2008-10-BOS-min - Laserfiche WebLink

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Budget Collaboration-Financial Summit 1 October 1, 2008 A joint meeting of the Board of Selectmen, School Committee and Finance Committees was held on Wednesday, October 1, 2008, at 7:30 p.m. in the Selectmen Meeting Room, Town Office Building. Present: Chairman Cohen, Mrs. Krieger, Mr. Kelley, Mr. Manz and Mr. Burnell; Mr. Valente, Town Manager, Ms. Pease, Executive Clerk; Dr. Ash, Superintendent; Ms. Dunn, Assistant Superintendent; all members of the School Committee; all members of the Appropriation Committee, except Mr. Levine; and all members of the Capital Expenditures Committee. The purpose of the meeting was to evaluate the fiscal health of the Town through a series of financial indicates and comparative benchmarks; to present a three-year projection of revenues and expenditures and outline the FY2020 budget calendar and issues. 1. Financial Conditions Overview and Budget Projections Key Financial Trends in Lexington. Mr. Valente presented the Town’s financial condition: strong in tax collections, stable labor costs as a percentage of total operating costs, adequate pension funding, revenues related to economic growth and low debt service; satisfactory in the areas of revenue and expenses per household and level of reserves; and unsatisfactory in the areas of state aid and employee liabilities. Mr. Valente presented information on where Lexington stands financially. Detailed information on the following indicators was presented: 1. State Aid 2. Revenues Related to Economic Growth 3. Personnel Costs 4. Employee Benefits 5. Debt Service 6. Reserves and Fund Balance FY2010-2012 Revenue and Expenditure Projections. Mr. Addelson presented three-year projections of revenues and expenses to facilitate discussion as the Town plans the FY2010 budget. The projections were based on maintaining the current level of services. The projections show a shortfall of $1,247,154 in FY1010, $2,339,969 in FY2011 and $2,406,865 in FY2012. To the shortfall we have to add the variable cost drivers, which include a one percent increase for municipal and school wages and new debt service. Key assumptions include: Property Tax Levy (2.5 percent of property tax growth and new growth of $1.9 million annually); State Aid (level funding); Local Receipts (historical averages and elimination of PILOTS in FY2010); Available Funds ($2.620 million in free cash applied in FY2010 and $2 million annually thereafter); Revenue Offsets (overlay at $750,000 in FY2010 and FY2012, increasing to $925,000 in reevaluation year, level funded $300,000 set aside for snow and ice deficit annually); Other Revenues (reduced water and sewer indirects as per 6-year