2023-03-27-CEC-ATM-rpt (corrected)

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CORRECTED CAPITAL EXPENDITURES COMMITTEE REPORT TO 2023 ATM The Town, the CPC, and this Committee are mindful of the additional taxes which the CPA imposes on our community at a time when our tax burden is projected to rise to pay for essential capital projects like the new Police Station and a new or renovated Lexington High School. To lessen the impact on Lexington households, particularly those with smaller homes, the Town has adopted a provision in the CPA law that exempts the first $100,000 of home value from the CPA surcharge. As is clear from the Table in this section, by choosing the maximum 3% surcharge, Lexington has received the maximum supplement allowed paid from the State for every year since 2007. As of FY2023, the Town has received $20,489,966 and projects an additional $1,785,000 for FY2024. Had our participation been at the 1% level, not only would our initial proportional distributions have been lower, but we would not have received the second and third round distributions, and our total supplemental receipts would have been less than a third of what they were. For relatively small contributions per household, the Town has realized enormous benefits, and will continue to do so, even with the lower percentage supplements of recent years. For these reasons this Committee continues to believe that Lexington should maintain its CPA participation at the 3% level, and that not to do so would be "penny wise and pound foolish." See the CPA Summary in the Brown Book (Appendix C, Page C-8) for a summary of the CPF status, including projects that have been funded from the CPF since its inception in Lexington and those being requested for FY2024 under Article 10. Enterprise -Fund Projects The Town operates three enterprise funds (EFs) for revenue-producing activities funded outside the tax levy by user fees: water distribution, wastewater distribution (sanitary sewers), and certain Recreation and Community Programs (R&CP) services, such as the golf course, swimming pools, and tennis courts. The costs of these activities are normally funded out of their respective enterprise funds. Unlike property -tax revenues, EF fees are not subject to a limit under Proposition 2'/2. Recreational playground restoration and equipment, in contrast, are not fee generating and Capital investment for such equipment is therefore, normally funded as part of the small -ticket program of the General Fund (GF)—sourced by the tax levy. The 2012 amendments to the CPA expanded the range of recreation projects that are eligible for funding under that Act; therefore, many recreational projects have since been submitted to our CPC with requests for use of the CPF as the fund source. That continues this year; many of the recreation projects coming before this ATM will request full or partial funding from the CPF rather than from the EF or GF. This Town Meeting will consider requests from the Departments that manage the R&CP, Water, and Wastewater, and R&CP EFs. (See Articles 11, 13, and 14.) Revolving -Fund Projects Revolving funds established under the provisions of Massachusetts General Laws (M.G.L.) Chapter 44, Section 53E'/2, must be authorized annually by Town Meeting vote. (As the Schools Food Service Revolving Fund was established, instead, under M.G.L. Ch. 548 of the Acts of 1948, it does not require Town Meeting's annual authorization or appropriation to use it.) Each fund is credited with only the departmental receipts received in connection with the programs supported by such revolving fund, and expenditures may be made from the revolving fund, without further appropriation, for those programs. Revolving funds are usually expended to cover non -Capital costs, and this Committee normally does not report on their annual authorizations unless a Capital expense is contemplated. Such an expense is not contemplated in FY2024.