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HomeMy WebLinkAbout2023-01-05-AC-min 01/05/2023 AC Minutes 1 Minutes Town of Lexington Appropriation Committee (AC) January 5, 2023 Place and Time: Remote Participation: in accordance with “An Act Relative to Extending Certain State of Emergency Accommodations”, signed into law by Gov. Baker on July 16, 2022, communication took place via a Zoom teleconferencing session that was open to the public; 7:30 p.m. Members Present: Glenn Parker, Chair; Anil Ahuja; John Bartenstein; Alan Levine, Secretary; Eric Michelson; Lily Manhua Yan; Carolyn Kosnoff, Assistant Town Manager, Finance (non-voting, ex officio) Members Absent: Sanjay Padaki, Vice-Chair; Sean Osborne; Other Attendees: Bob Cunha, Retirement Board; David Kanter, Capital Expenditures Committee; At 7:32 p.m. Mr. Parker called the meeting to order and confirmed attendance by roll call. Mr. Levine was enlisted to take minutes and recorded the meeting for the purpose of creating minutes. Announcements and Liaison Reports Mr. Michelson announced that, in late 2022, the State released a supplement of twenty million dollars for the State trust fund for Community Preservation and that the funds were then distributed to communities. Lexington received about $495,000 of those funds. For FY2023, the State match for Lexington amounts to 39.96% of the revenue from the local tax surcharge, just over the 38% that was anticipated by the Town. Ms. Kosnoff announced that the preliminary budget in the form of the White Book will be released on January 6. The preliminary budget contains the amount from the revenue allocation process for the school budget even though the preliminary school budget that was recently released exceeds the revenue allocation by $710,000. Ms. Kosnoff also announced that the Select Board would discuss the preliminary budget at its meeting on Monday, January 9. Ms. Kosnoff noted that at its January 9 meeting the Select Board will view a presentation and discuss whether to adopt a 5% cost of living adjustment (COLA) for pensions for FY2023. She further noted that the Select Board will also hear about the creation of a stormwater enterprise fund and whether such a fund would be ready to be acted upon at the 2023 annual town meeting. The stormwater enterprise fund and the associated fees could be a topic for discussion at a future AC meeting. Mr. Levine said that he had observed the Select Board budget hearings and would be interested in having a presentation at a later meeting on how the Emergency Medical Services budget works since there are no salary or wages in that part of the budget as presented to the Select Board. Adoption of 5% COLA for Retirees Ms. Kosnoff, backed up by Mr. Cunha, presented the case for adoption of a 5% COLA in FY2023 for those on Town pensions. This possibility is enabled by Massachusetts General Laws, Chapter 269 of the Acts of 2022, which allows for FY2023 a COLA of up to 5%, rather than the usual COLA limit of 3%. The COLA percentage is applied to the COLA base, which is limited to a maximum of $15,000. It was noted that the Commonwealth of Massachusetts and the Massachusetts Teachers Retirement System have both adopted the 5% COLA for FY2023, and that 01/05/2023 AC Minutes 2 the Social Security Administration has adopted a COLA of 8.7% for Social Security payments in calendar year 2023. The Town previously adopted 3% for FY2023; if 5% is adopted now, it will apply retroactively to the entire fiscal year. An increase in the COLA from 3% to 5% would give each retiree as much as, but no more than, $300 per year. The power to increase the COLA jointly rests in the Retirement Board, which has already given its approval, and the Select Board. Adoption of the 5% COLA will increase the present value of the pension liability by $1.3 million. Ms. Kosnoff showed a schedule of appropriations for the Retirement System, in which full funding is achieved in FY2029. In that schedule, the increase in the FY2023 COLA from 3% to 5% implies that just over $2 million more will need to be appropriated in FY2029, assuming there are no other changes in the appropriation schedule. When asked if there are any objections to the COLA increase, no AC member responded. Review of the List of Articles for the 2023 Annual Town Meeting Mr. Parker led the AC through a review of a draft list of articles for the 2023 annual town meeting primarily to start assigning topics to Committee members. The first article that generated discussion is a potential article regarding establishment of a stormwater utility. Two articles will be needed for such a utility to go forward, i.e., one to establish the utility (an enterprise fund), and one to set the bylaws for the utility including fee structures. Ms. Kosnoff noted that if the utility is established at the upcoming town meeting, the first revenue would not be received until FY2025. In the current year, the operating budget includes about $2.5M related to stormwater management. The annual expenditures are expected to rise significantly as EPA regulations take effect. Properties owned by nonprofit organizations in Lexington that are exempt from the payment of property taxes would not be exempt from payment of stormwater management fees. Such fees might be based, e.g., on the amounts of impervious surface on real estate parcels that would be determined by GIS mapping. There could be discounts for properties that have taken actions to mitigate stormwater runoff, but a scheme for that has not been fully worked out. Officials have discussed a reduction in property taxes to offset the increase in revenue from fees if a utility is established. A tax reduction could be accomplished several ways, one of which could be an operating underride. The possible strategies to offset fee increases were discussed at some length. The article on Public Facilities Capital includes a line for 173 Bedford St. renovations, which was noted to be intended to cover the design phase only. Mr. Levine pointed out that the total cost of renovating this building, if intended to house the School Administration, has been estimated to be about $6M, and that the move of the LPS Central Office to that building would be only one in a series of changes that have not yet been fully thought out and discussed. The line for the Children’s Room at the Library also refers to a potential project where the scope is not clear, i.e., it may be rather advantageous to combine the Children’s Room project with HVAC and other system work that is reportedly needed. “East Lexington Architectural Concept” likely refers to the East Lexington Fire Station. Any project at the Stone Building will be funded through the CPA, and hence will be moved to the CPA article. One action that is likely to be requested under the article on stabilization funds is the transfer of the balance from the Affordable Housing Stabilization Fund to the Affordable Housing Trust. The Affordable Housing Stabilization Fund then may be dissolved at this or a subsequent town meeting. 01/05/2023 AC Minutes 3 There was discussion of whether there are financial reasons for the AC to research and report on the article to change the Zoning Bylaw to include multifamily housing in accordance with the state legislation relevant to MBTA Communities. Most likely the article will not request any appropriation or transfer of funds. However, it has major implications for the Town and thereby for Town finances. A good financial analysis of this topic will not be simple and straightforward to prepare. Mr. Parker encouraged the other AC members to volunteer to work on the articles that interest them, and to help fill out the report assignment spreadsheet. Meeting Schedule Mr. Parker discussed the schedule of upcoming meetings, and asked whether the AC should meet on Wednesday, January 18, even though there is a budget summit meeting scheduled for Thursday, January 19. The question of a January 18 meeting will be revisited at the January 11 AC meeting. Mr. Parker has arranged for Select Board representatives to join us at our January 26 meeting to discuss the use of ARPA funds. Mr. Michelson criticized school and municipal officials on the basis of his perception of a lack of communication between them in the budget process leading up to Budget Summit III. He would like to see the issues resolved before the upcoming January 19 Budget Summit IV. Minutes of Prior Meetings Mr. Parker said that he has a draft of the minutes from the December Budget Summit III meeting. He is willing to share them and requested that any comments be sent to him by the next day. A motion was made and seconded to approve the minutes of November 1, 2022. The motion passed on a roll call vote. VOTE: 6-0. Adjourn The meeting was adjourned by roll call vote at 8:48 p.m. Respectfully submitted, Alan Levine Approved: January 11, 2023 Exhibits ● Agenda, posted by Mr. Parker ● Retirement COLA Presentation 1/5/2023 ● 2023 ATM AC Report Planner - assignments