Friday, November 10, 2006
Preliminary guideline budgets held to 2.9% increase
Carlisle will be tightening its belt next year if it adheres to the preliminary guideline budget proposed by the Finance Committee (FinCom) this week. In a letter sent to all town departments and the schools, the FinCom is proposing a guideline increase for FY08 of only 2.9%. Even this low level will need to be supported by a transfer from free cash. Without the transfer, the increase would be only 1.8%, a level at which cuts in personnel and services would be required. "This is new," says Chair Thornton Ash, "to need to transfer free cash just to get the guideline budget process rolling." The guideline is the level of increase at which the town budget can be balanced without an override of the Proposition 2 1/2 limit on property taxes.
Several factors are making it difficult to make ends meet in FY08. The largest is the ending of state reimbursement for the Carlisle Link Building constructed in 1996, the last payment of which was received this year. Although these were reimbursements, not revenue in the strict sense, "those big chunks of cash masked the spending picture," says Ash. Over several years, that picture included growing costs of operations without commensurate increases in revenue. Benefits, insurance and county retirement have seen double-digit increases, and are expected to rise again in FY08. At the same time, state aid, which five years ago was budgeted at $1,870,739 is, on a preliminary basis, projected to be $1,381,342 in FY08.
Free cash gives room to maneuver
Fortunately, Carlisle is this year sitting on a tidy pile of free cash. The free cash balance of $1,297,000 will allow the FinCom to recommend transferring $351,000 to operations. Of the $351,000, the sum of $151,000 will offset costs due to an increase in the FY08 "assessment ratio," the percentage of students at the high school from Carlisle. The other $200,000 will fund the increase in the guideline budget to 2.9%. The free cash balance is largely a result of underspending past budgets and of deposits from the town's investment in NESWC (North East Solid Waste Cooperative).
Ash notes that, coincidently, "Concord is very close [to Carlisle] on the preliminary high school guideline budget" although he notes, "the [Regional] School Committee hasn't weighed in yet." He says Carlisle and Concord are comparing notes much earlier in the process this year to try to arrive at matching proposals for budgeting Concord Carlisle High School. The regional agreement requires that the two towns fund the school at the same level based on the assessment ratio.
Could things improve?
Several factors could change the picture for better or worse. The Carlisle School's teacher's contract is up for negotiation this year and could add to the costs of education. Also, although new real estate growth had remained strong until recently, the assessor's office reports a downturn in new building permits issued in Carlisle this fall. Does this indicate a tapering off of the real estate market? Ash expects the FinCom will know more by spring, particularly since the 40B development on Concord Road is expected to move forward before then. An increase in condos could be "a heck of a source of revenue," says Ash, although in the long term, with the influx of new students to the schools, "the offset could be even worse."
Finally, there is state aid, which varies according to the political winds. Will a new administration in the state house bring increases to cities and towns? Or with the election over, will the pandering end? We won't know until the governor's budget is released in the spring. "It looks like it's going to be an interesting year," Ash concludes.
Each department has been asked to prepare a budget that fits within the guideline limit of a 2.9% increase, as well as a budget that shows what's needed to maintain current services and one that includes reasonable growth. The next step will take place on Monday, November 27 when the FinCom will hold an open meeting with department and committee heads to discuss the guideline, use of free cash and other budget issues.
© 2006 The