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APPROPRIATION COMMIT fEE REPORT-NOVEMBER 2005 Projected operating-override requirements to maintain level services in FY 2007-2008 and build reserves by $3M from July 1, 2004 to July 1, 2007 Exhibit A2 shows updated projections of the revenues required to sustain level services for FY 2007 and FY 2008 while increasing our reserves by$3 million over the 3-year period July 1,2004 to July 1,2007. The figures given in the April 2005 Appropriations Report are shown for comparison. (As cautioned in our report to the April Town Meeting,at this time the Appropriation Committee is neither making a policy recommendation regarding an appropriate reserves target,nor an override schedule. We are simply seeking to demonstrate the estimated additional revenue requirements of one possible target.) This Exhibit demonstrates that in the one-override scenario,the override estimates assuming approval and disapproval of Article 5 are currently$6.75M and$5.38M,respectively. Both of these values are lower than the $7.63M projected in April 2005 due to our improved free cash position and increased state aid. Similarly, in the two- override scenario,the override estimates assuming approval or disapproval of Article 5 are currently$4.52M and $3.60M,respectively. Both of these values are lower than the$5.11M projected in April. The Exhibit also shows in the 2005 column our improved reserves position relative to the April 2005 reserves estimate,and the"saw tooth"nature of the reserves balance as earlier overrides are used to build reserves above the target level,to be spent down in FY 2008. The fact that the amounts in the two-override scenarios are not simply twice the amount in the corresponding one-override scenarios reflects the fact that an override in FY 2007 is carried forward as part of the base revenue budget in subsequent years. Exhibit A3 shows the details of the expenditures and revenues for FY 2005-2008 with the assumption of two overrides, one for FY 2007 and one for FY 2008,level services, and the$3M over-three-years increase in reserves. (The projections for FY 2007-2008 are based primarily upon numbers provided by Town staff last spring and this past August,with some Appropriation Committee adjustments to reflect more recent information.) Similar spread sheets were constructed to produce the estimates for the different scenarios in Exhibit A2: one override or two, and with or without approval of Article 5. The Appropriation Committee's April 2005 report discusses these projections in more detail. Exhibit A2: Projected operating-override requirements to maintain level services in FY 2007-2008 and build reserves by $3M from July 1, 2004 to July 1, 2007 Override vs. Reserve Balance Scenarios Values in$M Appropriation Committee report in Each Reserve Balances on July 1 April 2005 Override 2004 2005 2006 2007 One Override for FY2007 7.63 4.04 5.30 8.08 7.04 Equal Overrides for FY2007,2008 5.11 4.04 5.30 5.68 7.04 Each Reserve Balances on July 1 Current Estimates Override 2004 2005 2006 2007 One Override for FY2007 (with article 5) 6.75 4.04 7.73 9.58 7.04 (without article 5) 5.38 4.04 7.73 10.01 7.04 Equal Overrides for FY2007,2008 (with article 5)* 4.52 4.04 7.73 7.46 7.04 (without article 5) 3.60 4.04 7.73 8.32 7.04 * This scenario is used in Exhibit A3 Page 9 of 11