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

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Recommendations The high degree of uncertainty affecting both revenues and expenses in the future makes budgeting especially challenging. Accordingly, our first, overarching recommendation is that decisions be made, to the greatest extent possible, with a recognition of the uncertainties that Lexington faces. Fiscal policies must be guided by long-term directions and principles, but the specific strategies and tactics adopted must evolve with the situation as new information becomes available. We begin by planning for FY 2011 with an assumed budget gap of approximately $4 million. That figure may well be revised, in either direction, depending on: •the closing balances for FY 2009, which will determine free cash available for the FY 2011 budget; •the level of spending in FY 2010 (for example, costs for snow and ice removal), which will, in turn, determine the level of free cash available for FY 2012 (and may affect spending estimates for FY 2011); •decisions affecting employee total compensation (salary and benefits) in FY 2010 and beyond; •clearer indications about the national and state economies, bearing on the length of the downturn, the pace of recovery, and/or inflation; •indications about the Commonwealth’s plans for local aid, especially Chapter 70 funds, for FY 2011; •actual data on local receipts (affecting both the year-end FY 2010 balance and the forecast for FY 2011 and beyond); and •actual experience with residential and commercial “new growth” revenues entering the tax base in each fiscal year. In that context, we offer specific recommendations concerning near-term action on expenses and on revenues to cope with the projected FY 2011 budget gap (with consideration for the likely implications for FY 2012 and beyond); and then several general recommendations, which apply to all budget years. FY 2011 Expenses Exercising maximum restraint in compensation. We recommend that in the current circumstances—constrained revenues, historically low inflation, but persistent healthcare cost inflation, particularly in the Greater Boston area—maximum restraint be exercised in the negotiation and setting of total compensation (public-employee salaries and wages, plus benefit costs), from the bargaining units through the executive ranks. The task force recognizes that very few Lexington citizens and taxpayers will receive salary or wage increases in the coming year, and many will face significant reductions in income; this reality provides crucial context for Lexington’s compensation decisions. As part of this recommendation, we urge as the highest fiscal priority that town management and bargaining-unit leadership promptly agree on ways to effect substantial, lasting, and 14