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APPROPRIATION COMMITTEE REPORT TO 2010 ATM — MARCH 2010
<br />yields an estimated increase of 13.34% in the budgeted FY2011 amount over the FY2010 projected
<br />amount. See the discussion under the health insurance section of Article 4 for further information.
<br />The Town Manager is recommending the use of $3,860,110 of Free Cash for FY2011 operating expenses.
<br />This amount is a bit more than the amount of $3,668,576 that was taken from Free Cash in FY2010 to
<br />support the operating budget. In addition, the recommended budget includes the use of $1,270,000 to
<br />support recommended capital expenditures and /or debt service, the transfer of $350,000 from Free Cash
<br />to the SPED Stabilization Fund, and the transfer of $479,399 from Free Cash to the Post - Employment
<br />Insurance Liability Fund (for details see the discussion under Article 18 below). Given the Town's current
<br />financial situation, there is no plan this year to transfer any funds into the general - purpose Stabilization
<br />Fund. This proposal is summarized in Table 1.
<br />Table 1: Anticipated Free Cash Changes -2010 Annual Town Meeting
<br />Certified Free Cash, as of July 1, 2009
<br />$6,159,509
<br />Set aside for FY2010 (Article 24)
<br />($200
<br />Less use for operating budget (Article 4)
<br />($3,860,110)
<br />Less use for FY2011 debt service or cash capital (various articles)
<br />($1,270,000)
<br />Less transfer to Post - Employment Fund (Article 18)
<br />($479,399)
<br />Less transfer to SPED Stabilization Fund (Article 20)
<br />($350,000)
<br />Less transfer to Stabilization Fund (Article 21)
<br />($0)
<br />Remaining balance at end of Town Meeting (see text)
<br />$0
<br />The recommended FY2011 budget (with projects proposed for CPA funding) includes approximately
<br />$12,800,000 for capital expenditures in regard to Town projects; this amount is at least $1,000,000 more
<br />than was appropriated for FY2010 (see the FY2010 Brown Book page XI -3 and the FY2011 Brown Book
<br />page XI -4). Note that purchases or work related to LexHAB and Lexington Housing Authority properties
<br />are not considered to be Town projects and the funding for those projects is not included in the above
<br />totals. The funding sources for FY 2011 capital projects include the tax levy, enterprise funds, CPA
<br />funds, Free Cash, a revolving fund, and state funding (Chap. 90).
<br />FY2012 and beyond
<br />This year it seems that the balanced FY2011 budget proposal that will be presented to Town Meeting did
<br />not require any difficult tradeoffs or sacrifices. This was definitely a positive development, but there are
<br />areas of concern for observers of the Town's finances. Two areas in particular that will need concerted
<br />effort and guidance are employee benefits and the growing list of large capital projects required to
<br />maintain and upgrade the Town's infrastructure.
<br />We don't need to elaborate about the need to control the growth of the costs of health insurance for Town
<br />employees and retirees. It is not hard for many to point to aspects of the current program that they don't
<br />like, but it is difficult to make major changes in these benefits because they are contractual matters
<br />requiring the support of both management and unions. Nevertheless, the Town must strive to reach
<br />agreements where the complete picture of compensation and benefits is fair to current and future
<br />employees, to Town retirees, as well as the taxpayers.
<br />In regard to major capital projects the town must consider in the coming years, the list includes street
<br />resurfacing and reconstruction work beyond the usual annual expenditures in order to catch up with that
<br />which has been deferred past the time of due diligence, renovation and expansion of the High School,
<br />renovation or reconstruction of the four older elementary schools, reconstruction or renovation of the Fire
<br />Department's main building on Bedford St., work on the Police Station, a senior and /or community
<br />center, renovation of the Stone Building in East Lexington, and probably other projects. The total cost of
<br />these projects will approach $100,000,000, and most of them will only be feasible if financing is
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