Redding taxes within the DRG

Considered within its DRG, Redding house prices are very competitive: one can live in a very nice home with plenty of land for $500,000, typically with more bedrooms and land area than one can buy in, say, Darien for the same price. Put another way, the median home price of a house in Redding is substantially less than in Darien.

Correspondingly, the median tax bill for houses in Redding has consistently been at or near the bottom among the districts in our DRG. This illustrates the fact that while the mill rate in Redding may be higher than in other towns, when you get down to dollars and cents, you still tend to pay less in taxes according to the median.

This is illustrated in the following table (click here for larger fonts): Comparison of DRG A Districts Median Taxes New Margins c

Parsing the rises in school costs

There are many line items involved in crafting a school budget; for a very comprehensive description of this year’s proposed budget, please see this report, Redding.School1819Budget.Facts, to the Redding community from Superintendent Dr. Tom McMorran. But two general types of line items that have recently contributed substantially to rising costs of education are special education and health insurance. In this post we look at how those costs have changed recently in Redding, focusing particularly on K-8 where next year’s budget is still up in the air.

Just as a biological reality, quite independent from policies and administrations, the proportion of special education students has steadily risen, as has severity of special needs. Consider for instance the incidence of diagnosed autism: according to one recent CDC study, the incidence is currently estimated to be 1 in 59 children. Back in 2000, the estimate from the CDC was 1 in 150.

Connecticut state law mandates that adequate professional and paraprofessional care be afforded to children identified as special needs students, which in Redding K-8 is about 1 in 14 students. Meanwhile, costs associated with such care are often much higher than the costs for general education students, and continue to rise. The increase of special ed costs from 2017-2018 to 2018-2019 (pending approval of the budget) is more than $650,000, according to Dr. McMorran’s report, and the need for that increase seems not to be in question for either the BOE or the BOF.

Health insurance costs (for both students and staff) have recently spiked. To meet adequate levels of coverage, the BOE currently requests $350,000 more than last year’s insurance bill, representing about a 19% rise. This despite a slight dip in student population, and despite the search for competitive pricing.

Transportation costs are also up, by more than $100,000.

Other items — basic overhead costs having nothing to do with declining enrollment numbers, such as costs of heating oil and air conditioning, building maintenance, septic, and cleaning — also add to the general rise in school costs. For example, operation and maintenance of the physical plant is up by about $100,000.

Given these realities, there are significant pressures making it increasingly difficult to hold total school expenditures down. But, in Redding they have been held down. If we put just special education and health insurance costs to one side and look at all other spending (including overhead expenditures) combined, that spending has gone down by about $1.2 million between 2012-2013 and 2017-2018, in other words by about 8.2%. Under the current budget proposal, it will sink even further, down by $1.6 million (or about 11%) relative to the 2012-2013 level.

More information can be gleaned from this table, from which some of the costs cited above were drawn.

Recent History of Town Budgets within DRG A

The following chart


gives a history of year-over-year town budget increases for the towns in our District Resource Group, since fiscal year 2012-2013.

Notice that Redding is the only district in the DRG where the cumulative growth since 2012-2013 is negative, as indicated in the final column.

To check the numbers in the final column, choose an imaginary starting number for a 2011-2012 budget (it can be anything, say 10,000,000), and then to get to the next budget, multiply by 1 + r where r is the increase for that year. For example, Darien would grow by a factor of 1.0481 the first year, to 10,481,000. In the second year, it would grow from 10,481,000 to that times 1.0405, or 10,905,481. Keep going, and the end result for the last year is about 13,150,000, or in other words a 31.5% increase over the 2011-2012 budget.

What is the Mill Rate?

The mill rate is a type of tax rate. The “mill” doesn’t refer to grinding into flour; rather it means one-thousandth, as in the word “millimeter”. Thus a mill rate of 30 means 30/1000, or in other words a tax rate of .03 or 3% (not 30% of course!).

Definition: the mill rate is the rate at which property values must be taxed in order to cover a municipality’s tax bill.  Here’s how this works, using Redding as our example.

First, there is the tax bill; if the Referendum passes, then the total taxes the town must raise to cover the budget is currently given as $48,688,556.

Then, there is the total combined value of assessed property values, called the Net Grand List. That total amount is $1,550,912,552. We’ll say a little more later about that number, but for now the indicated link gives a breakdown of properties that are assessed for tax purposes (residential, commercial, motor vehicle, etc.).

You get the mill rate by dividing total taxes by the total combined assessed property values. Well, that’s almost correct: you have to figure in that not everyone is going to pay all their taxes for this year. But recent history suggests that a 99% tax collection rate for Redding is reasonable. And so the formula is

  • Mill rate = (total taxes) / (.99 times Net Grand List).

We get (.99) times 1,550,912,552 = 1,535,403,426, and so the mill rate is 48,688,556 divided by 1,535,403,426, which is .0031711 (rounding up at the last decimal place). That means the calculated mill rate is 31.711. The mill rate that the BOF approved is 31.72. Last year it was 29.62.

Some people may say or think that going from 29.62 to 31.72, a jump of 7.1%, means that taxes are being increased by 7.1%. That would be false. The tax increase is from $47,577,482 to $48,688,556, which is a 2.34% increase.

The discrepancy between the two figures (7.1 versus 2.34) is accounted for by the change in the Net Grand List between this year and last; this change is the result of the 2017 revaluation, which brought the Net Grand List down, from $1,622,853,113 to $1,550,912,552, a drop of 4.43%. The smaller the Net Grand List, the larger the mill rate must be to make up the difference. But in terms of actual tax dollars, the rise is 2.34%.

By State law, the Net Grand List is adjusted every five years. The approaching budget year (July 1, 2018 to June 30, 2019) happens to be at the beginning of the 5-year cycle, during which the Net Grand List will remain fixed at $1.55 billion. Thus, next year the change in mill rate will accurately reflect the change in taxes to be raised.

Finally, let us emphasize that mill rates all by themselves don’t tell you much about typical house property bills. This is well illustrated by the following table (click here for larger fonts): Comparison of DRG A Districts Median Taxes New Margins c.

Compare this post.