2019-01-30-AC-min - Laserfiche WebLink

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01/30/2019 AC Minutes new growth would not only reduce annual revenue but would also create a growing amount of unused tax levy that could enable a large spike in the tax rate without a voter referendum. The Town administration is responding to negative comments by the rating agencies about the large amount of Free Cash that has been applied on an ongoing basis to the operating budget by implementing a five-year program to phase out this practice. This year that translates to a reduction of$700,000 of revenue available to support the operating budget. Water& Sewer Enterprise—Mr. Bartenstein noted that the proposed Water and Wastewater Enterprise Fund capital budgets have jumped from about$1.2 million $2.4 million per fund. He inquired whether, and to what extent, the proposed Automated Meter Reading system was responsible for this spike. Ms. Kosnoff noted that the proposed funding for the meter system would be borrowing, not cash, and thus would be responsible, if approved, for a relatively small part of the capital budget increase for FY2020. Ms. Kosnoff noted that alternate ways of funding the meter system are being considered; one option is through the user rates and another is through a new flat fee that might depend on user type. She added that implementation of a new metering system would allow meters to be monitored and billed every three months, reduce the time staff spends reading meters, allow for prompt notification of households where water is being used at unusually high rates, and thus decrease the number of abatement requests. Operating Fund Expenses - It was noted that contract negotiations may become more challenging as the general unemployment level decreases. It was also noted that both the municipal and school budgets have completely used their revenue allocations in the proposed FY2020 budget. Debt Service, Capital Stabilization Fund, and mitigation t�—Ms. Kosnoff reported that due to the proliferation of within-levy debt-funded capital projects, annual within-levy debt payments are growing more than 5%per annum, and thus are inconsistent with a previously adopted goal. In future budgets, funding for baseline capital programs will use the entire 5% growth, leaving no room for new capital requests. This could result in accelerated withdrawals from the Capital Stabilization Fund to mitigate the impacts of the increases in within-levy debt service on the operating budget. It is estimated that to maintain the 5% growth cap for within-levy debt over the next 5 years, S 10-12 million of stabilization funds would be needed to mitigate the cost of within- levy debt service. This would reduce the amount available to mitigate exempt debt. One way to control this growth may be to reevaluate timing and cost containment options for ongoing capital projects. The FY2020 budget's increased expenses have led to a decrease in the recommended appropriation into the Capital Stabilization Fund. If this trend continues, it is possible that there will be no appropriation into the Fund next year. It was noted that the large amounts of Free Cash used to fund the Capital Stabilization Fund in previous years may be partially attributed to end-of-year turn- backs due to conservative budgeting for health insurance and the Lexington Public Schools. Report to the 2019 ATM Mr. Parker asked article authors to suggest people to be invited to future meetings to aid the Committee in its deliberations. Committee members listed the following issues where more information is needed: automated meter reading; Center streetscape; Minuteman High School athletic fields; crematorium; CPA reduction; debt service/Capital Stabilization Fund; and the Sustainability Director. Upcoming Meetings and Report Schedule February 7 2