Friday, March 1, 2002
Last week FinCom members struggled to come up with a combination of strategies to achieve a town budget that is "balanced," that is, requires no Proposition 2-1/2 overrides, to recommend to the board of selectmen. The selectmen will then decide whether to ask voters for additional taxes to cover spending over that levy limit, which would require approvals at Town Meeting and in the town election ballot in May.
10+ percent tax increase?
The FinCom also vowed earlier this year to keep any increase in next year's tax bills at or below 5%, but frustrating their attempts to do so is a gap of about $1.3 million between the town's expected income and what the schools and town departments say they need to run the town next year. This would mean a 9.3 % increase over last year's tax rate. In addition, town officials have planned to add another $168,500 in debt payments to the FY03 tax bill, raising taxes another 1.2 %, to a 10.5 % increase.
The rhythm and pace of the town's budget process is well established. Budget hearings on cold winter evenings, with requests mounting to an unsustainable deficit by mid-February, are followed by pleas and negotiations with the schools, and often the police and fire departments, for "voluntary" reductions in requests.
FinCom members at this point generally move to close the gap between income and expenses. To help offset higher costs they "tweak" earlier revenue estimates, increasing their guesses about how much more will come to the town in state aid, new growth, and motor vehicle excise taxes. They recommend a higher transfer from the town's operating surplus ("free cash") to cover the budget requests.
So generally by early March a consensus is reached over how much will go to each department and the size and allocation of potential overrides. This year, however, the familiar routine has been unsettled by the size of the possible deficit which, as The Mosquito goes to press, the FinCom calculates to be over $1.2 million.
5.2% required increases
How much can be cut from department budgets and how much will be placed on an override are always difficult to decide. This year the strain has been exacerbated by large increases in non-discretionary items, such as in assessments for Minuteman High School and Middlesex County Retirement programs. Table 2 itemizes the non-discretionary operating expenses, which total about $740,000, resulting in a 5.2 % increase over this year's (FY02) tax rate.
2.7% discretionary increase
Given this high level of contractually or legally required payments, additional requests above FinCom's guideline, which the town is not required to pay, are more vulnerable to reductions. FinCom members have suggested a wide range of cuts in these proposals. Table 2 also shows these discretionary requests, above the no-override guideline, which total just over $380,000 and add another 2.7% to the tax rate.
Avoid pain or send message?
In considering how much to cut, the FinCom's concerns over the past weeks have moved from avoiding the pain of budget cuts for particular departments, especially the elementary school, to worries about the level of override a majority of voters will support. The FinCom also wants to adhere to their goal of slowing the rate of acceleration in the tax rate.
Several members, led by David Trask and Lisa Jensen-Fellows, have also expressed a sense of urgency about sending a message to both the Carlisle and Concord-Carlisle school committees on what FinCom members see as overly generous labor settlements. If the next contract negotiations with teachers maintain current agreements, cuts in services will be required, FinCom members insist. Several times Trask and others have suggested withholding funds required to pay next year's increases, forcing the school committee to either reduce staff or other expenditures. Others feel the town's bleak fiscal state will be an advantage when the next teacher negotiations come up next year.
The FinCom has also increased next year's payments for debt excluded from the levy limit by about $169,000, advancing by a year a payment for principal and interest for a ladder truck, a dump truck and other debt already approved by voters. Table 2 shows changes in short-term and long-term debt payments, which taken together would add a net of 1.2% to next year's tax rate.
Reduced income adds 1.3%
Usually in midwinter the FinCom raises its estimate of the income the town will receive from sources other than the property tax to help close the gap between revenues and expenses. However, this year that option has been foreclosed by the recession. Table 1 shows the changes FinCom has made to their estimates of next year's income.
State aid to the town is already $100,000 below that promised for this fiscal year, and based on press reports the FinCom has reduced next year's estimate an additional 10%. The treasurer has also lowered the forecast income from investments. These reductions have been offset somewhat by an increase in the committee's estimate of how much "new growth" will add to property tax collections, for a net reduction of $187,000, which would add 1.3% to the FY02 tax rate.
$200K from free cash: 1.4% less
However, FinCom members have also made suggestions, not yet adopted, for increases in projected revenues which would offset operating increases by an additional $289,000, or 2% of this year's tax rate. (These proposals are also shown in Table 1.) Chair Tony Allison had planned to reduce the impact of the revenue shortfall on town departments next year by transferring $400,000 from free cash (funds accumulated from unspent appropriations and revenues beyond expectations in past years). But this hope was dashed when in late January the town learned that free cash had been certified by the state at just $459,000. Because the town has another reserve, in a newly established stabilization fund expected to grow to about $800,000 to $900,000 over the next year, the FinCom has agreed thus far to recommend a transfer of $200,000. This transfer would offset the losses in other revenues, reducing the tax rate increase by 1.4%.
Several FinCom members have suggested raising the estimate of additional property taxes from new growth by about $50,000, based on the assessor's office property valuation of $30 million as of the January 1 cutoff date. However, member Dave Ives has resisted this recommendation, pointing out that last year the total valuation of the town's property declined.
Lisa Jensen-Fellows has also suggested moderating the expectation of a 10% cut in education funding from the state to 5%, which would increase estimated state aid by about 38,000.
Conservation funds targeted
Despairing FinCom members have even looked to funds appropriated or reserved for a particular purpose, such as $100,000 in the conservation fund established by Town Meeting in 1999 for acquisition of real estate, water rights "and other related interests." Most members hope to hold those funds to offset next year's operating expenses. According to town administrator Madonna McKenzie, any change in use of these targeted funds would require Town Meeting approval and a ballot vote.
The committee has also voted 6 to 1 to recommend reducing the Community Preservation Act tax surcharge, approved by voters last spring, to the minimum permitted by law. Approximately $220,000 collected so far has been set aside to be used for conservation land acquisition, affordable housing and historic preservation, and this amount is expected to be doubled by state matching funds next year.
There must be no pressing need for these funds, Allison suggests, since the Community Preservation Committee, established by the Act, has not met or planned any expenditures. Moreover, since state matching funds have not been received, there is little reason to continue to collect the surcharge. Lowering this surcharge to close to zero - also requiring both town meeting and ballot approval - would reduce next year's tax bills an average of about 1.5%.
Cell towers, DSL, dam
Members have also suggested that the town explore other revenue-producing options, such as placing cell towers on town land or installing DSL at the Town Hall, reducing co-payments for health insurance for town workers, transferring funds from the ambulance fund to offset some ambulance expenses, and selling the Greenough dam, which will soon need expensive repairs.
Tuesday night, as The Mosquito went to press, the FinCom presented to the selectmen a table of each member's recommended formula of fund transfers, additional revenue assumptions, override and reduced increases to balance the budget. Members recommended reductions in budget requests ranging from $294,000 to $846,000, with a consensus of $756,000, and overrides from $138,000 to $589,000, with consensus of $373,000. [Details in next week's Mosquito.]
Schools and public safety were targeted for the highest recommended reductions. The Carlisle Public School's request would be cut between $150,000 and $475,000, CCHS from $87,000 to $185,000, and the police and fire budgets a total of $23,000 to $75,000. The finance committee was expected to issue a "final" guideline to town departments on Wednesday night. The board of selectmen has called a meeting for next Wednesday (March 6) to learn how that budget would affect each department.
© 2002 The Carlisle Mosquito