NEW CANAAN — A debate that hits at the core of how the town sets its budget and tax rates is sitting like a cloud over this year’s finance deliberations.

The Town Council would like to set the budget based on a tax collection rate closer to reality, while the finance board prefers underestimating the collection rate as has been town tradition. Anticipated tax revenue influences how much the town can spend and what the mill rate is set at.

Despite a lingering disagreement with the Board of Finance, the Town Council approved a $148,136,106 million 2017-2018 town budget April 5. The council moved the estimated tax collection rate up half a percent to 98.5 percent, still well below the town’s three-year average collection rate of 99.56 percent. Most municipalities underestimate collection rates on the tax levy to leave a buffer of sorts.

The council’s approval came the night after a meeting of the Board of Finance, at which Town Council Chairman Bill Walbert and Vice Chairman Steve Karl were present to voice the concerns from within their body over the tax collection rate set lower, 98 percent, than the town’s three-year average collection rate, 99.56 percent.

An increase as high as 99 percent was favored by some members of the Town Council.

The Board of Finance, however, voiced unanimous opposition to any change April 4.

“So what would you do with that? That’s extra money that’s out there that is effectively part of the reserve,” Board of Finance Chairman John Sheffield said. “You could take it out of this pocket over here, and you could put it in this pocket here. And what have you done?”

Indeed, the Town Council was not ultimately swayed by the Board of Finance’s hard stance on the collection rate, though some members worried that changing the rate against the wishes of the finance board might strain the relationship between the two town bodies.

“I just hope this does not really harm our relationship with the board of finance that we were working really very, very, very hard to improve in past years. I wish we had this discussion a whole lot earlier,” Town Councilman Penny Young said Tuesday night. She and Kenneth Campbell were the two members of the council to vote against making the change.

Those who wished to take action on what they thought was both a controls issue and a responsible move on behalf of the taxpayers prevailed.

“The reality is, you’re setting yourself up for overtaxing for a lot of dollars for next year, which creates a bias toward spending, bias toward increasing general fund,” said Town Councilman Kevin Moynihan, who argued that with a more accurate representation of the money raised by taxes the mill rate might be reduced, should the Board of Finance decide to still take $3.7 million out of the general fund. “I think it’s the right thing to do.”

In less contentious fashion, the council passed the Board of Education’s $87.6 million budget and $32.6 million in total town operating expenses.

The Board of Finance will now complete the budget process by setting the mill rate on May 9.

justin.papp@scni.com; @justinjpapp1