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CAPITAL EXPENDITURES COMMITTEE REPORT TO 2012 STM(NOVEMBER 19,2012) Warrant Article Analyses and Recommendations Article 2: Funds Requested Funding Committee Amend FY2013 Source Recommendation $161,507 for Massachusetts Approve (5-0) Operating, Enterprise Lexington's Community Fund and Community Community Preservation Preservation Budgets Preservation Fund Trust Fund "To see if the Town will vote to make supplementary appropriations, to be used in conjunction with money appropriated under Articles 4, 5 and 8 of the warrant for the 2012 Annual Town Meeting, to be used during the current fiscal year, or make any other adjustments to the current fiscal year budgets and appropriations that may be necessary; to determine whether the money shall be provided by the tax levy, by transfer from available funds, from Community Preservation funds or by any combination of these methods; or act in any other manner in relation thereto. "DESCRIPTION: This is an article to permit adjustments to current fiscal year (FY2013) appropriations of the general fund, enterprise funds and Community Preservation budgets." [Town of Lexington Warrant to the 2012 STM,November 19,2012] At the time the FY2014 budget was prepared, the Massachusetts Department of Revenue (DOR) was projecting that communities participating under the Community Preservation Act (CPA) would be receiving a supplemental distribution from the State's Community Preservation Trust Fund this fiscal year in the first round of distribution of 22% of the surcharges collected by the community on its prior-year's property taxes. That percentage was down from the prior year's actual rate of 26.6%based on a projection of reduced transactions at the Registries of Deeds and, therefore, reduced surcharges on those transactions which provide the revenue for that Trust Fund. (The just completed Trust Fund year included revenue from Registries' collections in September 2011 through August 2012.) As this Town authorized the maximum CPA surcharge of 3% on its property taxes (with certain exemptions), it participates in two additional rounds of distribution calculations. Because those additional rounds had provided 1% more in distribution over the past two years, our FY2014 budget had used 23% to project its supplemental distribution for FY2014. That was a projection of $768,000 based on an estimated FY2013 CPA surcharge of$3,342,000. This Committee had been tracking the month-by-month surcharge collections at the Registries versus those for the prior Trust Fund year and reported that, after a very slow start (the first month was down 17.5%),by the end of that year(the last month was up 36.6%), that Fund had a total revenue for that year which was up 10.2% over the previous year—which augured well that this year's supplemental distribution would be higher than the DOR's projection even though there were five more communities receiving distributions than last year. (See this Committee's Report to the 2012 Annual Town Meeting, released March 23, 2012,beginning on page 10, for more background on this Town's participation under the CPA.) When the DOR made this-year's distribution on October 15,2012, the first-round percentage was 26.83% and this Town received an additional 0.96% total under the 2nd & 3rd rounds. That total of 27.79% was just a small increase from last-year's 27.62%. Including a $255 additional distribution that DOR made this year to correct for a computational error made in last-year's distribution, this Town received a distribution of $929,507 based on our final, net, FY2013 CPA surcharge of $3,344,371. It is those $161,507 of additional supplemental funds over the estimate for FY2013 that will be added under this Article to the Community Preservation Fund's unbudgeted reserve—which provides maximum flexibility in the use of those funds. 1