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APPROPRIATION COMMITTEE-2020 ATM 25 March 2020
<br /> Table A-2a. Projected Revenues by Category
<br /> FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025
<br /> Revenue Category Actual Actual Revised Proposed Projection Projection Projection Projection
<br /> 1 Property Tax Levy $ 169,332 $ 176,841 $ 184,822 $ 192,312 $ 199,870 $ 207,616 $ 215,557 $ 223,696
<br /> 2 State Aid $ 15,737 $ 16,013 $ 16,283 $ 16,518 $ 16,733 $ 16,952 $ 17,171 $ 17,392
<br /> 3 Local Receipts $ 16,739 $ 16,969 $ 14,082 $ 14,281 $ 14,498 $ 14,694 $ 14,930 $ 15,174
<br /> 4 Available Funds $ 15,159 $ 15,059 $ 14,314 $ 14,942 $ 12,493 $ 11,007 $ 11,021 $ 10,285
<br /> 5 Revenue Offsets $ (2,027) $ (2,074) $ (1,861) $ (2,181) $ (2,217) $ (2,255) $ (2,293) $ (2,483)
<br /> 6 Other Revenues $ 1,674 $ 1,647 $ 1,696 $ 1,749 $ 1,802 $ 1,856 $ 1,912 $ 1,969
<br /> 7 Total Revenues $ 216,614 $ 224,456 $ 229,337 $ 237,621 $ 243,178 $ 249,870 $ 258,298 $ 266,032
<br /> Notes on assumptions
<br /> 1 Property Tax Levy Reflects statutory allowable growth of 2.5%and assumed new growth of$2.75 million annually.
<br /> 2 State Aid Assumes FY2020 Chapter 70 aid increasing at$25 per pupil Minimum Aid in FY2022-25.
<br /> 3 Local Receipts Assumes modest growth in local receipts based on evaluation of historical averages.
<br /> 4 Available Funds Free Cash estimate of$10,500,000 available for FY2022 and$9,000,000 for FY2023-2025. Annual contributions of
<br /> $141,000 from TDM Stabilization Fundto support Lexpress andthe Alewife Shuttle,$385,000 from Parking Fund to
<br /> support Traffic Bureau and snow removal;and$50,000 from Cemetery Fund to support Cemetery Division. In FY2021-
<br /> 2023,$750,000 annually from balance of Health Claims Trust Fund to be used to fund health insurance,resulting in an
<br /> equal amount in the tax levy becoming available to fund contributions to OPEB Trust per BOS policy. Includes in
<br /> FY2021-FY2025 use of Capital Projects Stabilization Fund to offset within-levy debt service,as detailed in Line 14.
<br /> 5 Revenue Offsets $750K for overlay(property tax abatement and exemptions)in FY2021-25. $400K set-aside for snow&ice deficit
<br /> 6 Other Revenues Assumes FY2021 Water,Sewer and Recreation Indirects increasing by 3%annually.
<br /> Source:Lexington Finance Department
<br /> Table A-2b shows the projected year-to-year percentage increases in the various revenue categories. Note
<br /> that Property Tax Levy and State Aid grow more slowly from FY2022-FY2025 than in the earlier years.
<br /> In both cases,the differences appear to reflect conservative assumptions, which we discuss in more detail
<br /> below for property tax revenues. The other notable change is in Available Funds, which shrink in several
<br /> of the projected years due to lower levels of free cash. This is due to some of the more aggressive changes
<br /> noted above to close the shortfall in the FY2021 proposed budget, which will lower free cash for the next
<br /> fiscal year.
<br /> Table A-2b. Annual Rates of Increase in Revenues
<br /> FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025
<br /> Revenue Category Actual Revised Proposed Projection Projection Projection Projection
<br /> 1 Property Tax Levy 4.4% 4.5% 4.1% 3.9% 3.9% 3.8% 3.8%
<br /> 2 State Aid 1.8% 1.7% 1.4% 1.3% 1.3% 1.3% 1.3%
<br /> 3 Local Receipts 1.4% -17.0% 1.4% 1.5% 1.4% 1.6% 1.6%
<br /> 4 Available Funds -0.7% -4.9% 4.4% -16.4% -11.9% 0.1% -6.7%
<br /> 5 Revenue Offsets 2.3% -10.3% 17.2% 1.7% 1.7% 1.7% 8.3%
<br /> 6 Other Revenues -1.6% 3.0% 3.1% 3.0% 3.0% 3.0% 3.0%
<br /> 7 Total Revenues 3.6% 2.2% 3.6% 2.3% 2.8% 3.4% 3.0%
<br /> Note:Each entry shows the percentage change from the previous year,calculated from Table A-2a.
<br /> Proposition 2'/2 limits growth in the property tax levy to 2.5% each year plus an allowance for growth in
<br /> the tax base resulting from capital investment, e.g., construction and renovation, commonly called "New
<br /> Growth."The limit on the tax levy may be temporarily exceeded to cover debt service on projects that are
<br /> deemed exempt from Proposition 2'/2 as the result of a town-wide referendum. In addition, a successful
<br /> operating override referendum can permanently increase the tax levy limit.
<br /> Leaving aside exempt debt service and operating overrides,New Growth is the key determinant of increases
<br /> in property tax revenues. The Finance Department's projections assume that New Growth will be $2.75
<br /> million per year, up slightly from the $2.5 million assumed in recent prior years. As shown in the figure
<br /> below,this assumption is conservative in the sense that it is lower than the actual new growth in nine of the
<br /> last ten fiscal years.
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