2004-12-02-AC-min - Laserfiche WebLink

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December 2, 2004 DB, in broad terms, advocated for beginning a community-wide dialogue on dealing frankly with our structural budget problem. Continuing the current every-three-year override schedule doesn’t work and doesn’t address the fundamental problem. Committee discussion re DB’s memo: What should the community say to Moody’s in January? DB: We could have that discussion tomorrow just as easily as we can in January. Should positively describe what we’ve done (no use of free cash in FY05, money appropriated to stabilization in FY05, no second pension holiday), what has occurred that’s positive (higher free cash position by $1M, SBA reimbursement coming in, override passed), and describe commitment to addressing structural problems, to having a community-wide discussion, and describe our commitment to getting back on track with a reserve policy. We won’t know much more in January than we know now. DK: If we point to these discussions and our commitment to coming to grips with this, even though we won’t have the answer by January, but demonstrate recognition and commitment, isn’t that enough for Moody’s? EM: Are we foolish to think this will be sufficient at this point to address Moody’s? RE: It’s all we have at this point in time. c. AL’s memo: AL tried to take a step back and ask, what are the major things we can agree on now? (1) Services have been cut as far as we can stand. (2) Expenses are growing faster than revenues. (3) Reserves need to be built up. So what can be done? Overrides every year, every two years? If we want to maintain things at an equilibrium, during an override year we need to put reserves aside. Purposes of reserves: (1) Buffer for unusually difficult years, not for the non-override years – base component – wouldn’t normally draw on this. $5-10M? (2) Buffer for usual year-to-year changes – non-override years – this is in addition to base component $1-2M? (3) Help preserve Aaa bond rating. Reserves are yet another box requiring money. But when we add up all the things we need, we will see we don’t have revenues. We’ll have to make decisions about what the right mix is. Reserves important but not sacred cow. Re overrides – not much to add to what DB said. Bad idea to do these every 3 years – you need a huge amount all at once, and if it fails, impact huge. If more frequent, they’re smaller, and impact is less. Possible policy statements: Things we could vote on now. Could be material S. English could take to Moody’s as AC positions: (1) Primary goal to maintain services at approx. current level. (2) Need to build up reserves to act as buffer in years when revenue is unexpectedly low – should be sufficient to get the town through 2 consecutive years in which revenue is short of the amount needed by 2%. Current 5% of tax – minimum goal. (3) Town should increase reserves in most years until the level reaches the goal. Target to hit goal in 5 years. (4) For foreseeable future, regular overrides every 2 years. Include funds for years in between overrides. Page 6 of 8