2009-07-10-FTF-rpt - Laserfiche WebLink

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•First, the town tries to fund a certain share of capital spending, including all of its smaller projects, with cash (averaging $870,000 from FY2007 to FY2010). The town borrows for larger items with expected longer lifetimes, paying the resulting costs (interest and retirement of principal) within the budget. Such costs compete with other uses of funds for programs and operations within the budget. •Second, large, nonrecurring projects are funded by affirmative public votes on so- called “debt-exclusion overrides,” authorizing borrowing and repayment outside the general fund budget. Past examples include the secondary-school renovations, the construction of new Fiske and Harrington elementary schools, major road repairs, and the Department of Public Works headquarters and garage. Among the larger such projects on the horizon are further major road repairs; renovations or replacement of the police and fire headquarters; further school renovations/expansions; and a senior/community center. Portions of some of these projects, and others, may be funded by the Community Preservation Act. Although such costs fall outside the budget, the aggregate costs are of course borne by Lexington taxpayers. Capital spending is already being restrained, both by deferring authorization of pending projects to the future and by deciding to delay projects for which Town Meeting has already authorized funds. In determining how to sustain operating budgets during times of fiscal stringency, past town governments have had to weigh the costs of deferring maintenance to the future (as in incurring more costly road repairs). That issue arises again now, as does the issue of financing some routine maintenance through borrowing, rather than through current budget appropriations of “cash capital.” Reserves, discretionary actions, and other potentially favorable factors . Lexington’s government—the administration, elected officials (the Selectmen and School Committee), and Town Meeting—have prepared for less favorable financial circumstances by: •accumulating financial reserve funds in accordance with the town’s fiscal policy, most significantly resulting in a stabilization fund balance of $6.8 million and an additional $700,000 in a fund for unbudgeted special education costs; •restraining discretionary capital spending, as noted above; and •restraining hiring as vacancies occur. In addition, as a result of recent legislative action, the town will gain access to a new source of revenue—an estimated $500,000 annually, beginning in FY 2010—from applying the property tax to telephone company poles and wires. The legislature has also given the town discretion to levy new taxes on restaurant meals and lodging services (effective later in FY 2010 if enacted by a Special Town Meeting this fall, and estimated to produce $350,000 and $145,000, respectively, on an annual basis thereafter). With regard to the property taxation of telephone company poles and wires, it should also be noted that, depending on the outcome of ongoing litigation, the town at some point may also gain use of some $600,000 of escrowed funds for prior year taxes. The task force wishes to emphasize that any such one-time revenues should not be spent to support on- going operating expenses. Rather they should be used for such one-time purposes as 9