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APPROPRIATION COMMITTEE-2.020 ATM 25 March 2020 Property tax revenue from commercial and industrial owners is far more volatile than residential property tax revenue.A global economic recession would hurt local businesses,impacting global,regional,and local revenue. Lower employment at the local level would lead to lower retail activity and fewer new business opportunities.In recent years,a steady 20%of the Town's property tax revenue has come from commercial, industrial and personal (CIP) property taxes. A drop in CIP tax revenue would put pressure on residential tax rates,but this would likely come with a lower rate of inflation that would dampen the need for operating overrides. A significant decline in state income tax revenue would lead to cuts in almost every form of state aid,with few alternatives to make up the loss other than our stabilization fund. We note that in past economic downturns,the direct impact on Town finances has been delayed by a year. Despite the immediate impact to our residents and businesses,much of the current year's revenue is"baked in", and the impact of recent economic trends will take another year to show up in the Town's balance sheet.Now is the time to prepare for challenging conditions. Updates This report presents the official positions of the Committee as of the date of publication. The Committee will continue to meet as necessary prior to and during Town Meeting and it may revise its official positions based on new or updated information. In a typical year,the Committee also reports orally to Town Meeting on each article.The oral report summarizes the Committee's current position,which may have been updated following publication of this report. This year may require changes in our usual practice, but we will endeavor to satisfy our responsibility to provide financial advice to Town Meeting. 5