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At the regular Milan Town Board meeting in June, the town board voted unanimously to reduce General Fund spending by $27,221, based on a projected revenue shortfall of $60,000. The town board also reduced the budgeted revenue by the same amount to keep the budget in balance. The major reason for this decline in revenue is a sharp drop in mortgage tax. Last year, the town board projected that the town would receive $90,000 in mortgage tax. It appears now that the town will receive less than half this amount – only around $42,000, leaving a deficit of $48,000 in this account alone. Other smaller areas of lower than budgeted revenue bring the total to $60,000. Unless there is an upswing in revenues in the second half of the year, it is certain that further cuts will have to be made to balance the budget, a constitutional requirement.

Added to the town’s financial problems is the cost of growing cost of health insurance. The previous town board budgeted $60,000 to cover these costs, but despite changing one of the policies to a lower cost one, the town will pay over $75,000 in this fiscal year. It should be said that the town board members were unaware of the 34 percent increase in premiums when it approved the final budget. If left as is, this would add another $11,000 to the deficit.

To remedy this situation, the town board held a special meeting on June 30, and after considerable discussion and analyses, voted to change both the employee and retiree plans. These changes will result in $9,000 in savings over the remainder of the fiscal year on just the general side of the budget. Comparing the present plan with the newly approved plan, the new plan will result in a $28,000 reduction over the course of a year. Both plans provide for reduced premiums for the town and the participants in the health plans. The plans are due to go into effect on August 1.

It should be noted that the revenue shortfalls in this year’s budget are not likely to be made up in next year’s revenues. Thus, there is a strong likelihood that the 2011 budget will have to reflect these reductions. It’s belt-tightening time.