HomeMy WebLinkAbout2004-12-02-AC-min
December 2, 2004
To: Appropriation Committee (AC)
From: Deborah Brown, Acting Secretary
Subject: Minutes of AC meeting on Thursday, December 2, 2004
Attendees: A. Levine (Chair), P. Hamburger, R. Pawliczek, D. Brown (Vice Chair),
R. Eurich, J. Bartenstein, D. Kanter, E. Michelson, S. English, M. Young, R. Pagett & W.
Kennedy (Board of Selectmen [BoS]), Marge Battin (Town Moderator).
Material Distributed:
#1. Agenda
#2. Ethics commission handout
#3. P. Hamburger’s proposal (circulated by email)
#4. D. Brown’s memo (circulated by email)
#5. A. Levine’s memo (circulated by email)
#6. W. Kennedy’s email (memo from Linda Vine re assistant town manager duties)
The meeting was called to order at 7:40 by Al Levine in Town Office Building Room
PM
111.
1. Campaign participation: Reviewed last year’s vote on campaign participation.
Donation prohibition discussed. Will revisit later in evening.
2. M. Battin (Town Moderator) visit: New staff members, new people on committees, so
a time to clarify roles and relationships.
a. ROLES: Since she appoints AC members, it falls to her to visit us to talk about
this. We are one of the 2 most important boards in town (AC and CEC). In many
towns, we are the budget submitters and make all the financial motions. Our role
is very important. Referred to Lexington code regarding AC: a) We are
responsible for oversight of all issues regarding management of the town, not just
financial affairs; and b) We have right of access to any record of the town and
access to any employee. Article II, Section 29-7 and 29-9, specifically. In
addition, she elaborated that we are “the voters’ eyes and ears on the inside of the
process if we don’t like what we see.”
b. RELATIONSHIPS WITH OTHER BOARDS, COMMITTEES: We need to
remain open minded, fair, impartial; therefore we can’t serve on other
committees. Intent of this prohibition is to prevent conflict of interest or influence
when a proposal comes to us for consideration and recommendation – AC
members shouldn’t be in a position of lobbying fellow committee members for a
“pet” project. Battin explained that this had been a problem in the past and that’s
why the committees were set up the way they were. (Article II, section 29-7).
c. LIAISON ROLE: Regarding acting as liaisons to other committees, Battin
thinks we should be consistent with the letter and intent of the bylaw. When we
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December 2, 2004
approach people we should identify our role. If we are acting as AC member, as
opposed to liaison role, we have more latitude. Battin consulted with Paul
Lapointe and town counsel about liaison role on committee that’s going to bring
something before town meeting. Lapointe has seen problems in other towns
where liaison sits in as regular member and even votes. Suggested Battin
reference the dictionary definition of “liaison” – facilitator of communication in
both directions. William Lahey (town counsel) sees the intent of the liaison role
as a communications vehicle, an observer. The liaison shouldn’t serve or act as
chair, shouldn’t lead or direct the work or engage in public deliberation. Battin
feels that the liaison role is enormously important and doesn’t want to confine us.
Battin’s purpose in speaking with us is not to define this for us, but to merely
raise the issue and leave it to us to work out our own policy and ground rules,
being sure to preserve flexibility.
d. State Ethics Commission/conflicts of interest: AL asked Battin to report on the
meeting with the ethics commission. She reported that it was a good meeting, and
that AC members are designated by BOS as “special employees of the town.” As
such, we have more leeway, unlike BOS, on whom the conflict-of-interest
restrictions are more onerous. (Reference handouts from Town Clerk Donna
Hooper.) AC members can’t accept bribes, nor any gratuities over $50, and
we’re subject to anti-nepotism rules. In sum, we can’t enjoy any benefits that
might flow from being member of AC. If we believe one of us has a potential
conflict of interest, we can petition the state ethics commission for a ruling, go to
town counsel (which then must go to ethics commission) or take the matter to the
appointing authority, in this case the moderator, who doesn’t have to run her
ruling by the ethics commission.
e. Ensuing AC discussion: JB raised a concern related to W. Lahey’s comment
about public deliberation. If liaison responsibility is two-way communication, at
a minimum, liaison needs to communicate information that might be relevant
from AC’s position and that might qualify as deliberation. Battin agreed that this
would be appropriate communication for a liaison.
(Discussion interrupted to take Committee picture for annual report.)
- DK reported that as liaison to CEC, he doesn’t participate in CEC votes; he
communicates anything from our committee that’s helpful; he feels comfortable
asking questions, just as any member of the public can do. DB remarked that
DK’s last point is important – the liaison should have at least the same rights as a
member of the public attending an open meeting.
- AL reported that he had presented some information on PILOTs to the
Water/Sewer Committee at that committee’s request, and he was very
comfortable participating in the ensuing discussion as an AC member.
- RE raised issue of cases where the AC may not have taken an official position,
and therefore a liaison expressing an opinion may give the impression that he/she
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December 2, 2004
is expressing an AC position. PH said we should make that clear when we offer
an opinion, that this is “not an official AC position.”
- PH described his experience with the newly-formed Health Care Committee. He
was asked by the BOS chair to convene and chair the first meeting. At that
meeting, a new chair was elected but PH finished chairing the first meeting and
then new chair took over. PH shared health benefits information he’s collected on
behalf of AC. AC members agreed that sharing this information is appropriate.
PH said he will remember that when the Health Care Committee completes its
work and has a proposal, he has to be circumspect since the AC will
independently review this proposal and come to its own determination on a
recommendation.
- PH’s other liaison assignment is to 20/20 Committee. Haven’t been making
determinations of any kind, but he has been very active collecting information
from other towns. He has identified himself as AC liaison. He has offered some
preliminary thoughts, but will be careful when deliberations take place. EM
remarked that there is a significant difference between information-gathering and
decision-making. He doesn’t think the former poses a problem. AL remarked
that it may be a fine line. DK phrased it as “push/pull” rule. Liaison shouldn’t
push information – the committee should do the pull. Battin said Bill Lahey made
a similar point - don’t lead the work, don’t direct the work. JB probed this point a
bit with a hypothetical situation. Suppose members of a committee think
something is a fact or a wise decision or policy, but you as liaison know they’re
wrong. Would be foolish not to share that information. We ought to be able to
offer helpful advice or correction without leading the deliberation; this advances
the public interest.
- DB is/has been liaison to various search committees. She does not participate in
votes, but she believes she should offer her opinions on candidates. AC members
all agreed.
AC members agreed that common sense should rule in our roles as liaisons;
members should exercise good judgment and bring any concerns back to the
AC for discussion, direction.
3. Continuation of discussion of campaign participation: Some interest expressed in
amending AC’s previous position to allow anonymous contributions. Some concern
about size of contributions. Also discussion of spouse participation in campaigns.
AC tabled discussion for the evening with no new proposal on the table. Will take up
again at next meeting; for now, AC members still bound by last year’s vote.
4. Budget discussion:
a. PH’s proposal:
Objectives/assumptions in PH’s document:
??
Should try to deal with a 4-year perspective. Whatever we do, should be revisited
each year to fine-tune with information we have that’s new. Best place to start is
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December 2, 2004
with pro-forma budget and demonstrate the impact of varying things, like
overrides at different intervals, then start playing with other variables.
??
Try to achieve same level of service for next 4 years. Believes that current
student-teacher ratio is a good thing and should be supported. Town has 78% of
staff it had years ago, people working harder and more productively. Proposal
based on keeping what we have now (at a minimum).
??
In order to do level service and to do something about increasing reserves, which
are a very small percentage of our budget, what do we have to do? Must rely on
support from taxpayers, employees, and service users.
??
Must recognize that we have various times in budget cycle when information
becomes available.
??
Communication – revenues needed to support budget
??
Revisit policies on free cash, cash capital, PILOTS, etc.
PH’s implementation strategy:
??
Develop overview budgets describing scenarios and effects of various budget
drivers
??
With above info, select a scenario close to where the town as represented by its
elected and appointed officials feel it can go. Must consider effect of future failed
overrides.
??
Capital debt exclusions. PH asked question about secondary project – S. English
replied: State looking to dump cash from ’05. We’ll get money from SBA after
first of the year. Working with financial advisors to determine what that does for
our cash flow and impact on our taxes. M. Young said that the $32M on BANS
for secondary project will be compensated (75% of the reimbursable portion) by
the lump sum from SBA. S. English: Not sure what will happen with interest –
legislation didn’t deal directly with interest. Looking at this now. PH: Are you
thinking in terms of making a bonding in Feb. that relates to this SBA
reimbursement? If we’re getting influx of money, will we try to pay off some
fraction of the $32M with that money? S. English thinks State will require us to
do that. PH: Suppose you take all of that and pay off money, now owe $32M – X,
now question is when are we going to pay that off, do we keep doing BANS? S.
English: Working on all that now. Whether you issue permanently or BAN, there
needs to be clarification on how you get your reimbursement. For permanently
issued debt, reimbursement follows old rules. PH remarked that this will all have
tax impact. EM asked if we might build up reserves by bonding? S. English:
Lots of possibilities. DB: Important for S. English to bring this back to the
committee when the information is in hand, because AC and others need to
discuss the taxpayer impact and the opportunities it may present. S. English
agreed. JB asked if this good financial news (on SBA reimbursement) will be
incorporated into Moody’s presentation; S. English said yes. DK wants to
understand the mechanics of short-term and long-term borrowing. M. Young said
he’d get something together for David.
Committee discussion re PH’s document:
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December 2, 2004
- RE asked whether this will be sufficient – coming up with a 4-year plan – to satisfy
Moody’s. S. English replied that 3 years is about all you can reasonably present.
- AL was looking to see a series of policy statements, very general. We can’t decide
tonight what the budgets will be for the next 3 years.
- EM asked if PH’s framework will satisfy Moody’s. S. English said this is all an
excellent start, but for Moody’s we need to answer the questions she presented before
(document present to BOS and to the Budget Collaboration Group). For instance,
need to answer the question about whether we have a reserve policy. DB said yes, we
have an existing free cash policy whose goal is to achieve free cash level of 5% of tax
levy. PH asked if “reserves” as Moody’s defines it includes stabilization fund. S.
English said no. PH reminded S. English that AC would like to see a list of what
“reserves” includes. S. English said she’ll get that for us.
b. DB’s memo: Started by describing positive steps that have been taken to address
the Moody’s issues – no use of free cash for FY05 budget, no second year of pension
holiday, monies appropriated to stabilization for FY05. Also several positive
circumstances – override passed, expecting SBA reimbursement, free cash certified as
of July 1, 2004 at approximately $1M more than we anticipated. Now how do we
address the fundamental issues?
DB reviewed her purposefully simplistic description of the structural problem with
our budget.
??
The problem: We've had a structural budget problem for a number of years now
and we've thus far dealt with it in a patchwork fashion. Would describe the
problem simply as: (1) On the revenue side, Prop 2-1/2 limit on tax revenues
combined with reduction in state aid, flat local receipts, and community desire to
restrict commercial tax base growth. (2) On the expense side, average wage
growth most years greater than 2.5%, plus health benefit cost increases 10-15%,
school enrollment increases, and recently, huge increases in utility costs. This is a
"structural" budget problem because without overrides, the annual growth in the
cost of providing level service (same staff) far outpaces annual growth in
revenues.
??
Possible solutions:
1) More frequent (i.e., annual or every-other-year) overrides. Let there be an
annual referendum on the budget.
2) Regular reduction in expenses/services. This will naturally occur under
solution (1) every time an override vote fails, but it's also accomplished
by not presenting an override option and simply cutting services. Probably
this is what will happen this year since the prevailing view seems to be
that this is a non-override year. But that means that we'll be cutting
services without the benefit of a community-wide dialogue.
3) Increase other revenue sources. Primary one that comes to mind is
re-thinking of the community's approach to commercial development. Seems
like it is time for a community-wide dialogue about this in the context of
the budget discussion.
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December 2, 2004
DB, in broad terms, advocated for beginning a community-wide dialogue on dealing
frankly with our structural budget problem. Continuing the current every-three-year
override schedule doesn’t work and doesn’t address the fundamental problem.
Committee discussion re DB’s memo: What should the community say to Moody’s
in January? DB: We could have that discussion tomorrow just as easily as we can in
January. Should positively describe what we’ve done (no use of free cash in FY05,
money appropriated to stabilization in FY05, no second pension holiday), what has
occurred that’s positive (higher free cash position by $1M, SBA reimbursement
coming in, override passed), and describe commitment to addressing structural
problems, to having a community-wide discussion, and describe our commitment to
getting back on track with a reserve policy. We won’t know much more in January
than we know now. DK: If we point to these discussions and our commitment to
coming to grips with this, even though we won’t have the answer by January, but
demonstrate recognition and commitment, isn’t that enough for Moody’s? EM: Are
we foolish to think this will be sufficient at this point to address Moody’s? RE: It’s
all we have at this point in time.
c. AL’s memo: AL tried to take a step back and ask, what are the major things we
can agree on now? (1) Services have been cut as far as we can stand. (2) Expenses
are growing faster than revenues. (3) Reserves need to be built up. So what can be
done? Overrides every year, every two years? If we want to maintain things at an
equilibrium, during an override year we need to put reserves aside.
Purposes of reserves: (1) Buffer for unusually difficult years, not for the non-override
years – base component – wouldn’t normally draw on this. $5-10M? (2) Buffer for
usual year-to-year changes – non-override years – this is in addition to base
component $1-2M? (3) Help preserve Aaa bond rating.
Reserves are yet another box requiring money. But when we add up all the things we
need, we will see we don’t have revenues. We’ll have to make decisions about what
the right mix is. Reserves important but not sacred cow.
Re overrides – not much to add to what DB said. Bad idea to do these every 3 years –
you need a huge amount all at once, and if it fails, impact huge. If more frequent,
they’re smaller, and impact is less.
Possible policy statements: Things we could vote on now. Could be material S.
English could take to Moody’s as AC positions: (1) Primary goal to maintain
services at approx. current level. (2) Need to build up reserves to act as buffer in
years when revenue is unexpectedly low – should be sufficient to get the town
through 2 consecutive years in which revenue is short of the amount needed by 2%.
Current 5% of tax – minimum goal. (3) Town should increase reserves in most years
until the level reaches the goal. Target to hit goal in 5 years. (4) For foreseeable
future, regular overrides every 2 years. Include funds for years in between overrides.
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December 2, 2004
Discussion re AL’s memo:
- DK: Would argue that there are places in town budget where resources aren’t
adequate for prudent management. So level service might not be appropriate goal.
Described two different types of problems – inadequate staffing on the one hand, and
some problems managing capital issues which may or may not be related to
resources.
- AL: Appears that Revenue Office staff has been cut more than it should be;
Assessors Office has similar problem, probably other departments as well. List from
Linda Vine re task in Town Manager’s office – seems substantial. Not arguing that
current state of services is adequate, just the general idea that the kinds of services we
have now are the ones we want to keep. Can argue at the fringes, but more or less
this is the level of services we want.
- DB: Can we agree that at a minimum, we don’t want to degrade services below
current level? General concern on AC that there are places where we need to address
problems by adding staff.
- DK.: Not ready to say no override this year. Thinks we shouldn’t prejudge the
political outcome. Expressed concern about staff already approaching their budget
development by prejudging what officials want to hear. Lively discussion about the
pressures on staff, the role of town manager to provide guidance, our role as oversight
committee and not budget developers.
- AL: Trying to make the point that cutting the budget is not the solution we’re
looking for because services have already been cut pretty far.
th
- PH: We need a 5 bullet on Al’s document: “acknowledge structural problems in
some departments and the need to come up with plan for structural repair of damaged
departments.” Agrees with “do not degrade current services levels”
- RE: If we can identify those departmental problems now, shouldn’t we start
advocating for fixing them before town meeting?
- PH: Don’t think that things that are structural issues should be put to override
referendum. One or two more people in the assessors office – to put that on an
override is a mistake. Something else will have to go on override.
- AL: Assessment and revenue collection are fundamental and should be staffed
adequately. Burden should be on other departments if we need to put people there. -
- DB pointed out that even if you do this, only exacerbates the structural problem and
you’re cutting in other places that citizens think important – class sizes, police staff,
etc. Still have to put something to a referendum.
- S. English agrees that Moody’s issue is helping us focus on future.
- M. Young: – as budget officer, the goal is that Dec. 13 will be first budget
th
presentation to BOS; have 3 dates on calendar - Dec 13 and 15 and a date in Jan.
Staff have been preparing budgets at the department level with help from finance
staff, then finance staff put these budgets together, there’s an internal review, and
then they’re given to BOS for discussion, recommendations.
- R. Pagett gratified by direction discussion is taking. Have to be prudent in how we
craft FY06 budget with eye towards Moody’s. Understands that on school budget,
there’s an increase of 40 students that leads to the addition of 14 staff. This means our
budget gap is larger than the $4.6M on the pro forma.
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December 2, 2004
- DK asked had schools presented level-staffing and then the deltas.
- R. Pagett: Yes, they described 3 types of additions: (1) obligatory/contractual, (2)
enrollment, (3) critical needs. Thinks (3) needs to be looked at more closely.
- PH suggested that in addition to having one or more members attend BOS meetings,
we need more than one person attending SC meetings.
AC members agreed we’ll need to devote same attention to school budget as to town
budget. RE will attend next SC meeting along with RP; RE and EM will try to
share SC meeting duty after that.
AL will revise his policy statements and bring them back next week.
5. Future meetings: Next meeting two weeks from tonight in Town Manager’s office.
M. Young will see if there’s a cancellation for a bigger room.
6. Other business:
a. DB reminded S. English of list of eight items of information previously requested
by AC (in DB’s memo). S. English agreed to provide information at our next
meeting. JB added an item to the list that had also been requested previously -
Moody’s narrative on the other Aaa towns. S. English agreed to obtain that as well.
b. JB referenced Barbara Anderson link, asked if anyone disagree with his
assessment. DK said he agrees with JB’s assessment.
The meeting was adjourned at 10:30 pm.
Approved January 6, 2005
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