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APPROPRIATION COMMITTEE-ATM 2018
<br /> In early December 2017, in a Town-wide referendum, Lexington voters endorsed the exclusion of debt
<br /> service costs for all three planned capital projects —replacement of the Hastings School, replacement of
<br /> the Fire Headquarters and associated build-out of temporary swing space, and the construction of a new
<br /> LCP— from the limits of Proposition 21/2. Although the debt exclusion is not for a fixed amount, the total
<br /> borrowing required for the three projects was estimated at approximately $86 million($49 million net for
<br /> the Hastings School, $15 million for the LCP, and$22 million for the Fire Headquarters).
<br /> In connection with the debt exclusion campaign, the Town updated and published a capital planning mod-
<br /> el detailing the anticipated use of our sizeable Capital Stabilization Fund(current balance of approximate-
<br /> ly $28 million)to mitigate the impact on residential tax bills over the next five years of excluded debt for
<br /> the three new projects, if approved, as well as that for pre-existing projects, including the recent expan-
<br /> sion of the Clarke and Diamond Middle Schools. In particular, the plan sought to "shave the peak" that
<br /> would otherwise occur during the period FY2019 through FY2024, until the retirement of older debt
<br /> gradually lowered the base of pre-existing debt service, and limit annual tax bill increases during that time
<br /> period to a more reasonable amount.
<br /> The Summit Process and Estimated FY2019 Revenue
<br /> In the usual series of budget summits,joint meetings of the Board of Selectmen, the School Committee,
<br /> the Appropriation Committee, and the Capital Expenditures Committee, held throughout the fall of 2017
<br /> and into early 2018, the Town Manager presented: (1) his FY2019 revenue estimates, including the certi-
<br /> fied Free Cash available for appropriation in FY2019; (2)the amounts proposed to be set aside for various
<br /> special purposes, including continued paydown of the prior land purchases, further strengthening of the
<br /> Capital Stabilization Fund and Post Employment Insurance Liability (PEIL) Fund, and the dedication of
<br /> over $4 million in Free Cash toward the funding of over $7 million in cash capital, see Brown Book pp.
<br /> xi, 11-5; (3) a proposed appropriation from the Capital Stabilization Fund of$4,500,000 to provide proper-
<br /> ty tax relief for excluded debt service and a smaller amount to offset within-levy debt service(with a goal
<br /> of limiting nominal within-levy debt increases to 5% per year), see Brown Book, p. xii; and (4) the pro-
<br /> posed allocation of the balance of this year's incremental revenue between the School Department and the
<br /> municipal departments for use in developing their respective FY2018 operating budgets.
<br /> Overall revenue growth, resulting from a combination of the annual allowed 2.5% increase in the tax
<br /> levy, estimated new growth, state aid, and local receipts, continues to be healthy, projected to increase
<br /> over FY2018 budgeted revenues by about 4% (compared with growth of 4.6% from FY2017-FY2018 and
<br /> 3.3% from FY2016-FY2017), see Brown Book,p. iv. After adjusting for changes in set-asides (primarily
<br /> a reduction in the contribution to the Capital Stabilization Fund), net general fund revenue available for
<br /> appropriation has increased 6% over FY2018. See Brown Book, p. II-3. Certified free cash, up last year
<br /> by about$3 million, has leveled off at about $13 million. See Brown Book,p. II-3. It should be noted that
<br /> the Governor's initial proposed FY2019 state budget, for the first time in several years, does not show a
<br /> material increase of Lexington's Chapter 70 aid; this was anticipated because a multi-year effort by the
<br /> state to bring Lexington up to appropriate"foundation budget"levels has now largely achieved its goal.
<br /> As a result of the set-aside and allocation process described above, it was determined in December that
<br /> approximately $9.4 million in incremental revenue was available to be applied to the FY2019 operating
<br /> budget, an increase of 6.9% from last year, and that the increase would be allocated 74% to the school
<br /> department and 26%to municipal departments (following a decision to absorb the previously unallocated
<br /> incremental costs of staffing the new Community Center into the municipal budget). The school depart-
<br /> ment and municipal departments have each developed their respective proposed FY2018 operating budg-
<br /> ets within these parameters,providing for level service without the need for an operating override.
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