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Home My WebLink About2011-11-17-AC-min -summit 2November 17, 2011 Minutes Town of Lexington Appropriation Committee November 17, 2011 Place and time: Public Services Building Cafeteria, 7:00 PM Members present: Glenn Parker (Chair), John Bartenstein (Vice Chair and Secretary), Alan Levine, Dick Neumeier, Jonina Schonfeld, Rob Addelson (ex officio, non - voting) Members absent: Robert Cohen, Mollie Garberg, Eric Michelson, Joe Pato The Committee joined the Board of Selectmen, the School Committee, and the Capital Expenditures Committee for the second Budget Collaboration - Financial Summit for FY 2013 (Summit 2). The agenda items were: 1. FY2013 Revenue Projections • Overview (Carl Valente) • Presentation by Revenue Source (Rob Addelson) • Policy Issues (Carl Valente) o Use of Reserves to Offset FY2013 State Aid Reductions o Impact of Federal Budget Reductions o Use of Reserves (Free Cash) to Fund FY2013 Operating Budget, Capital/Debt Service, OPEB Reserves 2. Establish Date: Budget Collaboration- Summit 3 Please see the attached minutes of the Board of Selectmen, which are published on the Town web site at http://Iexingtonma.gov/selectmen.cfm and which are also available in the Town Clerk's office, for details. A list of documents and other exhibits used at the meeting is contained therein. The meeting was adjourned at approximately 8:20 PM. Respectfully submitted, John Bartenstein Approved August 2, 2012 -1- Summit Meeting Board of Selectmen, School Committee, Appropriation Committee and Capital Expenditures Committee November 17, 2011 A Summit was held on Thursday, November 17, 2011, at 7:00 p.m. in the Public Services Building Cafeteria, 201 Bedford Street. Chairman Manz, Mr. Cohen, Mr. Burnell and Ms. Mauger; Mr. Valente, Town Manager; Mr. Addelson, Finance Director, Mr. Kalivas, Budget Officer and Ms. Chabot, Assistant to the Executive Clerk, were present. Also Present: All School Committee (SC) members; Dr. Ash, Superintendent of Schools; all members of the Appropriation Committee (AC) with the exception of Mr. Pato, Mr. Cohen, Ms. Garberg and Mr. Michelson; all members of the Capital Expenditures Committee (CEC) with the exception of Mr. Lamb and Mr. Edson. FY2013 Revenue Proiections Overview Mr. Valente gave a summary of General Fund Revenues. Gross General Fund Revenues include all revenues projected as available for use in FY2013. Net General Fund Revenues are gross revenues less revenues recommended to be set -aside to fund designated expenses. In FY2013, Gross Revenues are projected to increase by approximately $7.12 million, or 4.63 %, while Net Revenues are projected to increase by approximately $5.46 million, or 3.63 %. Presentation by Revenue Source Mr. Addelson gave a more detailed description by revenue source as follows: Property Tax Levy The FY2013 property tax levy is projected to increase $5.2 million, or 4.06 %. The projected levy is a function of the FY2012 levy limit increased by 2.5% per Proposition 2 1 /2, plus an increment for new growth. FY 2013 new growth will be a function of construction activity for the period July 1, 2011 to June 30, 2012. FY2013 new growth is estimated at $2,000,000 based on conversations with the Building Commissioner, the Chief Assessor and a review of historical data on new growth. State Aid FY2013 state aid is projected to remain unchanged from its FY2012 level of $8,441,625. Final 2013 state aid numbers will probably not be known until June 2012 when the Legislature adopts, and the Governor signs, the FY2013 State budget. According to staff at the Massachusetts Municipal Association (MMA), two pending events — the recommendations of the Congressional budget cutting committee and the Governor's projection of FY13 state revenues — may give us a more definitive sense of the direction state aid might go. As a hedge against potential reductions in state aid, it is recommended that approximately $420,000 of estimated FY13 revenue be set - aside to offset such cuts. It is also recommended that any reduction in state aid in excess of $420,000 be offset with appropriations from the Stabilization Fund. Summit Meeting — November 17, 2011 Local Receipts FY2013 projections for each category of receipt is based on inspection of the history of actual collections and projections of 3 and 5 year historical averages, unless otherwise specified in the supplemental tables of the report presented. FY2013 local receipts are estimated to increase by approximately $398,000 or 4.08% over FY2012 estimates as revised in November, 2011. The major contributor to this growth is an increase in the estimate for motor vehicle excise based on a review of actual FYI collections. Available Funds Staff has identified $8.9 million as available to fund the FY13 budget. The major component of the projected available funds is undesignated fund balance or free cash at $8.13 million. The amount of free cash proposed to support the FYI operating budget is $4 million. Free cash used to support the FY12, FY 11, FY 10 and FY09 budgets was $4.1 million, $3.9 million, $3.7 million and $2.8 million respectively. As was the case in FY12, the School Department is recommending that $250,000 from the Avalon Bay School Enrollment Mitigation Fund be appropriated to fund a portion of the FYI School Budget. Other components of Available Funds include parking meter receipts, cemetery funds, and the Transportation Demand Management Stabilization Fund. Proposed Designations of Revenue Mr. Addelson then discussed components of Gross General Fund revenues that are set aside for designated purposes. The amounts proposed for FY2013 and their financing sources are $200,000 (free cash) for unanticipated needs of the current fiscal year; $500,000 (free cash) to be used for supplemental funding of the Other Post Employment Benefits (OPEB) account; $1,370,000 (free cash) to be applied to cash capital; $419,096 (free cash) set -aside for potential cuts in state aid; and $1,654,004 (free cash) for as yet unidentified capital needs. Potential uses of the $1,654,004 might be to augment the recommended appropriation for cash capital or an appropriation into a debt service fund to mitigate costs of future capital needs. Assuming all the proposed uses of free cash as just described that leaves a residual balance of $4 million to be applied to support the FY2013 operating budget. Other General Fund revenue set - asides include $860,736 from the tax levy for the Street Reconstruction program of which $579,502 (adjusted by 2.5% per year) was funded in the 2001 override and $281,234 represents the maintenance of the supplemental funds added in FY12; $169,712 (tax levy) for the Building Envelope capital program funded in the 2006 override, and the $45,000 (tax levy) for the Senior Work -Off program. Policy Issues Mr. Valente asked the group to consider the following policy issues for discussion at an upcoming Summit: 1. $500,000 of Free Cash for Other Post Employment Benefits (OPEB) 2. $100,000 reduction in Free Cash to support Operating Budget Summit Meeting — November 17, 2011 3. $1,370,000 of Free Cash for Cash Capital 4. $419,096 of Free Cash set -aside for potential State Aid Reductions (Any additional cuts from Stabilization Fund) 5. $1,654,004 of Free Cash set -aside for as yet unidentified capital or other one -time needs Mr. Levine, Appropriation Committee, requested that a list of capital and other non - recurring projects be prepared so that the different advisory committees could have an appropriate discussion. Establish Date: Budget Collaboration — Summit Meeting The date for the next Summit was set for Wednesday, December 21, 2011 at 7:30 pm. Documents Presented FY2013 Revenue Projections Summit II Upon motion duly made and seconded, it was voted to adjourn at 8:20 p.m. A true record; Attest: Diana B. Chabot Assistant to the Executive Cleric