Friday, March 25, 2005
FinCom debates value of "additional expenses"
The Finance Committee wrestled with some philosophcal issues at its meeting on March 14. (See front page story from a subsequent FinCom meeting.)
What is the goal of a town finance committee? Should it review all town needs and make a decision on which items belong in the budget, or should it seek to fund basic town services and let the voters decide on the rest?
What is the goal of town government? Should it provide the least-cost level of services, or should "customer satisfaction" be a priority?
How much of the town's free cash (the excess of actual revenue over actual costs) should be used to fund recurring expenses, and how much should be saved for contingencies?
In the past three months the FinCom has worked with the schools, departments and boards to accommodate their essential operating expenses in a balanced or levy-limit budget, one where expenses do not exceed revenues, and property taxes do not rise more than 2.5% (the Proposition 2-1/2 limit). All other requests were placed on priority one, two and three lists, pending the availability of additional revenues.
Now with some additional revenues in sight, but not enough to fund all the Priority One and two items, FinCom members found themselves pondering and revisiting the priorities.
Barton's balanced budget
The meeting began as Town Finance Director Larry Barton outlined his version of a balanced budget. Barton used as a baseline the FinCom's preliminary set of priorities (see Mosquito, March 4, 2005) and the Governor's Fiscal Year 2006 (FY06) budget. Barton explained that he assumed a "flat growth" model of $18.5 million in revenue, supplemented by state payments, and looked to include as many "priority one" and "priority two" expense items as possible within the balanced (or levy limit) budget.
Barton outlined his balanced budget:
Revenues: FY06 revenue is expected to increase by $359,000 over FY05, including a one-time payment by NESWC (North East Solid Waste Committee) of approximately $110,000, which is a refund of monies left over from the the town's investment in the NESWC trash incinerator. The state recently informed Barton that these funds can be defined as "local receipts" for the purpose of applying them to the FY06 budget.
Expenses: Barton includes all of the departmental operating budgets, as outlined by the FinCom, as well as the following "additional items:"
• Middle School 6/5 plan: $ 97,000
• CCHS requests 107,000
• Minuteman requests 47,000
• Increased hours for
Town Clerk $26,000
• Police requests 12,000
• DPW requests 35,000
• Wastewater treatment plant 21,000
• Library requests 4,000
Total additional expenses: $349,000
• Police: money to attend court hearings, NEMLEC (North Eastern Massachusetts Law Enforcement Council) training, education and staff meetings.
• Fire: part-time secretary, inspections
• DPW: one of the two additional employees requested
•Library: Sunday hours, early childhood classes.
Concern about budget expansion
FinCom Chair David Trask was pleased that Barton's budget clarified the town's revenue outlook, and "there are more tax dollars available than we thought." However, Trask was concerned that the higher revenues facilitated higher expenditures. Looking ahead, he had run some FY07 numbers, assuming average real estate growth, no increase in state aid, and 2% inflation. The additional ongoing commitments would leave the Town with only 1.58% room to increase the budget over FY06 levels at the levy limit. Other members also questioned whether the $110,000 NESWC windfall should create an ongoing obligation in the form of budget expansion.
Ray Wilkes articulated that the FinCom ought to "err on the side of frugality" in considering new requests. Thorton Ash agreed, noting that the request to add one DPW employee was based on "a commitment that had been made" to DPW Superintendent Gary Davis, and not based on an analytical assessment of needs.
How much "customer service?"
Wilkes once again suggested that expanding the Town Clerk's hours should be put to a town vote (Mosquito, March 4). John Nock countered that the FinCom should be sensitive to the need for town services, and added that expanding library hours to include Sundays would probably benefit more town residents than the other items under consideration.
Sue Wolfe supported Sunday hours, and remarked that the Town Clerk issue boiled down to a customer service question, "Do you want to pay for having the Clerk available from 9 to 3?" She agreed this was an issue better decided by the voters. Town Administrator Madonna McKenzie added that because the Town Clerk is an elected position, it was appropriate for the voters to decide on changing her position from part-time to full-time.
Use of free cash fund?
Several members expressed concern that the town's free cash (in a sense, the"rainy day" fund) would be eroded over time by becoming a funding mechanism for ongoing expenses.
Tim Hult, chair of the Board of Selectmen, indicated that it was not unusual for towns like Carlisle to use free cash on an ongoing basis. He noted that there should be always be a 5% budgetary contingency, of which about 75% should be in the Stabilization Fund requiring a two-thirds voter approval to appropriateand about 25% of which should be in free cash. With an overall budget of about $20 million, Hult noted, a level of $750,000 in the Stabilization Fund and $250,000 in free cash was an appropriate reserve. McKenzie and Barton confirmed that the Stabilization Fund currently holds almost $1 million.
Trask called for a motion to adopt a preliminary balanced budget. After continued discussion, John Nock proposed adding one DPW employee, the wastewater treatment plant, and Sunday Library hours, but not expanding Town Clerk hours. He moved that a separate Warrant Article to fund extra hours for the Town Clerk out of free cash be presented to the voters at Town Meeting. All FinCom members except Thorton Ash approved this motion.
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