|
APPROPRIATION COMMITTEE-2019 ATM
<br /> of approximately$1 million of retained earnings in each fund as a buffer against revenue shortfalls resulting
<br /> from unexpected reductions in usage from the projections employed to set the rates or an unanticipated
<br /> need for extraordinary expenditures. The table below shows how the balance of retained earnings has been
<br /> deployed over the past several years and their proposed appropriation at this ATM for FY2020.
<br /> Retained Earnings: Appropriations and Year-End Balances
<br /> Annual Town Meeting 2014 2015 2016 2017 2018 2019
<br /> Water
<br /> Starting Balance I $2,234,007 $2,119,458 $1,786,659 $1,800,533 $531,863 $1,612,998
<br /> Approp. for Rate Relief 2 $250,000 $0 $0 $0 $0 $0
<br /> Bedford, Burlington Mitig.3 $250,000 $275,000 $131,000 $190,900 $0 $0
<br /> Approp. for Capital 4 $873,500 $1,015,500 $620,500 $1,095,000 $105,000 $775,000
<br /> Projected End Balance 5 $860,507 $903,958 $1,035,159 $514,633 $426,863 $837,998
<br /> Wastewater
<br /> Starting Balance I $1,990,816 $2,027,941 $1,032,942 $2,270,848 $576,523 $1,521,373
<br /> Approp. for Rate Relief 2 $50,000 $0 $0 $0 $0 $0
<br /> Approp. for Capital 4 $940,500 $1,390,500 $177,500 $1,290,000 $0 $700,000
<br /> Projected End Balance 5 $1,000,316 $637,441 $855,422 $980,848 $576,523 $821,373
<br /> Xotes
<br /> 1 Certified retained earnings as of the end of the prior fiscal year(as of 6/30/2018 for this year's ATM).
<br /> 2 Appropriations from retained earnings to subsidize the next fiscal year's operating budget.
<br /> 3 Several years ago,Lexington supplied unusually large quantities of water to Bedford as Bedford worked to correct issues
<br /> with its alternative supplies.More recently,Lexington has been called on temporarily to supply water to Burlington. The
<br /> retained earnings resulting from these extraordinary sales were "earmarked" and applied to mitigate the rate impact in
<br /> subsequent years.
<br /> 4 Proposed appropriations for capital projects for the next fiscal year(FY2020 at this ATM).
<br /> 5 Appropriations from retained earnings at the annual town meeting must be deducted as a liability from the projected retained
<br /> earnings to be certified as of the end of the current fiscal year,even though the funds will not be applied until the following
<br /> fiscal year.The projection of anticipated retained earnings assumes break-even operational results during the current fiscal
<br /> year.A higher(lower)starting balance available for appropriation the following year indicates that the current year's oper-
<br /> ating results were higher(lower)than were projected at rate-setting,resulting in an operating surplus(deficit).
<br /> Last year we noted that the "starting" retained earnings balances as of June 30, 2017 should have been
<br /> substantially higher than the "starting balances" shown in the table, and that this anomaly could have re-
<br /> sulted from an under-certification of the FY2017 year-end retained earnings. In fact, that turned out to be
<br /> the case, and the shortfall was corrected at year-end FY2018, as can be seen by the healthy "starting" re-
<br /> tained earnings balances shown to be available for appropriation at this annual town meeting.
<br /> Given these healthy balances, on the water fund side, it is proposed to use a total of$775,000 in retained
<br /> earnings as follows: $75,000 to be applied to fire hydrant replacements under Article 16(a); $500,000 to be
<br /> applied toward the automated meter reading system proposed in Article 16(f); and $200,000 for half of the
<br /> cost of a Vactor truck, to be shared with the wastewater enterprise,under Article 16(i). On the wastewater
<br /> fund side, it is proposed to use a total of$700,000 in retained earnings, $500,000 to be applied toward the
<br /> automated meter reading system and $200,000 for half the cost of the Vactor truck. As discussed under
<br /> Articles 17 and 18,the major annual water system improvement capital projects are proposed to be funded
<br /> exclusively by water and sewer fund debt.
<br /> Recreational Enterprise Fund
<br /> Early in 2015,the Recreation Department was reorganized as the Department of Recreation and Commu-
<br /> nity Programs (DRCP), resulting in increased costs for operations and programs. The Director of
<br /> 24
<br />
|