Friday, August 16, 2002
New growth makes up for last minute state budget cuts
Carlisle's leaders, having struggled through last winter and spring to settle on a budget for the new fiscal year (FY03), appear to have dodged a final bullet this week, as higher-than-expected revenues from increases in property value from new construction more than made up for cuts in state aid.
According to a notice from the department of revenue (the "cherry sheet") received last week, the town will receive just over $70,000 less in the budget signed by Governor Swift at the end of July than had been assumed in budgets approved by two Town Meetings and in a June 26 override election. However, assessor John Speidel reported good news at the August 12 meeting of the finance team. The town may pull in almost $160,000 more in taxes from new construction than had been anticipated. This windfall will offset the state aid cuts and may even reduce the projected 3.6% tax increase in FY03.
Guesses and estimates
Why were revenue estimates too low? Before deciding what the town can spend in the next fiscal year, the finance committee and other town leaders must agree on an estimate of how much the town might receive in addition to existing property taxes. This income includes, among other things, state aid and "new growth" in property valuation due to new construction, other building activity and land development, measured from July 1 to June 30 of the following year. Since these figures are rarely known accurately before the year actually begins, officials must run with "educated guesses."
Last fall, worried about hard times to come, FinCom members were deliberately conservative in making their FY03 guesses, reducing tax increases expected from "new growth" to just over half this year's figure. Winter brought warnings from the legislature, so FinCom reduced estimates of state aid ten percent from what was received this year. Despite pleas from selectmen to reconsider revenues, FinCom made almost no changes, increasing the new growth estimate from $26.4 million to $28 million and declining to assume a smaller cut in state aid.
Raised in June
Two failed overrides in May left the town struggling to fund an assessment for CCHS and preserve wage and salary increases for non-school employees. Both legislators and assessors made more optimistic forecasts, so hopeful selectmen warily raised revenue estimates. They agreed to assume a total of $97,000 more in education and lottery aid from the state, and to raise the new growth estimate to $30 million, adding an additional $31,500 to revenues. (At a tax rate of $15.78 per thousand, each $1 million in assessed valuation yields $15,780 in real estate tax revenues.)
Cut in July
However, even after the new fiscal year began on July 1, the legislature and administration at the state level were not yet finished with budget maneuvering. One month into the fiscal year Carlisle town leaders learned that the town will receive $71,066 less than had counted on in formulating the budget. (Since a reduction in highway funding can be offset by spending less, the actual reduction in money available to the town to spend will be closer to $63,000.)
$100,000 more in August
Fortunately, the added property value from new growth will be $40 million, about a third more than the selectmen's optimistic estimate in June. The extra income will be about $157,800. After offsetting the state aid reduction, the town will still receive nearly $95,000 more than expected. Since the town cannot spend more than appropriated by Town Meeting, citizens will probably receive a lower increase in the tax rate than estimated last spring, possibly below 2%.
© 2002 The Carlisle Mosquito