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

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2. Fiscal Outlook for FY 2011 and FY 2012:  In light of all the above factors, the consensus estimates of the Appropriation Committee and town staff identify a budget gap of approximately $4 million for FY 2011, plus an additional $800,000 per percentage point of any employee cost-of-living increase.  The Appropriation Committee forecasts a larger gap of $5 to 7 million for FY 2012.  These estimates are subject to a great many uncertainties, on both the revenue and the expense side. As new information comes in, it will be vital to continue to update the estimates. Summary of Recommendations 1. Recommendations for FY 2011 and 2012: In light of these anticipated budget gaps, the task force identified a menu of strategies that the town should consider for FY 2011. These same measures will provide an appropriate foundation for planning for FY 2012:  Exercising maximum restraint in compensation: In light of present economic circumstances, the town must make every effort to limit growth in total employee compensation (salaries plus benefits). In particular, highest priority must go to achieving substantial, lasting and pervasive savings in employee health benefit costs.  Capital spending: The town should consider increased use of borrowing to defer an additional portion of capital costs, and should perhaps also consider some modest deferrals of capital maintenance.  Retirement obligations: The town should consider some modest deferrals in funding of obligations for retiree pension and benefit costs.  Discretionary cost restraint: The municipal and school administrations should continue, during FY 2010, to take all prudent measures to hold down operating costs, by deferring filling of non-critical hiring and careful review of purchases.  Early identification of possible cost reductions: Municipal and school staff should identify $1 million of potential program reductions, equitably allocated between town and school budgets. Such reductions should only be implemented to the extent that the other strategies identified here are insufficient to close the budget gap.  Broadening the tax base: The town should adopt, at the earliest feasible time, the new local-option taxes recently authorized by the legislature (additional 2% hotel/motel tax and 0.75% meals tax). In addition the town will receive an additional $500,000 annually from the repeal of the property tax exemption for telephone company poles and wires.  Grant and stimulus funding: The municipal and school departments should take all reasonable measures to pursue any grant funding to cover costs of existing programs.  Use of stabilization fund: The town should make use of the stabilization fund to maintain municipal and school services and facilities. These funds will also be needed in FY 2012 and perhaps beyond. Depending on circumstances and the outlook beyond FY 2011, the town could draw between $2 and 3 million from the fund for FY 2011. 3