Friday, May 11, 2001
Finance Committee members discuss their role, town spending and future concerns
Recent discussions with the seven members of the Carlisle Financial Committee provided an opportunity to probe the role of the FinCom and to hear concerns the various members share as they look forward to substantial capital spending for new schools and other town needs. Those concerns include a tax rate that is one of the highest in the state, an excellent bond rating that could be threatened if an override were to fail, and a desire to put more money into the stabilization fund to buffer the effects of future spending.
Throughout these discussions there emerged three important roles the FinCom fills for the town: providing a framework for analysing the budget, balancing priorities and making recommendations, and overseeing the financial health of the town as a watchdog.
Guidelines provide framework
The FinCom guidelines, which set allowable increases for each department while maintaining a balanced budget, provide a framework for understanding the town budget. It would be overwhelming if there were no structure, says chair Simon Platt.
The guidelines are set in October or November for the fiscal year starting the following July. According to Platt, We take into account the previous years budgets and results, try to deal with disasters and icebergs, and look at cost drivers and items not dealt with. History is also important in understanding what drives cost increases. An example is population growth, which has a large effect on the schools but may not affect the police budget. Policing 4500 people is not greatly different from policing 3500. Projections of revenue are derived by estimating growth in the tax base, state aid, and other revenue sources.
According to Platt, The guideline is our first guess, a broad indication of where we want to be. We dont try to be artificially low, but try to anticipate the budget that will provide level services. That way we can focus in and highlight where something new is being proposed, such as extra hours at the library.
Hearings on the guidelines begin in January, with each department that requests a higher level invited to defend their request. The goal is to be ready to recommend a budget by March.
The next step involves a balancing act. The FinCom must make recommendations to the selectmen on the budgets for each department for the next year, and on the Warrant articles for programs and capital equipment outside the budgets.
According to Platt, We try to balance priorities within the constraints of state rules. We recommend an allocation of town resources, but our role is clearly advisory; the outcome of the process is a recommendation. It is not our job to set policy. We dont decide if a proposal is a good thing or bad, but look at its effect on finances.
The selectmen are under no obligation to agree with FinCom recommendations, and sometimes they havent. In recent years the selectmen have supported overrides of Proposition 2-1/2 limits on property taxes in order to fund requested services.
When the Warrant is ready, the FinCom makes recommendations to Town Meeting. Again, those recommendations are non-binding, and the town has sometimes supported projects panned by the FinCom. As an example, says Platt, a few years ago we felt ten thousand dollars for the Tot Lot was not a priority, but the town came back and said yes it is.
Several FinCom members expressed frustration with voters at Town Meeting who ignore FinCom recommendations and repeatedly vote for programs that drive up taxes. But Charlie Parker believes voters do listen, The town likes to have a FinCom recommendation. We take our role seriously and our recommendations are well-done, carefully considered, and balanced. Adds David Trask, Departments get a thorough review and we end up with a reasonably valid real projection of need.
Guarding financial health
It was interesting how often the word watchdog came up. An important part of any FinCom recommendation is an analysis of the effect on the tax rate and on the towns long-term finances. According to John Nock, Its our responsibility to review departments in more detail than a citizen can. We assure the town things are in order and proposals are reasonable. Adds Parker, Were the ones concerned with where spending is taking the town. My guess is that no one else worries about the towns bond rating - but we do.
Taxes - nowhere but up?
The town amazes me, says David Trask, Taxpayers want to put themselves under this high tax burden. Trask points out that according to the Massachusetts Department of Revenue database, Carlisle has the fourth highest tax rate in the state but were not the fourth wealthiest town. Generous taxpayers are being strained. Retired people who dont benefit from the schools will move out. Trask is also concerned that high tax bills preselect future residents to be wealthy - the town will have no diversity at all. I dont think thats good.
Allison shares that concern. The tax rate is making it unaffordable to live here unless you have kids in the schools. Special interests like the schools and library are driving the tax rate out of sight. Over the past two years the rate has risen 20 to 25%, and incomes are not keeping up. He adds, Maybe new owners with million-dollar homes can afford the tax increase, but at some point the retired person without kids in the schools will move, and a family with two or three children will move in. Allison points to efforts by the FinCom to keep control of the tax rate, But Town Meeting continues to vote yes - its sometimes frustrating. We need to get the message to the town that not everybody can easily afford these taxes, unless we want a town thats all millionaires.
Parker says The town is freer spending than five years ago. Theres been an influx of wealthier people, readier to spend money. We have been going through good times. People tend to get in the habit of thinking spending is not a problem. But Platt adds, These things go in cycles. We have learned to accept that some part of the school budget will end up in an override. But, he warns Im fearful that at some point indigestion may set in. Adds Trask, A recession will be much more painful with a high tax rate.
Keeping overrides to a reasonable level has been a significant challenge. Says Tony Allison, Many people fail to realize a failed override affects he towns bond rating. It shows citizens are fed up with new taxes, and raises the risk for creditors. By working to minimize override amounts, the FinCom hopes to safeguard the towns bond rating and ensure a reasonable cost for borrowing in the future.
The FinCom members are also concerned that the town prepare for substantial capital spending on the horizon. There are some big expenses on the radar screen, says Allison. We need to plan for a new school in Carlisle, high school capital costs of $10-12 million, and a fire department that could cost $500,000 if we professionalize. Platt points out Carlisle has the last volunteer fire department within Route 495 and agrees, Pressure is coming. He adds, Im particularly concerned about a second school. The capital cost of $13 million is not as much a concern as on-going operating cost. The library went from $200,000 per year to $400,000 after expansion.
Good financial balance?
Ives adds the Community Preservation Act and the school septic project to the list of expenses that must be planned for, but says, I think the towns finances are in good balance. Debt service is 11% of the budget, which is reasonable, and weve been able to put money into the stabilization fund. He adds We also have $900,000 in free cash. This is our piggy bank. He points to the towns excellent bond rating, and notes new growth revenues have risen by $550,000 this year. Taxes have risen the past two years, but are now leveling off.
Trask is less optimistic. If you ignore the Wang Coombs money, which is not available, we have almost nothing in the stabilization fund. We are facing substantial future expenses with no money set aside - the schools demand everything we can raise. He points to Acton which has a stabilization fund of $400,000 to $500,000; Carlisles is $5,000. It would be nice to have $500,000 to start for debt service. The town is currently selling a lot on Carriage Way and expects to add $450,000 to the stabilization fund when the sale is complete.
School costs on the rise
Of concern is the inability to hold down the rising cost in education. In general we do pretty well in controlling cost, but the schools are a separate case, says Ives. This year the high school budget was the most challenging negotiation the FinCom faced. According to Platt, The high school issue was very difficult
Parker agrees, Their [regional school committee] position was very unyielding. It was one of the tougher negotiations we have ever faced. He adds, The tenor of negotiations is different from those with the Carlisle school; there we are generally able to work something out and negotiations go smoothly. Parker calls the high school budget the least disciplined of all the budgets we see.
Parker is concerned with the regional school committees uncompromising attitude and adds Concord has no history of looking favorably at overrides. Adds Allison, The high school is not sympathetic to other issues. We tried to look at the cost of the Metco program which requires a $800K subsidy, but the subject was radioactive: they would sooner fire 3 teachers and reduce the athletic program. I think there was a brinkmanship that didnt need to happen. Allison also fears the regional school committee is risking a failed override. According to Davida [Carlisle Superintendent Fox-Melanson], when the 1989 override failed [for the Carlisle school] it took five years to get back to where they left off. Once programs are shut down, it takes time to rebuild. This is a real danger.
Parker is also concerned that growth in the school population will make it difficult to control education costs. We really have to get growth under control. Taxes on a new home do not cover the cost of educating the two or three children who live there. He points to Acton which is going bankrupt because there is no growth control. At issue is a new Carlisle school which sounds pretty inevitable. Growth is making it almost a certainty.
A more extreme position on controlling school costs is voiced by Trask. The school committees are convinced their salvation depends on high funding. I just dont believe that. I dont think it would hurt school quality to lower the budget. The school committees over-emphasize the role of money. We pay a high price to have top schools, when we could have very good schools, maybe not number one, but number 3 or 4 in the MCAS, and kids would still get good educations and go to good colleges.
Is the FinCom representative?
Barton laughs when asked if the FinCom is representative of Carlisle. Without a female or minority, it looks like a white mans club, he admits. Platt makes the point that the FinCom members are appointed by the selectmen and the board is not intended to be representative. In addition, there is a very small pool of qualified people interested in joining. He adds, I would welcome women on the board; this is a population that needs to be represented. I urge those who have an interest and some financial experience to come forward. Parker agrees, When anyone complains about the make-up of the board, I ask them what are they doing from a voluntary stand-point? Findingf the apparent sameness of the board, a variety of opinions are represented and expressed. Parker says, The board is a mix of conservative and moderate opinions; different viewpoints are reflected in the discussions. He adds, Theres always discussion, but its very rarely contentious. Were collegial, but not always unanimous.Allison agrees. Theres a wide range of opinion, from those who want no overrides to those who say whatever the schools want. Ives points out that on the Community Preservation Act, The FinCom split 2 for and 3 against with one abstaining and one absent. He also notes that on the high school budget some wanted a higher level of override. The board is by no means unanimous.
In general, however the board tends to be conservative on spending. Parker defends this positon, Its appropriate for us to be the most conservative board financially. The town looks to us to be the watchdog. Were the entity that concerns itself with financial discipline, and we allow others to do the progressive thinking. Its healthy. Nock agrees. The board members have various opinions, but tend to be more conservative. The FinCom attracts people who have to be convinced to spend money. It may be good because its what the townspeople want and expect.
Barton believes the board works well together. Theyre terrific contributors with interesting backgrounds and agendas. Theres diversity of opinion, and attitudes can change. Sometimes someone takes a hard position to test the waters, but each can modify a position. He adds, All have interests in other parts of community - the schools, the library, LT Caps [long-term capital needs], ConsCom, and others. Summarizes Platt, Theres much debate, but in the end, you have to do what you thinks right. The challenge is to stay away from policy.
Is the process for settling the town budget too much like watching sausage be made? Pratt believes the process works. I dont think its a bad structure, but Im open to input if someone has a better way to do it. He believes that seven is the right number of FinCom members. Much smaller and one member has too much sway, larger and is becomes unwieldy. He adds, If townspeople have concerns, they should direct questions to the moderator at Town Meeting. We would welcome a more interactive dialog.
Other members pointed to changes that have improved communications and accuracy. Says Allison, Two or three years ago the FinComs presentation at Town Meeting was disorganized. We had gone through 18 or 19 drafts of the warrant , and the spreadsheets were in disarray. It was embarrassing. Allison credits the formation of the FinTeam with solving that problem, This was a great step forward in communication. Ives explains that the FinTeam, fomed by selectman Doug Stevenson, is a bi-weekly meeting of the towns financial people, including the FinCom, selectmen, town administrator, school business manager, and treasurer/tax collector. Says Ives, This has helped communications immensely. Doug deserves a lot of credit. Now theres no excuse for going off in different directions.
The members of the FinCom agree the town is pretty well run financially. We are good and thorough in our overview, and I believe we are repected by the other boards , says Parker. Adds Allison, Were in fine shape if we can keep the budget in line. Otherwise it will be difficult for low to moderate income residents to stay in town.
Summarizes Barton, In general were in pretty good shape if we keep control of the tax rate.
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