an average of 39%.”

The good news is that state aid for education is expected to increase by $775,000, although the state budget could still change before it is passed, in June, by the General Assembly.

The capital budget, Kenyon said, will decrease.

“There’s a transfer to capital projects just shy of half a million dollars,” she said. “That’s down from $725,000 in Fiscal Year ’23. It’s been recommended from department heads for this year. It’s to help maintain our infrastructure.”

In anticipation of the payment of road bonds, the town’s debt service will increase by just over $300,000.

“There was an approval of $2.5 million dollars for road bonds and this would be the debt service for the issuance of those bonds,” Kenyon said.

Department heads level-funded their budget requests, but costs will still rise with a 3% cost of living increase for personnel. Health insurance is up 1.6% and dental is up 8.9%.

“Dental is a much smaller number so while it says 9%, the impact is not that much,” Kenyon explained.

The details of the proposed budget can be found on the town’s website. 

The residents react

Several residents attending the hearing told the council that they were not pleased with the budget.

One man, who bought his house about 20 years ago, said his taxes had gone up every year.

“Right now, I’m working all the overtime I can at Kenyon Mill as a mechanic, textile mill, to pay my taxes in this town,” he said. “I don’t want to move out of this town but it seems like I’m being driven out. You have to listen to the little people. All of us aren’t rich in this town.”

Colasante said he agreed.

“As far as I’m concerned, it’s like an illegal squatter in your home, okay? That’s the way I classify it,” he said. “Think about that, and don’t lose that image in your mind, okay? They’re like a squatter in your home, because if you don’t pay your taxes, they’re going to take your house.”

In a separate interview two days after the budget hearing,

Town Administrator Karen Pinch said the reduction of the fund balance had been necessary to offset the impact of an increase in the Chariho budget.

“We had an increase in expenses, which was offset by increases in revenue,” she said. “So, the town was at a zero increase, but the school had an increase, and the will of the people, as evidenced in the [Chariho budget] vote, was to increase the school budget – to pay more taxes through the school. In reducing the fund balance, we’re basically erasing the schools’ increase.”

Kenyon said she believed the council might consider amending the fund balance policy.

“The issue is, the council can vote to use as much of the unassigned fund balance as they choose in the budget, it’s just that they have guidance with their own fund balance policy as to what would be the consequence of the decision,” she said.

It should be noted that the Government Finance Officers Association recommends that a city or town have a reserve that would be sufficient to cover two months of expenses. In the case of Richmond, that would be a fund balance of 16.6%.

What’s next in the budget process

A second and final public hearing on the budget will take place on May 2 at 6 p.m.

Residents approved the abolition of the town’s annual Financial Town Meeting, which has been replaced by a budget referendum on June 5. Voters will be able to cast their ballots from 8 a.m. to 8 p.m. at the Town Hall.