Friday, October 5, 2001
Fearing slowing economy, finance committee sets conservative FY03 guidelines
The Carlisle Finance Committee (FinCom) has voted preliminary guidelines of 5% for the schools and 2.5% for all other town departments for the fiscal year 2003 (FY03) budget. According to FinCom member David Ives, the resulting tax rate would rise 4.6%, from $15.78 this year to $16.40 next year. This calculation does not count an additional 2% for the Community Preservation Act surtax to fund conservation, historical preservation and affordable housing.
Worry over "wild cards"
Every fall the FinCom sets upper limits for budget increases for all departments for the following fiscal year. In setting these guidelines the committee needs to anticipate certain "wild cards," that is, make guesses of how non-tax revenues and certain expenses will change in the coming year. These include possible increases or decreases in:
(a) state aid, including funds from the lottery. The actual amount received in various categories is usually not known until well after annual town meeting, making exact prediction of income to offset taxes a guessing game;
(b) "local receipts," funds the town takes in for licenses, fees, motor vehicle excise taxes, etc. Again, the FinCom must try to predict how much will be collected in a year which begins the following July. This is usually based on the previous year's total, which is often not known to FinCom members until after they have set a guideline.
(c) the level of the town's "free cash" available for transfer to support operating expenses;
(d) "new growth" in property valuation due to new construction and other building activity;
(e) short term interest and other borrowing costs not excluded from the Proposition 2-1/2 levy limit.
Anticipating a slowdown in building and other economic activity, members discussed the need to make conservative revenue assumptions for FY03. They have reduced the tax increases expected from "new growth" to just over half this year's figure ($21.4 million vs. over $39 million for FY02). They have also eliminated a traditional budget balancing device - a transfer from the town's "free cash." Finally, the guideline proposal also assumes no increase in state aid or local receipts, and no change in costs for short-term interest.
Low assumption for high school increase
At meetings on September 11 and 27 some FinCom members worried about issuing a guideline that seemed unrealistic for both school and town departments. Carlisle's share of the Concord-Carlisle High School budget is projected to continue to rise for this and the next few years as enrollment from the town leaps upward. Member Larry Barton feared a possible increase of 15 to 16% in the town's assessment for the high school, and expressed concern about setting a guideline without even knowing the change in the proportion of Carlisle students at the school. However, the FinCom's guideline does not account for any increase beyond
In the past the guideline set by the Town of Concord's FinCom has set the de facto increase paid by both towns. This year Concord's FinCom is expected to issue its guideline for CCHS on or about November 15, following hearings with the school administration and the regional school committee. Differences between the two towns' guidelines were a source of confusion and difficulty last winter and spring, as leaders sought to avoid a last minute joint town meeting to resolve the discrepancy.
Health insurance up
The FY03 guidelines set by the committee do not allow for an expected increase of 20 to 30% in costs for employees' health insurance, or any change in short terms borrowing costs from last year.
Free cash, stabilization fund
Based on records prepared by the town accountant, each year the state department of revenue certifies an amount of "free cash," an accumulation of unspent appropriations and nontax receipts in excess what was expected. These funds are then available for transfer to any town budget by Town Meeting, without regard for the Proposition 2-1/2 limits. Though not yet certified, FinCom currently estimates free cash at just under the traditional goal of $500,000 (after subtracting transfers from that fund already approved by voters).
FinCom also expects that nearly $900,000 will be the eventual balance in the town's stabilization fund, after funds from sale of a town-owned lot to developer William Costello and additional receipts from the sale of the O'Rourke land to the US Fish and Wildlife Service are added. About a third of the total in the fund has been reserved to make principal and interest payments on the borrowing to purchase the Hutchins/Robbins (formerly Wang-Coombs) fields.
Reserve fund transfer
In other business at the September 27 meeting the committee reluctantly voted to transfer $10,000 from the reserve fund to pay for additional septic testing on the Banta-Davis. Barton expressed reservations about whether the transfer qualified as an "unforeseen" or "unanticipated" expense, a criterion for transfers from that fund. What was "unanticipated," Allison replied, was the mixed result of the first tests, requiring further exploration on a different part of the property.
© 2001 The Carlisle Mosquito