MERIDEN — City officials want to use half of the $3.43 million in unanticipated tax revenue recently received from Eversource Energy to “prepay” for items in next year’s budget.
The other half would go toward items in this year’s budget, according to a proposal by City Manager Tim Coon and Finance Director Michael Lupkas.
Without any discussion, the City Council voted Tuesday night to refer the proposal to the council’s Finance Committee. The committee is expected to take up the plan on Feb. 26.
Under the plan, the city would “prepay” for $1.2 million in health insurance costs, $400,000 for retirement benefits, and $104,000 for two new police cruisers. The remaining $1.73 million would be applied to the current budget, including $800,000 for health care, $200,000 for retirement benefits and $732,000 into the city’s unassigned fund balance or “rainy day fund.”
The city is putting money toward the rainy day fund because it is currently below 8.33 percent of the overall budget. After the city finished the fiscal year 2017-18 with a $2 million deficit, the unassigned fund balance fell to just below $15 million at the end of June 2018, according to a financial audit released last month.
The $800,00 that would go toward health care expenses in this year’s budget would reduce the account’s current deficit of $1.8 million. The $200,000 being put toward retirement benefits in this year’s budget is meant to restore a cut the City Council made during a budget revision process last summer.
The city received the $3.43 million payment from Eversource after discovering a clerical error resulted in the utility’s personal property being significantly under-assessed for the 2016 and 2017 grand list years.
Since learning of the errors in November, city officials have expressed optimism that the $3.4 million could be used to offset next year’s budget.
"The mill rate will certainly be lower than it otherwise would have been if we didn't capture the Eversource underpayment," Finance Committee Chairman Brian Daniels said last month.
Any reduction in taxes would be welcomed by many city residents, 6,000 of whom voted to reject the council's original budget at a July referendum.
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