Manager proposes slightly higher tax rate under 1 cent as budget offset; TERS and new BPP exemption drive pressure

Mikhail presented the general‑fund picture: an estimated fund balance of about $5.1M, a 60‑day reserve of roughly $2.6M and an unrestricted balance near $2.5M. He told council the proposed manager tax rate is approximately 0.4712 (M&O 0.300), which staff said would balance the proposed budget as presented.

Staff outlined three major budget pressures: the 28% increase in medical premiums (estimated FY27 impact ~ $300,000), the town's increased TERS payment (about $349,000 impact), and the state legislative change that expanded the business personal property exemption resulting in an estimated revenue loss of about $546,000. The manager presented alternatives: (1) adopt the proposed rate, (2) reduce funded positions or use special‑project fund balances to hold the line, or (3) increase the rate further to fully fund more positions and projects.

Council and staff discussed the accounting treatment of the special projects fund and whether TERS allocations should be presented net of transfers. Staff committed to auditing the special projects fund and validating all earmarks prior to finalizing the budget for adoption; the manager also noted the proposed rate will be formally placed on the next agenda and that public hearings will be set before final adoption.