Friday, April 27, 2007
Revenue and expense issues raise concern
A slowdown in the Carlisle real estate market means fewer building permits and less new real estate growth. At the Board of Selectmen meeting Tuesday,April 24, Chair Doug Stevenson conveyed the news that preliminary financial projections for FY07 are "of concern" due to local receipts and real estate growth well below what was estimated at the beginning of the fiscal year. With two months to go until year's end, the possibility of a shortfall in the six figures must be considered. However, Finance Director Larry Barton advises, "We don't necessarily have a problem that needs to be resolved" given the "moving parts" in the budget, including the possibility of higher state aid.
Shortfalls in FY07 revenue,
tax base in FY08
Local receipts consist of several items, most notably building permit fees and automobile excise taxes. This line item is running 5 to 10% below budget. "Building permit income is way down, and people haven't been buying new cars in 2007," said Barton. Unless there is a sudden upturn in building construction, there will be shortfalls of approximately $100,000 in FY07 permit revenues. In addition, the town recently learned it has lost the appeal of a tax suit and will likely have to pay back $83,000 collected from a property owner.
New real estate growth is down, and this affects the coming year's budget. The assessors now say new growth will be in the $13 to $15 million range, and the FY08 budget was based on an estimate of $23 million. The lowered number reflects a downturn in applications for new subdivisions. The unrealized tax revenue on the $8 to $10 million difference could mean a $100,000 to $130,000 revenue shortfall.
State aid may fill gap
Barton notes there are a number of possibilities for dealing with a shortfall if it materializes. In the worst case, a Special Town Meeting might be called to consider an additional override, Free Cash or Stabilization Fund transfer, or reduction in the FY08 budget. "The Stabilization Fund is there for unforeseen events," says Barton, and a transfer could be arranged which would be paid back in the future.
However, he notes, it's too early to panic. "We really don't know what's going to happen." State aid has not yet been determined, but preliminary numbers show a heartening increase of as much as $100,000. In addition, other revenue accounts such as interest income may come in above expectations. "We usually try to underestimate revenue," says Barton.
reflected in Article 2
Article 2 at the April 30 Town Meeting will address FY07 expense overages, including $120,000 in legal costs associated with Coventry Woods, $75,000 for the Carlisle School due to unexpected waste water treatment and special education costs, $5,500 for the Fire Department, and $15,000 to Communications due to sick time. Stevenson called the overages "an unfortunate turn of events" but added, "We have to pay our bills." Town Administrator Madonna McKenzie noted the proposed $145,000 transfer from Free Cash to bring the Reserve Fund balance to $236,000, covering expected overages, is the highest in memory, "This year is very unusual."
© 2007 The