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APPROPRIATION COMMITTEE REPORT TO THE MARCH 2012 ATM & STM Introduction The Appropriation Committee is required to create a report with a review of the budget as adopted by the Board of Selectmen, including an assessment of the budget plan and a projection for future years' revenues and expenses. This report includes the Committee's advice and recommendations regarding all appropriations of Town funds that are anticipated in the Town Warrant, and other municipal matters that may come before Town Meeting. This report is published and distributed to the members of Town Meeting as a printed document and as an electronic document via the Town website. The Committee also makes presentations during Town Meeting, including recommendations on appropriations and other matters for which the Committee's formal position was pending at the time of publication. Developments Since Adoption of the FY2012 Budd The actual "new growth" figure for FY2012 was $3,346,536, an increase of $1,546,536, or almost twice the original FY2012 budget estimate of $1,800,000. It is the Town staff's practice to use a conservative estimate for new growth, meaning that the estimate tends to be lower than the actual result. Nevertheless, this was a significant deviation contributing to additional revenue in FY2012 and raising the Town's levy limit for FY2013 and beyond. November 2011 Special Town Meeting — As a consequence of the increased revenue from new growth and a late -in- the -year reduction in the FY2012 health insurance budget of $1.25 million (resulting from a lower than expected increase in health care costs), an additional $2.8 million of revenue was available for appropriation to the FY2012 budget at the fall Special Town Meeting held on November 10, 2011. Of that amount, just a little over $1 million was actually appropriated, leaving an FY2012 surplus of nearly $1.8 million that will flow to Free Cash at the end of the current fiscal year and be available for appropriation for FY2014 at the 2013 Annual Town Meeting (or for FY2013 if a special town meeting is held in the fall of 2012). Bridge /Bowman and Estabrook Debt Exclusions — At the November 2011 Special Town Meeting, the main action taken was to appropriate funds for the Bridge and Bowman Elementary School renovation projects. The request for a borrowing authorization totaling $21,670,000 was contingent on the approval of a debt exclusion referendum by a vote of the Town residents. A special election was held on January 24, 2012, to present questions for two debt exclusions, one for the Bridge and Bowman projects and another for the reconstruction of the Estabrook Elementary School. Both debt exclusions were approved, granting the Town the right to borrow in excess of the limits established by Proposition 2 to fund these construction projects. The actual amounts that can be borrowed for the Estabrook project will be determined by an appropriation request to be made under Article 2 of the Warrant for the Special Town Meeting to be held on April 2, 2012. Reserve Fund — At the November 2011 Special Town Meeting, a supplemental appropriation of $350,000 to the Reserve Fund was approved in order to simplify the funding of the snow and ice budget. This raised the total FY2012 appropriation for the Reserve Fund from $550,000 to $900,000. The same, larger amount will be requested for the Reserve Fund in the budget for FY2013 to help address potential overruns in FY2013 snow and ice costs (in spite of the uneventful winter of 2011 - 2012), and also to hedge against potential large shifts in fuel prices during the coming year. On December 21, 2012, the Committee authorized a $40,000 Reserve Fund transfer to mitigate hazardous conditions at a private home at 80 Oak Street pursuant to a determination by the Building Commissioner and others that the property posed a threat to general health and safety. To date this has been the only use of the Reserve Fund, leaving the balance at $860,000 for FY2012. If not needed by the end of the fiscal year, this amount will flow to free cash and be available for appropriation for FY2014. Employee Health Insurance — At the end of January, 2012, the Town concluded a successful coalition bargaining process with the Lexington Public Employee Committee. Under the resulting agreement, the