2006-11-29-SPTM1-AC-rpt - Laserfiche WebLink

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APPROPRIATION COMMITTEE REPORT TO STM1-NOVEMBER 2006 Article 3: Amend FY2007 Enterprise Funds Re uested q Funding Source Committee Recommendation Funds Budgets $513,318 in EF Approve (9-0) reductions $500,000 intrafund EF transfer $55,000 increase GF~EF (see discussion for details on each) This article proposes three housekeeping adjustments to the water and sewer enterprise fund budgets approved at the 2006 Annual Town Meeting. The first is to amend the appropriations for the FY2007 Massachusetts Water Resources Authority (MWRA) charges, originally based on estimated assessments that were available in February, to reflect the lower final assessments issued in June. The second is to adjust the appropriation for the water enterprise funds to reflect the decision by the Board of Selectmen, at the FY2007 rate-setting that occurred in October, to apply $500,000 in water enterprise retained earnings to mitigate the FY2007 water rate increase. The third is to adjust the appropriations for the water and sewer enterprise funds to reflect a recent decision by the Board of Selectmen to reduce the level of indirect expenses paid by the enterprise funds to the general fund. Adjustments to Reflect Final MWRA Charges In January of each calendar year, the MWRA provides its member towns with a preliminary estimate of their water and sewer assessments for the upcoming fiscal year. The Town uses these preliminary assessment figures to establish the MWRA component of the water and sewer enterprise fund appropriations at the Annual Town Meeting. In June of each year, the MWRA completes its budget process and issues final assessments to its member towns. The final assessments are typically less than the preliminary estimates. When water and sewer rate-setting takes place in the late summer or early fall, the Town's practice has been to set rates in an amount projected to be sufficient to cover the actual, final, MWRA assessments, as well as the other direct and indirect costs of the water and sewer enterprises. In effect, therefore, the Town raises in the rates and pays to the MWRA each year an amount that is somewhat less than the amount originally appropriated at the annual town meeting. The amounts appropriated at this year's Annual Town Meeting for MWRA water and sewer charges and the actual, final, assessments for FY2007 are as follows: MWRA Water and Sewer Char es Fund A ro riated Final Assessment Chan e Water $ 4,341,830 $4,032,517 $(309,313) Sewer $ 5,782,838 $5,633,833 $(149,005) Total $10,124,668 $9,666,350 $ 458,318 Nothing prohibits the Town from spending less than the amount authorized by an appropriation, and it is not strictly necessary for Town Meeting to amend the original enterprise fund appropriations to reflect the final MWRA assessments. Historically, Town Meeting has not been asked to do so. However, in a break from past practice, the Town Manager has proposed making such an adjustment as a housekeeping measure to help increase the transparency of the water and sewer budgeting and rate-setting process, and to simplify the reports that the Town is required to present to the state Department of Revenue during the tax rate-setting process. Page 7 of 15