Friday, May 24, 2002
Where did this "new" money come from?
At Tuesday night's meeting selectman Doug Stevenson and others questioned how town leaders had found additional revenues just when needed to fund their own priorities. He worried aloud about "finding this new money when we told people we couldn't afford" certain expenditures earlier in the budget process.
But what seems "new" is in fact not "news" to town leaders "good news" in the words of chair John Ballantine but the result of revising estimates of the town's income from sources other than property taxes. And Tuesday was not the first public discusssion of possible changes this year. What is "new" seems to be that, with two overrides failed and more data available, both from the state and the assessors, selectmen are more willing to raise revenue estimates to preserve wage and salary increases for non-school employees.
Guessing game for FinCom
Throughout the process of recommending spending and tax levels for the following year, from setting a guideline for budget preparation in October through recommending balanced and override budgets in March, FinCom members play a guessing game. Before deciding what the town can spend they must predict how much the town might receive in addition to existing property taxes, including:
• State aid, including funds from the lottery, which can be unpredictable;
• "Local receipts" (funds the town takes in for licenses, fees, motor vehicle excise taxes, etc.);
• The level of the town's "free cash" an accumulation of unspent appropriations and non-tax receipts in excess what was expected subject to mystifying and unpredictable certification by the state;
• "New growth" in property valuation due to new construction, other building activity and land development, from July 1 to June 30 of the following year.
Rarely are any of these figures known with any certainty before critical budget decisions are made, or even by the beginning of the next fiscal year. The state usually notifies the town during the summer how much aid it will receive. The following October the board of assessors release the total in local receipts and "new growth," and it is often mid-winter before the town learns how much is available from free cash.
Usually, any state aid above FinCom's prediction just reduces how much taxes are collected. Additional taxes from "new growth" also are not usually spent, eventually flowing into the town's free cash. If the town actually gets more in state aid or "new growth" than what FinCom guessed in March, the town cannot spend the extra funds without a Town Meeting appropriation.
Last fall, anticipating a slowdown in economic activity, FinCom members were deliberately conservative in making their FY03 guesses, reducing tax increases expected from "new growth" to just over half of this year's figure. Then this winter's nasty surprise on free cash forced them to reduce the amount they had hoped to transfer from free cash to reduce taxes. Finally, heeding legislative warnings, FinCom also lowered estimates of state aid ten percent from what was received this year.
FinCom doesn't "tweak"
When FinCom first presented the "balanced" budget to the selectmen in February, chair Ballantine, Stevenson, and selectman Tim Hult asked them to "tweak" their guesses on non-property tax income, to about $100,000 more. Allowing spending without raising taxes would have lowered the tax-rate increases required to pay for the two overrides by a little less than 1% each. However, FinCom made almost no changes, increasing the income from new growth by just over $25,000.
State aid: $97K more
A motion by FinCom member John Nock at a February 27 FinCom meeting to raise estimated state education aid (known as Chapter 70 aid) was also defeated. The move, which would assume that only 5% would be cut in Chapter 70 (vs. the 10% FinCom used), would have made about $38,000 more available. However, at Tuesday night's meeting Ballantine and town administrator Madonna McKenzie reported that state representatives Carol Cleven and Corey Atkins had each confirmed that Carlisle could expect to receive a reduction of less than 1% in Chapter 70 aid, making over $73,000 more revenues likely.
Cleven and Atkins have also reported that there will be no cut in state lottery funds for the town, adding about $24,000 to what FinCom had expected. McKenzie also reported that other sources of state aid, such as payments in lieu of taxes for state-owned land, might add another $25,000 to FinCom's estimates. However selectmen decided to assume only the $97,000 total of education and lottery aid in allocating additional funds.
New growth: $30,000 to 60,000
Nock also proposed February 27 that FinCom raise estimates of income from "new growth" by about $54,000. (This would be the additional amount received if $30 million were added to the town's total assessed value, as the assessors had predicted last winter, rather than the $26.4 million the FinCom had assumed. FinCom did agree to raise the new growth estimate in February, but only to 28 million, increasing revenue estimates by $25,000.
Though Ballantine had suggested new growth might eventually be as high as $32 million, or $63,000 in income, selectmen agreed Tuesday to add a more conservative $31,500 to expected new growth, based on a recent estimate of $30 million by the new assessor.
Ballantine also proposed that $30,000 to $50,000 could be transferred from various funds set aside for particular purposes.
Water study: $10,000 or more
Least controversial of his suggestions is $10,000 or more from funds unspent from recent appropriations to support investigations into the feasibility of a public water supply on the O'Rourke farm on Maple Street (now owned by the U.S. Fish & Wildlife service).
Conservation fund: $100,000+
The town's conservation fund has been established for many years. The $100,000 added to it by May 1999 Town Meeting and override votes "for the acquisition of real estate, water rights and other related interests in connection therewith" has now grown to nearly $120,000. During budget discussions FinCom members have repeatedly proposed using that money to support operating expenses, especially the $93,000 required to pay for the superfund cleanup (since then reduced to $83,000).
However, the conservation commission and other advocates resisted, and the state department of revenue recently pointed out to the town that state law restricts use of those funds to the purposes for which they were voted. [For further discussion of this debate, see "FinCom struggles . . ." in the April 5, 2002 Mosquito, in the archives at www.carlislemosquito.org.]
Stabilization fund: $800K expected
Thus far FinCom has declined to consider using any of the funds recently deposited or expected in the stabilization fund to support even one-time operating expenses, such as an $83,000 settlement with the EPA over landfill contamination.
At a November 2000 Special Town Meeting, voters agreed to place any amount received from the state in connection with Wang-Coombs purchase in this fund; FinCom and selectmen agreed these funds were to be used yearly to pay off a portion of the debt incurred for that purchase. Since then other Town Meeting votes have directed that similar "windfalls" fall into the stabilization fund (though none have yet been received). Expected soon are: about $115,000 from the sale of the O'Rourke farm (held in escrow pending decisions on the town's rights to take water from the land); over $400,000 from the sale of a town-owned lot in a new subdivision (the Carriage Way lot).
Currently Carlisle is one of the few Massachusetts towns with a Moody's debt rating of AA2 (the second highest), and FinCom fear this is in jeopardy. Anticipating heavy borrowing for the school's wastewater treatment facility and possible new construction, they aim to keep total reserves at the 5% of expenditures in reserves preferred by rating services.
This revolving fund, established in May 1998 collects the fees paid to the town by users and/or insurance companies. FinCom member Lisa Jensen-Fellows has suggested that this fund could help to offset some of next year's ambulance costs.
The town currently pays to maintain the playing fields at Spauding Field and Banta-Davis, as part of the budget for the recreation commission (RecCom). The commission does not charge user groups to use town-owned fields, chair Maureen Tarca said at a budget hearing February 6. Instead these groups make "in kind" contributions, improving the facilities based on a "laundry list" of improvements the commission has drawn up.
As FinCom struggled to balance the budget later in February, chair Tony Allison suggested that possibly some or all of the $45,000 field maintenance costs could be covered by users, but there was little response to his suggestion. Now, however, Ballantine has proposed that such a strategy, or a transfer from the RecCom's program fees, could be used to reduce these costs.
© 2002 The Carlisle Mosquito