Friday, October 31, 2003
FY05 guideline allows less than 1/2% budget growth
A fall-off in new real estate growth and predictions of further reductions in state aid led the Finance Committee (FinCom) to issue a conservative preliminary guideline for the fiscal year 2005 (FY05) budget. The guideline will hold town departments and schools to a 0.47% increase over the current year, FY04, excluding certain priority items, for a total town budget of $18,674,392. "Cuts in state aid and lower new growth projections leave us with not a lot to distribute," Finance Committee Chair Lisa Jensen-Fellows explained. "We recognize this is a very small increase, but I believe we made prudent assumptions regarding revenues and expenses and were not overly cautious."
The guideline provides a planning tool against which departments can start to prepare their budgets. It is based on a projection of town revenues assuming no override of the Proposition 2-1/2 rule, which limits property tax increases to 2-1/2% per year.
Real estate growth slows
There has been a substantial drop in real estate growth, which includes new development and expansions to existing property. Assessor John Speidel predicts that growth this year will be slightly over half of last year's growth of $32 million. The FinCom adopted $17.5 million as the best estimate. Whereas new growth added $639,688 to town revenues in FY03 and $488,592 in FY04, it is expected to add only $218,225 in FY05.
When asked about two large parcels rumored to be in the process of development, Town Administrator Madonna McKenzie said, "development is still out there, but not to the point of subdividing." She predicted it will be two years before those developments appear.
State aid predicted down 5%
Jensen-Fellows stated that the governor's office and State Senator Corey Atkins both advise that further cuts in state aid are likely. Last year Carlisle saw an overall 13% reduction in state aid. The FinCom is assuming a 5% reduction in aid in FY05 (excluding school building reimbursements), as recommended by Atkins. However, FinCom member David Trask worried that deeper cuts may be on the horizon as allocation formulas change to favor "poorer towns where advocacy is increasing."
The FinCom then examined expenditures, looking first at those where increases are uncontrollable. Blanket, group and unemployment insurance are expected to rise 15.9% overall to $856,730. Other uncontrollable increases include county retirement, snow and ice removal, debt service, and maintenance on the new wastewater treatment plant at the Carlisle school, which should be in operation by January 2005. The committee also set aside $82,000 to fund salary upgrades, required under the town's Wage and Classification Plan, and to provide computer system upgrades, training, and other needs for the town's financial departments. An amount of $144,000, equal to 1% of tax revenue, was set aside for long-term capital Warrant Articles, providing needed maintenance of town buildings and equipment.
With these priorities covered, $70,216 remained for departmental budget increases. When spread over schools and departments evenly, the residual allowed a 0.47% increase over FY04.
Uncertainty gives hope
Several factors could change the financial picture for the town. Since the town's free cash has not yet been certified by the state, the FinCom had to assume a zero balance. It is hoped that certification will be completed soon. Former FinCom member Nancy Pierce noted that new growth has historically been underestimated early in the year, and an upward adjustment may be possible at a later date. On the other hand, two issues at the high school involving unanticipated special education (SPED) costs could have negative impact (See article this page).
No gamesmanship intended
Noting the pitfalls of making very low estimates so early for a year that starts next July, member Deb Belanger cautioned the FinCom of "putting people through all kinds of hoops to meet [artificially low] budgets without basis." She added, "We did this one year and it backfired. It created ill-will." David Dockterman of the Carlisle School Committee said that the school will continue to "build budgets and deal with cuts at a later point. There would be a morale problem if we talk now about cutting programs based on [uncertain] November numbers." He asked the FinCom to understand the school's perspective "so it doesn't feel like we're playing a game."
FinCom members will be meeting with Concord representatives to try to coordinate funding for the high school. All Carlisle town departments are being asked to prepare budgets within the guideline and to provide a list of needed extras in case funds become available. They are also being asked for an accounting of revenues from fees, grants, and other sources in preparation for a discussion on increasing them in the future.
© 2003 The