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HomeMy WebLinkAbout2019-09-19-AC-min 09/19/2019 AC Minutes Minutes Town of Lexington Appropriation Committee (AC) September 19, 2019 Place and Time: Samuel Hadley Public Services Building, Training Room, 7:30 p.m. Members Present: Glenn Parker, Chair; Sanjay Padaki, Vice-Chair; Alan Levine, Secretary; Eric Michelson; Meg Muckenhoupt; Nick Nichols; Lily Manhua Yan; Carolyn Kosnoff, Assistant Town Manager, Finance (non-voting, ex officio) Members)Absent: John Bartenstein Other Attendees: Deepika Sawhney, School Committee Liaison The meeting was called to order at 7:33 p.m. Announcements and Liaison Reports After a brief discussion, a motion was made and seconded to elect the following officers for this Committee: Mr. Parker, Chair; Mr. Padaki, Vice-Chair; and Mr. Levine, Secretary. The motion passed. VOTE: 6-0 (Note: This vote was taken prior to the arrival of Ms. Yan.) New Committee Member Mr. Parker welcomed Ms. Muckenhoupt as a new member of this Committee. He reminded members that there is still one membership opening; suggestions for candidates should be forwarded to Deborah Brown, Town Moderator. Revenue and Expense Projections included in AC Reports Mr. Michelson and Mr. Nichols discussed their review of the revenue/expense projection report that is included in this Committee's report to the Annual Town Meeting (ATM). Their comments included the following: • Although staff currently prepares its own projection report each year, this was not always the case. Prior to staff assuming this task, Town Meeting voted that such projections should be part of the AC report, and this was formally incorporated into the AC charge. • It appears that the AC projection is redundant and not relevant to Town Meeting members or staff. The differences in the two reports are minimal and mostly reflect the timing of their preparation. • The projections in the AC report provide a range of estimated personnel wage settlements, so it would be challenging to quantify the accuracy of past AC reports. • In 2017, the Town changed the categories used in their projections. A meeting with Jennifer Hewitt, Budget Officer, has been arranged to understand the changes. • It appears that the Town projections have underestimated property tax revenues and State aid. Ms. Kosnoff noted that estimated tax revenue and State aid are intentionally conservative figures, adding that new growth, which impacts tax revenue, is a challenge to project. She also commented that the Town uses conservative health insurance estimates. During discussion, it was noted that while projections can be used for influencing policy decisions, this Committee does not set policy but only makes policy recommendations. Mr. Michelson noted that there are currently three issues being considered by the Select Board: 1 09/19/2019 AC Minutes • Whether to "tax to the max", i.e. keeping the tax levy at the levy limit; • How to handle personal property new growth; and • The impact of within-levy capital expenses on the operating budget. Ms. Kosnoff reported that the Select Board's Budget Summit 1 would take a high-level view of budgeting issues, with additional detail being provided at the second such summit. Revenue projections would be included in Budget Summit 3. She noted that last year staff prepared five-year budget proj ecti ons. Mr. Michelson and Mr. Nichols agreed to report back to this Committee after meeting with Ms. Hewitt. Crematory Study Committee (CSC) Mr. Padaki reported that the CSC voted 5-1 against adding a crematory at Westview Cemetery, primarily because the revenue would not cover expenses. Ms. Kosnoff added that the CSC's opinion also addressed equity concerns. The CSC plans to present a report under Article 2 at the 2019 Fall Special Town Meeting (STM). Ms. Kosnoff added that the project for replacing the administration building at the cemetery is expected to be brought to the 2020 ATM. 2019 Fall STM Ms. Kosnoff reported that the Town anticipates approximately $0.5 million in additional new growth beyond the FY2020 budget projection. She also commented on anticipated articles for the 2019 Fall STM warrant, as follows: • Three articles related to unpaid bills, stabilization funds, and the operating, enterprise fund, and Community Preservation budgets; • A request for a 2019 budget adjustment allowing the Town to hire a Sustainability Director, as approved by the 2019 ATM; • A conversion of all streetlights to LED bulbs. • Three zoning articles: 186 Bedford Street, 7 Hartwell Avenue, and Automated Teller Machines. • Pursuit of a State grant to look at the intersections of Hartwell Avenue with Bedford Street and Wood Street, noting that Hanscom Air Force Base is adding office space, which is expected to impact traffic patterns. Ms. Kosnoff noted that staff is sending a draft STM warrant to the Select Board tomorrow, at which time it will become a public document. Committee Input to Financial Guidelines Working Group Mr. Parker reported that he and Mr. Nichols plan to attend an October 8th meeting of this working group, which was created by Jim Malloy, Town Manager. Subjects for possible discussion by this working group were suggested, as follows: • Mr. Levine shared a handout showing his analyses related to"tax to the max" alternatives, which he identified as follows: ➢ Scenario 1: Reduce taxes now and do not appropriate funds into the Capital Stabilization Fund in anticipation of the high school project. Wait until debt service for the project is actually needed to increase taxes. At that point, taxpayers would experience a significant tax increase. 2 09/19/2019 AC Minutes ➢ Scenario 2: Tax to the maximum allowed under Proposition 21/2 with the goal of adding the extra tax revenue, i.e., the revenue above that raised in Scenario 1, to the Capital Stabilization Fund annually until debt payments begin for the anticipated large high- school project. Use those funds to reduce the impact of building a new high school during the five years when taxes will peak because of that project. ➢ Scenario 3: As under Scenario 2, tax to the maximum allowed under Proposition 21/2 and add the difference to the Capital Stabilization Fund annually. Use those funds to reduce the amount that will need to be borrowed for the high-school project. Mr. Levine expressed his preference for Scenario 2. Mr. Nichols noted that if the Town "taxes to the max" and puts the excess into the fund for Other Post Employment Benefits, the Town would realize a higher rate of return on its money than if it is in the Capital Stabilization Fund. The town could then reduce OPEB payments in the early years of debt payments for the high-school project. Mr. Michelson stressed the need for a transparent and well-defined process, whatever is selected. There was a philosophical discussion about using the tax levy to pay for capital expenses. • Mr. Padaki reported that Town Meeting member Tom Shiple has raised questions about the year-to-year fluctuations in full time employees within the different departments, which are not explained in the budget book. Ms. Kosnoff reported that full time employees are generally preferred if the employee is working enough hours to receive benefits. She noted that some departments share an employee. • Mr. Padaki asked that ideas for reducing the operating budget be identified and prioritized. Minutes After a brief discussion required to address the inclusion of an unfinished phrase in the draft July 7, 2019 minutes, a motion was made and seconded to approve said minutes, as amended. The motion passed. VOTE: 7-0 Future Meetings/Events for October 2019—March 2020 The following dates for events were identified: • October 3rd: Lexington Citizen Academy at Cary Memorial Library, 7 p.m. regarding the budget process. • Tentatively October 16th or 17th: Fiscal Guidelines/Policy Summit • October 30th,November 21st, and January 16th: Budget Summits • November 12th and 13th: 2019 Fall STM • March 3rd: Elections • March 23rd: Beginning of 2020 ATM The following dates for AC Meetings to prepare for the 2019 Fall STM were identified: • October 1st • October 15th • October 24th It was noted that this Committee's report to the STM should be published on November 5th The meeting adjourned at 9:20 p.m. 3 09/19/2019 AC Minutes Respectfully submitted, Sara Arnold Approved: October 15, 2019 Exhibits • Agenda, posted by Mr. Parker, Chair • Chart and graph showing three financial scenarios for taxation alternatives 4