Friday, August 31, 2007
Bad news builds on FY09 budget
While others finish their summer vacations and prepare for school to begin, the thoughts of the Board of Selectmen (BOS) and Finance Committee (FinCom) members turn once again to trying to contain a growing budget. But this year the squeeze will be especially tight. At the joint BOS/FinCom meeting August 25, Tim Hult noted that in his 20 years in town government, "(FY09) will be among the top two or three most difficult."
He proposed sending a letter to all boards and departments to prepare for a budget with no increases. There is bad news on many fronts:
· Real estate growth has "fallen off the cliff," according to Hult.
· Concord-Carlisle High School (CCHS) has received seven new out-of-district special education students.
· Insurance and benefits continue to grow at double-digit rates.
· Contractual agreements at the schools mean salaries will rise 6 to 7%.
Hult also pointed to a climate in which taxpayers may not be receptive to large overrides. Taxes went up 7.5% last year, and, since the increase is not passed on until state certification, it will disproportionately affect the last two tax bills. "In the spring citizens will feel a large increase in quarterly bills" just before Town Meeting. He also notes the FY07 spring Town Meeting's "relatively modest" override of $250,000 passed by only a few votes.
Finally, Hult noted the need to "moderate operating expense growth if we have any hope of funding large capital expenses we are anticipating for important school facility projects." Each school is expected to require at least $20 million for new buildings, assuming state reimbursement that is not guaranteed.
0.17% increase projected,
but don't panic yet
Finance Director Larry Barton noted that at current projections, only $30,000 more in revenue will be available in FY09 over FY08 without an override or cash transfer. This represents a 0.17% increase. FY07 ended with $19 million in new growth, but that is expected to drop to $10 million in FY08, and even that may be optimistic. This drop negatively affects FY09 tax receipts and income from fees and permits. Other revenue sources are minor; even the increase in state aid this year, though welcome, is a drop in the budgetary bucket.
Barton said that substantial Free Cash was used to help cover town expenses last year, dropping the balance from $1.3 million at the beginning of the year to $580,000 by year's end. Although not yet certified, the town's Free Cash balance is expected to be between $800,000 and $900,000 in FY08.
Regarding the letter to departments, Doug Stevenson cautioned against too strident a tone, "Things are never as bad as they seem. We don't want to create budget panic . . .We will have a budget that carries out the services we need to." Hult agreed that tone was important. "I'm worried about the (Carlisle) school because of the difficult issues they faced this year" in dealing with short finances. Said Barton, "There's a lot of softness in all this (preliminary budget). I am confident we will find solutions to a lot of it."
FinCom wants closer look
FinCom chair Dave Model said his committee is proposing a plan to look harder at budgets and ask, "Are we providing the right services?" He noted the current method of assuming last year's budget as a minimum level does not allow for prioritization. He proposed each department be requested to offer a budget at 80% of current levels as a means of getting at the core and evaluating the structure of town government as it exists.
But Hult felt "a year or two where budgets are level will be a significant change" that would force prioritization. He feared that "Both schools feel very constrained with what they got last year and are certainly down to strategic level," adding, "We don't want to go so far that the school community becomes so antagonistic of the process it's not productive." Barton noted that most of the town budget is in salaries, and that a 20% reduction without cutting into compensation would virtually eliminate all other areas of the budget.
Model said the FinCom was not wedded to the 80% plan, but wanted to get out of the mode of "focusing endless time on the facets (of the budget) that are truly discretionary." As an example, library Saturday hours were a substantial point of discussion last year, even though they represented a few thousand dollars in a $20 million budget. "Should we be bolder? If we nip and tuck and squeek by, have we served the town?"
Town Administrator Madonna McKenzie supported a closer look, noting that across-the-board policies impact different departments differently. "Some have discretionary funds, some have fewer expense items." FinCom member Thornton Ash also noted the "scope creep" as departments have added services in recent years, and proposed looking harder at what the town really needs. Hult suggested a higher-level review might be in order, including a look at consolidating or eliminating some functions.
Without resolving the issue of how to better manage departments, the Selectmen voted to issue the letter asking each department to prepare for a level-funded budget. The FinCom will issue its guideline at a later date, and in the meantime, Ash suggested caution in hiring or taking on new expenses for the foreseeable future.
© 2007 The