Hebron Dollars & Sense

Top Down Formula

Details: Created on Thursday, 08 November 2007 10:53

The “Top Down” approach is modeled after the formula used by East Hampton Common Sense Group. In reality, it is a very simple formula designed to let taxpayers know how much money is available for budget increases (or decreases). The Top Down Approach starts with last year’s budget and then makes additions and subtractions based on such things as Grand List increase (or decrease), cost of living adjustments (up or down), debt service reductions (or increases), and efficiencies gained since last year’s budget (for example: electricity budget was less than anticipated and therefore there is a surplus; it takes less employees to accomplish a job than originally thought because over time, employees become more efficient; and so on).

In a nutshell, the Top Down Approach follows this formula:

LAST YEAR’S BUDGET
Plus 80% of Grand List increase*
Plus Cost of Living Adjustment (currently 2.2% over 3 year average)
Minus ½% for prior year’s budget efficiencies**
Minus any debt service (i.e., DEBT) paid off
Plus any new debt service
Plus capital expenditures

EQUALS

NEW BUDGET AMOUNT AVAILABLE

* 80% is used because it would be fiscally unwise to budget 100% of any Grand List increase, which changes year to year.
** ½ % is a very conservative figure.

We believe this is a very reasonable formula, and it takes into account all of the positive things that we know about. Unfortunately, it assumes that Connecticut State Aid to Cities and Towns remains – at a minimum – constant, which we know is not true this year. If budget requests exceed the New Budget Amount Available, it is considered “Above the Town’s Ability to Pay”. As we know, budget requests rarely come in under the New Budget Amount Available.

Hebron Dollars and Sense is currently triple-checking the figures, as we will always do before publishing to our web site. While we have the information required to calculate most of Hebron, taxpayers understand that part of Hebron’s budget includes a Regional School District. In order to determine Hebron’s fair share of Regional School District No. 8’s budget, we must first calculate the “Ability to Pay” (or Top Down Approach) for the other towns, Marlborough and Andover.

Update on the Top Down numbers: We have generated the Top Down dollars several times. However, the budget process is very fluid right now. For example, last week the local Board of Education reduced their budget by $109,266 (a 7.8% increase). This means that we had to re-calculate all the numbers. This week, RHAM learned that the first year's interest on the bonds for the new RHAM building project will be $900,644, instead of the budgeted $1,000,000. This is a savings of $99,356 (Hebron's share of the savings is $50,970). Again, we must re-calculate the numbers. RHAM will also be setting their final budget number on Monday, April 22 at their 7:30 meeting, which may or may not require another re-calculation. As soon as we have the actual numbers, we will publish the Top Down figures. At that time, we will alert the public on the home page of www.HebronDollarsandSense.com to let you know the numbers are in!