By Kevin McNabola
Orange Board of Finance
Kevin McNabola
It is clear that most municipalities within Connecticut, including Orange, weathered inflationary pressures, high interest rates and events of the COVID-19 pandemic quite well. While some of the same challenges of municipal budgeting remain, next year the Board of Finance will need to consider and factor the impact of revaluation.
The Board of Finance met last month and has already started to lay the groundwork for the upcoming budget process for fiscal year 2024-2025, which essentially starts in January with formal budget reviews. The upcoming budget contains a few key drivers, including the impact of revaluation, the student enrollment shift within the Amity Regional School District and the upcoming Amity teachers’ contract.
The student enrollment shift includes an increase in the number of students from Orange attending Amity for the upcoming year, which will increase the budget by $438,853 before a single dollar of additional funding is proposed and approved within the Amity budget.
The Amity district also has recently negotiated their teachers’ contract, which contains a 13.5 percent increase over the three-year term of the contract (a 4.5 percent average per year, which includes both general wage increase a step increase). This increase is commensurate with the current labor market within Connecticut and the current standard of 12.9 percent based on recent negotiations of other districts throughout Connecticut.
The good news within the Amity budget is that debt service continues to decrease, so there will be somewhat of an offset to the wage increases.
Revaluation, which is conducted every five years for all municipalities throughout Connecticut, is a program that values all property, including real estate as well as residential and commercial properties. Based on current market conditions, it is highly likely that a single-family home in Orange could see an assessment value increase anywhere from 30 percent to 50 percent from the previous revaluation in 2017, depending on the style and condition of the home versus the previous revaluation.
It is important to note that the revaluation was delayed by one year with the expectation that home prices would fall between 2022 and 2023. That was an assumption that many experts in the field expected based on increasing interest rates and mortgage rates. We are now at a 30-year high for mortgage rates, hovering around 7.25 percent. But the housing market in Orange has continued to exceed expectations, increasing 6.5 percent from 2022 to 2023.
Where the property assessment land will ultimately determine the new mill rate for the upcoming budget year. It is highly likely that we will be looking at a major downward shift from the current mill rate of 32.31 in order to mitigate any potential tax impact from higher property values.
It is important to understand that the economy here in Orange is good. Property values Orange are strong because we have excellent and highly competitive school districts at both the elementary and regional high school, which has driven high demand for single-family home ownership, particularly among those aged 24-40. People from this group have left other communities throughout Connecticut and New York to reside here in Orange, making Orange a great place to raise a family.
Kevin McNabola is the chief financial officer for the city of Meriden and a member of the Orange Board of Finance.