Friday, October 26, 2001
At the bi-weekly meeting of the finance team on Tuesday, October 23 chairman of the Carlisle Finance Committee Tony Allison and town administrator Madonna McKenzie described the recent discovery of two potentially serious errors in the current fiscal year 2002 town budget that, by a stroke of sheer luck, cancelled each other out.
Retirement expense omitted
McKenzie appeared at the October 17 meeting of the finance committee to discuss her concern that a possible omission in the current year's recap sheet could create a quarter million dollar shortfall in the town's current budget. The item in doubt was the Middlesex County Retirement Fund expense. Town employees contribute to this retirement fund, and the town's share is currently about $250,000 per year to help pay the pensions of retired town employees.
The recap sheet is a form submitted to the state department of revenue (DOR) every fall and is used to calculate the tax rate. After the DOR reviews the recap sheet, and certifies the tax rate, then the town can send out tax bills. The recap sheet includes estimates of future state aid and local receipts. It also includes expenses such as the cost of snow and ice removal, which the town must pay, and on which it does not vote. These items are funded without a town vote, but are factored into the final tax rate.
Excess taxes discovered
While investigating the missing retirement fund expense McKenzie and FinCom member Simon Platt discovered the second problem. When the Spring Town Meeting approved the 2002 budget, it simultaneously reduced the amount to be raised by voting to transfer $240,000 from the town's free cash and stabilization funds. However, when the tax rate was calculated, this amount was not considered. Consequently, current taxes will produce a surplus approximately equal to that amount, which will fortuitously offset the retirement fund shortfall.
Clarification and communication
Discussions at both the FinCom and FinTeam meetings raised the question of whether the state-mandated retirement fund expense should be included in the main budget Warrant article, article 5, where it becomes subject to Proposition 2-1/2 tax limits. In the recent past the fund has been listed on the recap sheet, which does not require town vote. However, regardless of where the fund appears, the FinCom agreed that townspeople should be made aware of this expense, which is about 1.5 percent of the roughly $17 million annual budget.
The finance committee passed a motion to ask the various financial offices in town and the town administrator to review future recap sheets with the FinCom prior to submitting them to the state.
© 2001 The Carlisle Mosquito