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APPROPRIATION COMMITTEE REPORT TO STMI NOVEMBER 2006
<br />Article 3: Amend
<br />FY2007 Enterprise
<br />Funds Budgets
<br />Funds Requested
<br />Funding
<br />Source
<br />Committee
<br />Recommendation
<br />$513,318 in
<br />EF
<br />Approve (94)
<br />$4,032,517
<br />reductions
<br />Sewer
<br />$ 5,782,838
<br />$5,633,833
<br />$500,000 intrafund
<br />EF
<br />$10,124,668
<br />$9,666,350
<br />transfer
<br />$55,000 increase
<br />GF�EF
<br />(see discussion for
<br />details on each)
<br />This article proposes three housekeeping adjustments to the water and sewer enterprise fund budgets
<br />approved at the 2006 Annual Town Meeting. The first is to amend the appropriations for the FY2007
<br />Massachusetts Water Resources Authority (MWRA) charges, originally based on estimated assessments
<br />that were available in February, to reflect the lower final assessments issued in June. The second is to
<br />adjust the appropriation for the water enterprise funds to reflect the decision by the Board of Selectmen, at
<br />the FY2007 rate - setting that occurred in October, to apply $500,000 in water enterprise retained earnings
<br />to mitigate the FY2007 water rate increase. The third is to adjust the appropriations for the water and
<br />sewer enterprise funds to reflect a recent decision by the Board of Selectmen to reduce the level of
<br />indirect expenses paid by the enterprise funds to the general fund.
<br />Adjustments to Reflect Final MWRA Charges
<br />In January of each calendar year, the MWRA provides its member towns with a preliminary estimate of
<br />their water and sewer assessments for the upcoming fiscal year. The Town uses these preliminary
<br />assessment figures to establish the MWRA component of the water and sewer enterprise fund
<br />appropriations at the Annual Town Meeting. In June of each year, the MWRA completes its budget
<br />process and issues final assessments to its member towns. The final assessments are typically less than the
<br />preliminary estimates.
<br />When water and sewer rate - setting takes place in the late summer or early fall, the Town's practice has
<br />been to set rates in an amount projected to be sufficient to cover the actual, final, MWRA assessments, as
<br />well as the other direct and indirect costs of the water and sewer enterprises. In effect, therefore, the Town
<br />raises in the rates and pays to the MWRA each year an amount that is somewhat less than the amount
<br />originally appropriated at the annual town meeting.
<br />The amounts appropriated at this year's Annual Town Meeting for MWRA water and sewer charges and
<br />the actual, final, assessments for FY2007 are as follows:
<br />MWRA Water and Sewer Charges
<br />Fund
<br />Appropriated
<br />Final Assessment
<br />Change
<br />Water
<br />$ 4,341,830
<br />$4,032,517
<br />S(309,313)
<br />Sewer
<br />$ 5,782,838
<br />$5,633,833
<br />S(149,005
<br />Total
<br />$10,124,668
<br />$9,666,350
<br />S(458,318)
<br />Nothing prohibits the Town from spending less than the amount authorized by an appropriation, and it is
<br />not strictly necessary for Town Meeting to amend the original enterprise fund appropriations to reflect the
<br />final MWRA assessments. Historically, Town Meeting has not been asked to do so. However, in a break
<br />from past practice, the Town Manager has proposed making such an adjustment as a housekeeping
<br />measure to help increase the transparency of the water and sewer budgeting and rate - setting process, and
<br />to simplify the reports that the Town is required to present to the state Department of Revenue during the
<br />tax rate - setting process.
<br />Page 7 of 15
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