Friday, October 15, 1999
Line drive back to FinCom for budget contingency plan
Citing requirements of due process and the role of the finance committee as an impartial third party in budget matters, the selectmen on Tuesday whacked the ball back to the FinCom to structure a feasible contingency plan should a transfer from free cash not be possible to fix the shortfall in the FY00 budget. In so doing, the board rejected the FinCom's recommendation that, to make up the $189,043 shortfall, $89,043 be taken from the reserve fund and $100,000 be taken from the conservation fund. This latter transfer would entirely deplete the fund established at the town election just last May.
The contingency plan is Article 5 of the Warrant for the Special Town Meeting. This article is to be moved only if Article 4, requesting the budget to be balanced with a transfer from free cash, does not pass. Alternatively, Article 5 would also have to be moved if the state does not certify free cash in time for the Special Town Meeting.
The selectmen have been wrestling with the contingency plan for the past several weeks and delayed taking any action on the FinCom's original recommendation until discussing the option with the conservation commission. At Tuesday's meeting, selectmen chair Doug Stevenson stated that, after consulting with members of the ConsCom, he could not recommend a full depletion of the conservation fund. Selectman John Ballantine added that any significant reduction of the fund will severely restrict the ConsCom's ability to negotiate more than one conservation restriction, at least two of which are under discussion now.
Selectman Michael Fitzgerald, who originally voted against replenishing the conservation fund last spring on fiscal responsibility grounds, stated that depleting this fund would override what the voters clearly stated they wanted. Referring to the petition to place the Conant Land under conservation restriction, Fitzgerald also noted, "This is not the meeting to balance the budget on the back of the conservation fund.
The question then became how to spread the $189,043 shortfall around. It quickly became apparent that, since the FinCom is charged with the responsibility of making budget recommendations and must present any changes at Town Meeting, the FinCom must determine how to allocate the deficit. Moreover, selectmen clearly stated that this task must be done after giving notice to all departments and committees that they need to identify areas that could be scaled back in a budget emergency.
Regardless of the contingency plan actually recommended, however, the plan must still be approved by Town Meeting. If both Article 4 and Article 5 fail, explained Fitzgerald, the result is that the town continues to pay $10,000 a month in short-term interest on bank loans to keep the town running until tax bills can be mailed. (State law requires a balanced budget before the tax rate can be set.)
The previous evening, the FinCom had reviewed the latest changes to the town's estimate of this underbudgeting, and alternative strategies to arranging for appropriations to cover the shortfall at the November 2 Town Meeting.
In earlier discusssions, the deficit for the current fiscal year had appeared to be about $206,000, but by October 4 this figure had declined to about $189,043. Newly uncovered expenses included about $38,000 in potential teacher unemployment insurance claims, $15,000 in additional personnel expenses for the police, and $30,000 for interest on tax anticipation notes. (This expense results from the failure to balance the budget at last spring's Town Meeting. This year's tax rate cannot be approved by the state until voters approve a balanced budget, now delayed until the November 2 Town Meeting.) Not included are additional expenses anticipated for proposed renovations to make the Carlisle School Brick Building handicapped-accessible. Offsetting these additional expenses will be an unexpected reduction of $42,000 in the assessment for Minuteman Science-Technology High School, and about $26,000 in additonal funding from the state lottery.
Strategies to cover this shortfall depend on whether the state department of revenue certifies the level of town's free cash for this fiscal year (FY00) before the November 2 Town Meeting. "Free cash" refers to funds currently available to the town to spend without raising taxes, usually accumulated from budget surpluses in prior years. Each year, the DOR must approve the town's calculation of changes in the level of free cash, and historically the approval date has been unpredictable. Voters cannot legally appropriate anything from these funds until the state has "certified" free cash for the current fiscal year.
If FY2000 free cash has been certified by November 2, voters will be asked to approve increases in particular budget lines using transfers from free cash totalling about $189,043. However, should free cash not be available for appropriation by the day of Town Meeting, the town will have to find that sum somewhere within the operating budget. Town Meeting could cover these deficits from the reserve fund, usually set aside for "extraordinary" or "unanticipated" expenses, with the expectation that voters at the spring Town Meeting would replenish the fund from free cash.
However, the 125,000 appropriated to the reserve fund is much less than the total needed, so the town would still have to reduce other budgets. FinCom members suggested eliminating last spring's appropriation of $100,000 for the conservation fund, with the understanding this fund might also be replenished at spring Town Meeting. An additional $80,000 would be transferred from the reserve fund to make up the entire deficit, leaving the reserve fund with $45,000 and ConsCom with no funds available to cover expenses associated with exploring land purchases until the spring Town Meeting.
© 1999 The Carlisle Mosquito