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

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grant funding (particularly from federal economic-stimulus appropriations) that can assist in covering costs of existing programs and services. The task force does not recommend the use of grants to initiate new programs that might require tax levy funding if the grant funding later terminates. Use of stabilization fund. We recommend that the town’s stabilization fund reserves, accumulated for the purpose of strengthening the town’s financial flexibility and avoiding disruption during a period of recession and decline in state financial aid, be drawn from judiciously – not to support new services, positions, facilities, or initiatives (subject to the caveat concerning innovation below), but to help maintain existing municipal and school services and facilities. This recommendation is not self-implementing. The task force discussed a range of policies for using the stabilization fund to support the FY 2011 budget, mindful of the fact that in the current uncertain fiscal environment, the need for such appropriations may be larger in FY 2012 than in FY 2011 (arguing for building in some margin)—but that such a contingency is unknowable at present. Without settling on a definitive guideline for our recommendation, we felt that based on the information available to the task force as of June 2009, for FY 2011, Lexington might draw down somewhere between $2 million and $3 million from the stabilization fund. The exact amount will depend on the actual FY 2011 budget gap, to be refined as more information becomes available (as discussed above). In addition, the decision about stabilization fund use for FY 2011 must be informed by evolving information about FY 2010 revenues and expenses, as well as about the fiscal picture for FY 2012. Particularly were the budget gap for FY 2011 to worsen, we could envision a maximum draw of $3 million in FY 2011. This would still allow for a similar draw from the stabilization fund in FY 2012, while retaining a modest balance beyond that point. The objective is to attempt to maintain level services during the period of anticipated maximum fiscal stress. General Recommendations The task force anticipates that the preceding list of recommendations—presented in rough order of priority—is likely to provide sufficient tools to address the challenges of the FY 2011 budget. While this same set of strategies should again play a central role in planning for FY 2012, the task force recognizes that for that year and beyond, a broader set of questions remains and a broader range of issues must be considered. Exercising maximum restraint in compensation. Consistent with the discussion above, for the next several years, maximum restraint in total employee compensation policy will remain critical. Proposition 2 ½ operating overrides. After the worst of the financial downturn (during which we recommend reliance on use of the stabilization fund and the other measures discussed above)—and if suitable, structural, effective changes are made that restrain the growth in total compensation costs, it would then be appropriate to ask Lexington voters, through the mechanism of a Proposition 2 ½ operating override, whether they wished to increase taxes to maintain services, or instead to reduce services. (Consistent with its past fiscal policies, Lexington has recognized that the costs of providing local public services—and property values, and resident incomes—increase over time faster than the tax-levy growth allowed under Proposition 2 ½, and so voters have 16