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Home My WebLink About2021-12-02 FY2023 Budget Summit II-min Select Board Meeting Financial Summit II December 2, 2021 Remote participation Financial Summit meeting was called to order at 7:00 p.m. on Thursday, December 2, 2021 via Zoom remote meeting services. Present for the Select Board (SB): Ms. Hai, Chair; Mr. Lucente; Vice Chair, Mr. Pato, Ms. Barry, and Mr. Sandeen were present, as well as Mr. Malloy, Town Manager; Ms. Axtell, Deputy Town Manager; Ms. Katzenback, Executive Clerk; Ms. Kosnoff, Assistant Town Manager – Finance; and Ms. Hewitt – Budget Officer. Present for the Appropriation Committee (AC) Glenn Parker, Chair; John Bartenstein; Alan Levine; Eric Michelson; Meg Muckenhoupt; Sanjay Padaki; Lily Yan; Anil Ajuha; Present for the School Committee (SC): Kathleen Lenihan, Chair; Eileen Jay, Vice Chair; Scott Bokun; Sara Cuthbertson; Deepika Sawhney; Dr. Julie Hackett, Superintendent of Schools; David Coelho; Present for the Capital Expenditures Committee (CEC): Charles Lamb, Chair; Sandhya Beebee; Rodney Cole; David Kanter, Vice Chair; and Frank Smith. Ms. Hai stated that the meeting was being conducted via Zoom as posted, with the agenda on the Town’s website. ITEMS FOR INDIVIDUAL CONSIDERATION 1. FY2023 Budget Summit II  FY2023 Revenue Projections o In FY2023, Total General Fund Operating Revenues are projected to increase by approximately $7.85 million, or 3.1%. Net General Fund Revenues, those available to support school and municipal operating budgets, are projected to increase by $5.79 million, or 2.5%. o Property Tax Levy: The FY2023 property tax levy is projected to increase approximately $7.86 million, or 3.8%. The projected levy is a function of the FY2022 levy limit increased by 2.5% per Proposition 2 1/2, plus an increment for new growth. FY2023 new growth will be a function of construction activity for the period July 1, 2021 to June 30, 2022. FY2023 new growth is estimated at $2,750,000 based on a review of historical data o Tax Levy Dedicated to Capital Stabilization Fund: In the Fall of 2021 the Town Manager proposed a new fiscal guideline, a Capital Stabilization Framework, to prepare for future capital projects. Beginning in FY2022, new levy growth generated from specified commercial and industrial development will be dedicated to the Capital Stabilization Fund (CSF) rather than becoming general revenue for the town’s operating budget on new growth. The estimate for this item at this time $57,000. o State Aid: A small steady growth is expected for this item for FY2023. o Local Receipts: FY2023 local receipts are estimated to increase by approximately $649,570 or 5.06% over FY2022 estimates, which were also adjusted for the pandemic. o The gross general fund revenue is $258,920,652, a 3.23% increase over the prior year. In response to a question from Mr. Cole (CEC), Ms. Kosnoff explained that the Board recently set the tax levy shift at 1.75. This does not come into play for the revenue projection. In response to a question from Mr. Lucente (SB) regarding the motor vehicle excise tax, Ms. Kosnoff stated that this has been decreased slightly but there isn’t anything to indicate that there will be a large enough drop to decrease it further.  Final FY2023 Revenue Allocation (Municipal & School) and Uses of Free Cash o In the middle of October, the total revenues were projected to be $258,122,594, which was projected to increase 3.9% over last year, or $6,480,784. o The School’s initial budget request was 4.6% over last year, and the Town's was 4%. o Both the Town and School were projected to have a shortfall of revenue; School: $880,000; Town: $56,000. o FY21 New Growth: originally budgeted for around $4.2M, but actually came in around $4.9M. This is an increase of almost $600,000 in revenue from new growth. o There are reductions to the Workers’ Comp and Uninsured Losses line items in Shared Expenses, due to the lines having health balances. o The net change in Revenue Allocation from Summit I to Summit II was $788,617. o Currently, the total revenues are projected to be $ 258,920,652. This leads to an allocation total of $ 7,269,401, or 4.4%. The total School Allocation for FY2023 is $5,377,436, or 74%; the total Town Allocation for FY2023 is $1,891,965, or 26%. o The FY 2023 initial Municipal budget request is $44,791,052, or a 3.6% increase over last year, leading to a surplus of $333,219. This surplus would be available for any PIRs from Town staff. There are 39 PIRs that total $1.5M. o The FY 2023 initial School budget request is $ 128,551,071, or a 4.6% increase over last year, leading to a shortfall of $296,654 Ms. Kosnoff reviewed the FY2023 Budget Calendar: • Summit II - December 2, 2021 • Publish White Book - January 10, 2022 • Summit III - January 13, 2022 • Summit IV - February 10, 2022- Facilities' 20-Year Master Plan • Publish Brown Book - February 25, 2022 • Town Meeting - March 28, 2022 • Spring Fiscal Summit - TBD - Pension Schedule In response to a question from Mr. Padaki (AC) regarding the Appropriation Committee Reserve Fund, Ms. Kosnoff noted that there have not been many drawdowns for this fund, and she believes the current budgeted amount is adequate. In response to a question from Mr. Kanter (CEC) regarding shifting funds from OPEB to the Pension Fund, Mr. Malloy explained that the Town will meet with bond rating agencies in January to have this discussion. In response to a question from Ms. Sawhney (SC), Mr. Malloy noted that the unemployment rate in Lexington is just over 5%, which is substantially lower that the State and national unemployment rate. He noted that the State has data on property taxes as a percent of per capita income, which is a very good measure as to the ability to pay property taxes.  American Rescue Plan Act (ARPA) Overview o Lexington’s total ARPA allocation available through the Coronavirus Local Fiscal Recovery Fund (CLFRF) is $9,903,381 o ARPA funds must be committed by 12/31/2024, and must be fully spent by 12/31/2026 o Lexington has already received $4,951,691 which is 1⁄2 of our CLFR allocation. We expect the remaining 1⁄2 will be received in June of 2022 o Communities must follow Federal guidance for calculating lost revenue. Lexington’s formula is still under review, but we expect to have approximately $2.5 million available as lost revenue for the first measurement period. o Anticipated next steps include Dec 2021: Select Board to provide comments on public outreach plan and participatory budget process o Q1 2022  Lost revenue calculation for first & second measurement periods (12/31/2020 and 12/31/2021) to be reviewed/audited and finalized  Town Manager to propose project list based on available funding, Select Board priorities and community feedback  Kickoff of first year participatory budget process o Q2 2022 & ongoing:  Town staff will implement projects as recommended  Town staff will prepare periodic project and spending updates and propose new requests for review by the Select Board  New projects to be recommended and implemented annually through 2024  Lost revenue appropriations to be included in future budget processes (if required) In response to a question from Mr. Lamb (CEC), Ms. Kosnoff noted that the Federal Government is looking for the ARPA funds to be deployed for economic recovery, but there is probably some amount of moving around of funds that could occur using these funds. In response to a question from Mr. Lamb (CEC), Mr. Malloy explained that the participatory budgeting process would allow residents the ability to submit ideas for projects. Those ideas would be then filtered by the Finance Department to make sure that they do comply with the ARPA requirements. The initial list would then go to the Select Board for approval. This list of projects can then be voted on and prioritized by citizens, with the ultimate arbiter being the Select Board due to these being considered grant funds. The Town has set aside, for discussion purposes $500,000 a year for a three-year period to give citizens this opportunity to provide input. In response to a question from Ms. Lenihan (SC) regarding using ARPA funds to provide COVID-19 testing free-of-charge to the public, Mr. Malloy explained that supporting public health with these funds is one of the items that the Board will likely be discussing on December 13, 2021. Mr. Kanter (CEC) suggested that the Town consider using some ARPA funding for temporary staffing to carry the Town through this period of time to aid the Departments with their burdens. DOCUMENTS: FY2023 Revenue Projections, FY2023 Budget Summit II Presentation, ARPA Federal Funding - Presentation ADJOURN Upon a motion duly made and seconded, by roll call, the Select Board voted 5-0 to adjourn the meeting at 8:42 p.m. The other committees followed suit. A true record; Attest: Kristan Patenaude Recording Secretary