Friday, April 5, 2002
Finance committee struggles to reduce FY03 tax rate
Targets CPA and conservation funds as sources of cash
During this year's difficult budget hearings and deliberations the Carlisle Finance Committee (FinCom) struggled to find available cash to close a large gap between the town's expected income and departmental budget requests. After snooping around a number of special town funds, the committee voted to recommend that voters reduce the 2% tax surcharge for the Community Preservation Act (CPA) adopted last year to the minimum allowed, and to divert most or all of the $100,000 in the town's conservation fund to support spending to run the town next year.
Both initiatives had been approved with comfortable margins at past town elections, over the FinCom's opposition.
The two funds have somewhat different purposes. Use of the conservation fund is restricted to expenses involved in acquisition of land or water rights. Money collected from the CPA surcharge is restricted to open space acquisition, affordable housing and historic preservation. (See additional CPA article 1. article 2). The town is not required to spend from either pot in any given year, but may wait until a particular project spurs the ConsCom (in the case of the conservation fund) or Town Meeting (for the CPA) to approve an expenditure.
3 possible CPA cuts
This year the CPA tax surcharge was 2% of the assessed real property value after exempting the first $100,000. Three questions on the Warrant for Town Meeting on May 5 and 6 will ask voters whether they wish to reduce this surcharge.
Lowering the CPA surcharge will not provide any more money for the town to spend on school or other operations, since these funds are raised outside the Proposition 2-1/2 levy limit. However, cutting that amount off the tax bill would reduce the total tax paid by residents. So, FinCom members have argued, reducing the CPA would lower the apparent or "effective" tax increase, or make a larger override seem less onerous.
"They don't know what to do with it"
FinCom voted on February 22 to reduce the FY03 CPA surcharge to 0.01%, the lowest level permitted by the law. The vote was six to one, with member David Ives opposed. At their March 27 meeting they voted to support a 1.0% surcharge only if the .01% level fails.
Members have often justified eliminating the surcharge because the community preservation committee (CPC) has not spent any money this year, and in fact until last week had held no meeting. This, they feel, is because "they don't know what to do with the money," and will just try to think up ways to spend the funds. (See "Carlisle expects $216K in CPA matching funds this year" .)
The FinCom has also doubted that the state will pay the matching funds, which were the primary incentive for the adopting the surcharge. In their view, since the town will not receive the state funds for this year until next October, the surcharge should be cut. "We were told if we didn't get the match, [the town] could reduce it to the minimum," said FinCom member Simon Platt. (See "Town expects 100% CPA matching for 3 years" on page 6.)
The board of selectmen voted unanimously on March 6 and 25 to place a 1% reduction on the town meeting warrant and election ballot, (The Mosquito calculates this would reduce the surcharge on a $500,000 home about $65.)
Citizens petitions for reductions to 1.5% (a $33 tax reduction for the average homeowner) and 0.01% (about $125 less) must be presented to voters at Town Meeting. However, the reduction must also be voted at a town election (most likely the fall election). Selectmen voted 3 to 2, with Doug Stevenson and John Ballantine opposed, to put the 1.5% surcharge level on the ballot. Only Carol Peters supported a reduction to 0.01%. However, the next day town counsel Paul DeRensis advised that both citizens' petition questions must also appear on the ballot. So, regardless of the selectmen's votes, all three reductions will be presented to voters at Town Meeting. A table of estimated CPA surcharges and revenues at each proposed level is on page 7.
Vivian Chaput, the selectman responsible for organizing the CPC committee, was not present for the March 6 vote, but on March 25 she commented that reducing the surcharge to 1% would be "counterproductive." Since more money is available for the state matching funds, the town would be "better off to reap that money ourselves," she added.
"Just sitting there"
For next fiscal year attempts to use the conservation fund to increase operating budgets have been less successful.
Like the CPA, the $100,000+ in the conservation fund is "just sitting there" with no claims on it, says FinCom chair Tony Allison. Given the high cost of land, that amount won't make any difference when a high priority parcel could be worth "millions of dollars," and "the town won't vote for it" in any case, Allison has said. The school and other departments have been asked to cut their budgets, so Allison has said the money in the conservation fund should be transferred into the general budget.
Indeed, in developing plans for what to pare from budget requests at a February 22 meeting, most FinCom members advocated using the $100,000 in the conservation fund for operating expenses.
In addition, an unanticipated additional bill for $93,000, due in early July to settle the "superfund" town center landfill contamination case, created further pressure on the budget. FinCom members hoped to pay the $93,000 from the conservation fund (later reduced to $77,000) and the use the remainder in the co9nservation fund to restore some of these cuts to the school and/or other department budgets.
"Violation of public trust"
To divert the conservation fund to other purposes would be a "violation of a public trust," ConsCom chair Tom Brownrigg told FinCom at the March 5 meeting. Citizens who voted to create the conservation fund were supporting the purchase of conservation land and water rights. The fund was set aside specifically "to enable the town to react when an opportunity arises" to negotiate with a landowner, according to ConsCom member Roy Watson. The money is specifically intended to pay costs during pre-purchase negotiations such as surveys and appraisals.
Watson and others also expressed doubt whether the town could legally use the conservation fund for other purposes. Watson's doubt was later confirmed, when town administrator Madonna McKenzie reported at the March 18 FinCom meeting the sate department of revenue had advised that, since a Proposition 2-1/2 override had added the money to the fund, the town cannot spend it for different purposes.
On March 19, just hours before the deadline to place articles on the Warrant for Town Meeting, town counsel suggested a complicated exchange of payments and transfers that would ultimately result in using $66,000 from the conservation fund to supplement operating budgets.
But that scheme was quickly squashed by the approaching deadline and the reluctance of two key committees to cooperate. ConsCom, which would have to agree to use $66K of the fund for payments on the Wang-Coombs land, seemed skeptical.FinCom, which would have to recalculate operating budgets, would consider it only if it lowered overrides, rather than raising spending, according to Allison.
© 2002 The Carlisle Mosquito