2008-03-19-ATM-AC-rpt - Laserfiche WebLink

Browse Search

APPROPRIATION COMMITTEE REPORT TO 2008 ATM—March 19, 2008 placements. This has led to a plan in which the FY2008 operating budget will be revised downward by $350,000 and the “proceeds” transferred to the proposed Special Education Stabilization Fund under Article 24. We understand that the surplus is due to four main factors: 1) the new in-house special education programs, including those aimed at students suffering from autism-spectrum disorders, attracted more students than projected last spring, reducing the number of required expensive out-of- district placements; 2) more staff retired or otherwise left and were replaced by more junior people at lower salaries; 3) more positions than usual became vacant and have taken or are taking a long time to fill; and 4) energy costs were lower than projected. The magnitude of the currently-projected surplus gives us confidence that some funds will remain unspent and flow to Free Cash next fall and thereby be available to support the FY2010 budget or other financial needs. We should hardly need to state that as of early March, snow removal has already cost the Town about $1.34M which is far in excess of the budgeted amount of $610K by about $730K. A snow removal budget update will be presented at Town Meeting. As noted above, there will be unexpended balances in the unemployment compensation and debt service parts of the budget that total approximately $400,000 at the end of FY2008. Under Article 27, the unexpended balances will be transferred to other budget lines to help cover any FY2008 deficits including that for snow removal. The remaining snow removal deficit will be covered at the end of the fiscal year by other unexpended balances in the FY2008 budget, in the fall by the $300K in revenue offsets that were built into the budget for that specific purpose, and, also in the fall, by unprojected revenue increases or by the use of Free Cash. Of the $469,868 put into the Reserve Fund this year ($19,868 was added at the fall Special Town Meeting to the original appropriation of $450,000), $100,000 has already been transferred out to cover legal expenses related to collective bargaining and employee grievances. It is anticipated that an additional amount will also be needed to cover associated legal expenses. At the Fall 2006 Special Town Meeting No. 1 and at the 2007 Annual Town Meeting, articles were approved that enabled the school and municipal facilities efforts to be combined into a single Public Facilities Department. The Department has now been created but (in FY2008) facilities expenses are still budgeted in multiple line items. For FY 2009 the relevant budgetary items have been collected and will be presented as a Department budget line (line item 2400). Prompted by an alert Town Meeting Member, this winter we asked the Assistant Town Manager for Finance about the Town’s exposure to investment losses in the wake of the sub-prime mortgage crisis. We were assured that the Town is prevented by law from investing its operating money and reserves in risky investments such as those with the greatest exposure. The Pension Board is not subject to the same legal restrictions but has reviewed its portfolio and confirmed that it has no direct exposure (other than the effect on the market generally) resulting from the sub-prime crisis. Of course, some of the Town’s and the Pension Board’s investments may be indirectly affected by this crisis, especially as the stock market as a whole is affected. FY2009 The budget to be presented to Town Meeting is the first in some years that does not depend on the approval of an override, but this does not imply that overrides will not be needed to support future budgets, since expenses continue to grow faster than revenues. The budget depends on the levels of estimated revenues. While the lion’s share of the latter, i.e., the revenues from the property tax and available funds, are definite, the amounts of state aid and local receipts that will be received are uncertain to some degree. New growth, i.e., the property tax on newly constructed buildings and new commercial equipment, is estimated at $1,681,000. Part of the new growth revenue, i.e., $300,000, is earmarked to be applied to any snow removal deficit remaining from FY2008; this amount is carried in the budget as a revenue offset. The recommended budget assumes that the Town will receive State aid totaling $9,670,275 which is less than what the Governor has proposed by approximately the amount that the Governor’s proposal assumes would be raised from new gaming Page 8 of 50