HomeMy WebLinkAbout2022-06-23-AC-min 06/23/2022 AC Minutes
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Minutes
Town of Lexington Appropriation Committee (AC)
June 23, 2022
Place and Time: Remote Participation: in accordance with Section 20 of Chapter 20 of the Acts of
2021 “An Act Relative to Extending Certain COVID-19 Measures Adopted During the State of
Emergency”, communication took place via a Zoom teleconferencing session that was open to the
public; 7:30 p.m.
Members Present: Glenn Parker, Chair; Sanjay Padaki, Vice-Chair; Anil Ahuja; John Bartenstein;
Eric Michelson; Meg Muckenhoupt; Carolyn Kosnoff, Assistant Town Manager, Finance
(non-voting, ex officio)
Member(s) Absent: Alan Levine, Secretary; Lily Manhua Yan;
Other Attendees: David Kanter, Capital Expenditures Committee; Kat Labrecque, Budget Officer;
Sara Arnold, Recording Secretary
Mr. Parker confirmed attendance, reviewed the authorization for meeting remotely, noted that the
meeting was being called to order at 7:36 p.m. on June 23, 2022, and stated that the meeting was
being recorded for the purpose of creating minutes.
Announcements and Liaison Reports
Mr. Bartenstein reported that Lexington's final MWRA water and sewer assessment, issued this
week, reflected a 0% increase compared with the 0.4% increase in the preliminary assessments built
into the FY2023 budget. This reduction will have a very small positive effect on the rates to be set
for FY2023 next fall. Ms. Kosnoff explained that Lexington's assessment increase for FY2023 is
unusually small because Lexington's usage decreased last year relative to other communities.
Although the MWRA assessment represents a large portion of the water and sewer operating
budgets, the overall budgets are increasing by a higher percentage, primarily due to increases in
debt service costs.
Ms. Kosnoff reported that the Department of Revenue recently certified Minuteman Technical High
School’s (Minuteman Tech’s) excess and deficiency balance of $1,478,730, for FY2021. This
“excess” is Minuteman Tech’s equivalent of Free Cash, a portion of which must be applied to the
current year budget, thereby reducing the member towns’ obligations. Minuteman Tech informed
the member towns today that instead of applying all of it to the current year budget, they would like
to appropriate $500,000 of the excess into their Capital Stabilization Fund. This requires support
from 2/3 of the member communities before the end of FY2022; thus, this item has been added to
the Select Board’s (SB’s) June 27 agenda. Ms. Kosnoff noted that staff has not yet taken a position,
but in general, she supports the concept of setting aside reserves for capital expenses, and the
$500,000, when split among the member communities, does not represent a large amount. She
noted that it would be useful to know the reasons for the surplus.
Mr. Parker welcomed Ms. Labrecque, noting that this Committee looks forward to working with
her.
End-of-Year Adjustments to the FY2021 Operating Budget
Using a handout, Ms. Kosnoff reviewed the four types of end-of-year financial adjustments that are
being requested by staff:
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• Salary Reserve account adjustments: The budget includes funds for contracted salaries plus
the most recent contracted salaries for contracts that are being negotiated. Projected
increases for those future contracts are put into the Salary Reserve account. After the
contracts are finalized, the new rates go into effect for future fiscal years. The Salary
Reserve account is used for retroactive payments, i.e., when there are salary adjustments,
including vacation buybacks, for years when the new rates were not included in the budgets.
• End-of-year Line Item Transfers: Each department has a line item for salaries and a line item
for expenses; transfers between line items can be made when a line item’s expenditures
exceeded the appropriated amount and there are available funds in another line item to cover
them.
• Reserve Fund transfers: These can be requested any time of the year for an “unexpected and
extraordinary expense” and must be approved by this Committee. In FY2022, $750,000 was
allocated to the fund.
• Revolving Fund Increase: Lexington has approximately 10 revolving funds, which are
outside the general fund. Each year, Town Meeting places a spending cap on each revolving
fund based on projected revenue for that year. The Town cannot allow the balance in a
revolving fund to become negative.
Ms. Kosnoff reviewed the purposes and amounts associated with requests for one revolving fund
increase, two end-of-year line item transfers, three salary adjustment transfers from the Salary
Reserve account, and a potential Reserve Fund request. She explained that there is a line-Item
Transfer request, a Salary Reserve Transfer request, and a potential Reserve Fund transfer request
associated with the Fire Department to address unexpected overtime expenses (often related to
Covid-19 illness and quarantines but also to cover for situations where overtime was used when
there were injuries, etc.), vacation buyback requests, and payouts for accrued leave at retirement.
The requests were as follows:
• Revolving Fund Increase, which must be approved by the SB and this Committee:
Ø A $50,000 increase in the spending cap of the Public Works-Compost Revolving
Fund: The original spending cap approved by Town Meeting was for $790,000,
based on expected revenue. Expenses are expected to reach $840,000 by the end of
the year--$50,000 more than the spending cap. The increase resulted from the
Town’s expenses (e.g., sales tax, overtime) associated with increased product sales,
which exceeded $890,000 (about $100,000 more than expected). With this approval,
the end of year balance will be equivalent to the $504,232 brought in from FY2021.
• End-of-Year Line-Item Transfers:
Ø $89,274 to be transferred from snow removal expenses to snow removal personal
services. The timing of storms impacts overtime. Snow removal expenses can be
carried over to the next fiscal year if there were a deficit that could not be addressed
by a transfer.
Ø $75,000 to be transferred from Fire Expenses to Fire Personal Services because the
Fire Department’s expenses were less than budgeted and salaries were greater than
expected as discussed above.
• Salary Reserve Transfers: Specific requests were as follows:
Ø $44,812 to be transferred to the Fire Department, Personal Services; this is related to
contract settlements as described above.
Ø $8,200 to be transferred to the Human Services Department, Personal Services; this
is related to contract settlements as described above.
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Ø $1,500 to be transferred to the SB personal services; this is related to contract
settlements as described above.
• Reserve Fund Transfer, which must be approved by this Committee:
Ø $80,188 for potential use to cover unexpected Fire Department overtime expenses
(often related to Covid-19 illness and quarantines). Staff is asking the SB to approve
the use of American Rescue Plan Act (ARPA) funds for those unexpected and
extraordinary costs associated with Covid-19 illness and associated quarantines. If
this is not approved, the alternative is to use the Reserve Fund. There was discussion
about the pros and cons of contingently approving a Reserve Fund Transfer. It was
agreed that the motion should include a recommendation to use ARPA funds for this
situation. The town has received approximately $9.9 million in ARPA funds and has
only spent about 10% of them. They must be allocated by the end of Calendar Year
(CY)2024 and spent by the end of CY2026.
A motion was made and seconded to approve a $50,000 Public Works-Compost Revolving Fund
increase. The motion was approved by a roll call vote. VOTE: 6-0
A motion was made and seconded to recommend approval of an $89,274.11 transfer from snow
removal expenses to snow removal personal services. The motion was approved by a roll call vote.
VOTE: 6-0
A motion was made and seconded to recommend approval of a $75,000 transfer from Fire Expenses
to Fire Personal Services. The motion was approved by a roll call vote. VOTE: 6-0
A motion was made and seconded to recommend approval of a $44,812 transfer from the Salary
Reserve Fund to the Fire Department, Personal Services. The motion was approved by a roll call
vote. VOTE: 6-0
A motion was made and seconded to approve an $80,188 Reserve Fund transfer for unexpected Fire
Department Personal Services expenses related to Covid-19 illness and quarantines, with the
understanding that this transfer would not be implemented if the SB votes to use ARPA funds for
this purpose. It was agreed that this Committee would prefer that ARPA funds be used. Ms. Kosnoff
agreed to convey this Committee’s positions when forwarding this Committee’s decision to the SB.
The motion was approved by a roll call vote. VOTE: 6-0
Potential Effects of Inflation on Town Finances
Mr. Bartenstein noted that the Town has been experiencing 5.0% tax increases based on the 2.5%
Proposition 2½ restriction and new growth. If inflation exceeds 5.0%, the Town could see deficits
that require an operating override or reducing expenses.
Ms. Kosnoff agreed that there are challenges, noting increases in energy, construction, and
borrowing costs. She said that a $3.1 million Bond Anticipation Note issued yesterday resulted in a
net interest cost of 2.3%, in contrast to the approximately 1.0% seen in the recent past. The budget
is still using 4.0% but this needs to be monitored. She reviewed reasons that the in-levy debt has
some protections at this point in time, but she is concerned about excluded debt projections because
of the construction cost increases. Additionally, inflation is expected to impact the bargaining
process with unions as well as for outside contractors. She said the FY2023 budget is “okay” and
various current contracts should help control some costs into FY2024, but assuming inflation
increases, the challenges will increase, particularly if there is a recession. She noted that the SB has
been clear that an operating override should be avoided.
Future Meetings
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Ms. Kosnoff reported that there would be a fall Special Town Meeting, tentatively scheduled for
November 1, 2, and 3. She will confirm dates for Financial Summit meetings—probably starting in
late September. It was agreed to tentatively schedule AC meetings for August 11 and September 8,
2022.
Minutes of Prior Meetings
Approval of Minutes was postponed because Mr. Levine was absent.
Adjourn
Ms. Muckenhoupt reported that this was her last meeting as an AC member. She and members of
the Committee shared their mutual appreciation for the work she had done and the support she had
received from members of the Committee.
Ms. Arnold noted that this would be her last meeting as Recording Secretary. Again, mutual
appreciation was shared.
The meeting was adjourned at 9:15 p.m.
Respectfully submitted,
Sara Arnold
Approved: September 8, 2022
Exhibits
● Agenda, posted by Mr. Parker
● Requested FY2022 End-Of-Year Budget Adjustments, prepared by Finance Department
staff