Cheshire reviews revenue gains and bond premium as options to lower proposed mill rate

Town Manager Sean told the Town Council and budget committee on April 15 that recent revenue activity and a favorable bond sale give the council options to lower the town’s proposed FY27 mill rate. He said building-permit receipts through March were well above earlier projections and that the town’s recent bond issuance carried an interest cost near 3.49 percent, better than the roughly 4 percent assumed in January’s budget.

“The bond issuance two weeks ago got our official rate … at about 3.49 percent,” Sean said, and added that the transaction produced premium cash the town can apply over time: “we issued $20,000,000 worth of debt, they gave us $1,140,000 more than we borrowed,” which the town can amortize or apply up front to lower near-term debt-service needs.

Using the mill-rate calculator in live demonstration, Sean showed how increasing permit-revenue assumptions by roughly $250,000 would reduce the calculated mill rate by a few tenths of a mill and cut the average tax increase by several dollars. He also modeled a $1.0 million application of debt-service reserve funds or premium proceeds to FY27 debt service, which lowered the illustrative mill rate and smoothed the tax impact in the short term.

Council members questioned the sustainability of higher permit forecasts. Several cited large projects in the pipeline — including Stonebridge, a proposed West Main Street development, a hotel project, and an Elam Park expansion — but speakers warned that permitting and construction timing are uncertain. “It’s hard to project” that elevated activity will sustain at the same year-over-year pace, Sean told the council, recommending a conservative but responsive approach to assumptions.

Finance staff briefed the council on other revenue lines that affect the mill-rate calculation: recording fees in the town clerk’s office (driven by real-estate activity), Park & Rec summer revenues (timing-sensitive), investment-income assumptions, and miscellaneous collections. Staff cautioned that investment income and state grant reimbursements have proven volatile and that some grant reimbursements have lagged, reducing short-term investment yield.

Sean recommended the council weigh a combination of modest upward adjustments to department revenue estimates and a limited, one-time application of bond premium or reserve funds to smooth FY27 tax impacts rather than relying entirely on higher ongoing revenue assumptions. Council members instructed staff to circulate the updated mill-rate worksheet and return with resolutions for adoption at upcoming meetings.