Charter Commission proposes 7% budget cap, a fix that won't solve the problem


Charter Revision Commission. Budget limit debate on YouTube video starts at about 1:24:00

The Charter Revision Commission (CRC) approved a budget referendum, but only if officials proposed a budget that exceeded a 7% increase. If the budget fails in the referendum, it would automatically cap at 7%.

By forcing a referendum on any budget exceeding 7%, the CRC proposal effectively imposes a budget cap. While this might sound like a way to control taxes, it overlooks a fundamental issue: property tax rates fluctuate due to factors outside the town’s control.

The 2023 budget year proves this point: even with a 5.4% budget increase, homeowners saw their tax bills jump by 8-9%. The increase in taxes wasn't entirely due to spending—it happened because property taxes are affected by multiple conditions. A budget cap wouldn't have prevented these increases.

Enfield's problem is revenue. Property taxes must make up the difference when other revenue sources decline—whether state aid, investment returns, or fees. In 2023, we saw this play out as miscellaneous revenues dropped by nearly 50%. Even with careful spending control, such revenue losses force higher property taxes to maintain basic services. But Enfield's more serious issue is the grand list.

Grand List Impact on Tax Rates

If commercial, industrial, and personal property tax sources aren't keeping up with the residential share of the grand list pie, the tax burden on homeowners increases.

Before the 2021 revaluation, residential properties made up 60.05% of Enfield's grand list. After revaluation, that jumped to 61.96%, and has stayed around that level since (61.69% in 2023). This might seem like a small percentage change, but it represents millions of dollars in shifted tax burden to homeowners.

To find the residential share of the tax burden, divide the residential property value by the total grand list value and multiply by 100 to get the percentage.

For example:

In 2020 before revaluation:

-- Residential property value: $1.80 billion
-- Total grand list: $3.00 billion
-- $1.80 billion ÷ $3.00 billion = 0.6005
-- 0.6005 × 100 = 60.05%

In 2021 after revaluation:

-- Residential property value: $2.28 billion
-- Total grand list: $3.68 billion
-- $2.28 billion ÷ $3.68 billion = 0.6196
-- 0.6196 × 100 = 61.96%

The tax shift to residential explains why both parties have struggled with taxes. When Democrats increased spending to address areas they believed had been underfunded during years of Republican control, the combination of their spending goals and revaluation impacts proved costly.

The 2023 Tax Rate Increase

The largest budget increase in the past five years occurred in 2023 at 5.4%, but the tax rate increase exceeded the budget hike. 

Examples of 2023 residential tax increases on single-family houses:

📌 Abbe Road: $6,286 → $6,829 (+$543, +8.6%)
📌 Cora Street: $4,457 → $4,843 (+$386, +8.7%)
📌 Redwood Street: $4,151 → $4,513 (+$362, +8.7%)

It was a hard tax increase for residents to accept, and the Democrats lost the majority in the election. But the Republicans, despite campaigning on tax relief, couldn't reduce rates in 2024. Enfield's problem is structural.

If the CRC changes its approach from a budget cap to a tax cap, it faces an entirely different problem: predicting the future.

Multiple Factors Can Hurt the Town's Finances:

-- If property values shift dramatically during revaluation, as they did in 2021, it may force the town to make deep service cuts.

-- Major business closures that shrink commercial, personal property, or industrial tax revenue will set the stage for another residential tax shift.

-- Failing to reach economic development goals.

-- Federal grants ending or state assistance being cut.

-- Macroeconomic problems, such as declines in investment income.

Apart from those factors, the town has unyielding obligations, including contracted salary increases, state-mandated education spending, and debt service costs.

If these costs increase while other revenues decrease, staying under a tax cap could be impossible without defaulting on obligations.

What's clear: Economic Development is The Top Priority 

A budget spending limit or a tax cap accomplishes nothing. No council will raise the budget by 7% unless there's a tremendous and unavoidable expense. But a tax cap would be like promising to control a car's speed while someone else controls the engine, brakes, and road conditions. It might sound good to voters, but it could damage town services and financial stability.

There are hard limits to spending cuts, unless the town wants a smaller police department and larger classroom sizes. Enfield's budget outlook depends on successful economic development. That ought to be the number one priority. Budget or tax caps, in any form, are gimmicks—more a product of frustration than of prudent financial planning.


Location: Enfield, CT 06082, USA

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