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HomeMy WebLinkAbout2011-08-18-AC-minAugust 18, 2011 Minutes Town of Lexington Appropriation Committee Meeting August 18, 2011 Time and Location: Legion Room, Cary Hall, 7:30 p.m. Members Present: Glenn Parker, Chair; John Bartenstein, Vice Chair and Secretary; Joe Pato, Vice Chair; Robert Cohen; Mollie Garberg; Alan Levine; Eric Michelson; Richard Neumeier; Rob Addelson (non- voting, ex officio) Others in Attendance: Theo Kalivas, Budget Officer; Jonina Schonfeld The meeting was called to order at 7:35 p.m. Mr. Parker welcomed Theo Kalivas, the new Budget Officer, and recognized Jonina Schonfeld who was attending as a prospective new member of the committee. 1. Minutes. The 9/22/10 and 11/3/10 minutes were approved by a vote of 6 -0 -1. Mr. Cohen abstained as he was not a member at the time of these meetings. The 6/21 /11 , 6/28/ 11 and 7/7/11 minutes were approved with minor, non - substantive edits by a vote of 7 -0 -0. 2. Officer Elections. The Committee discussed officer positions and took a poll of member interest in these positions for the upcoming year. Mr. Cohen nominated the current Chair, co- Vice - Chairs and Secretary to continue in their positions. Mr. Levine seconded the nomination. Vote approved: 7 -0 -0. 3. Moody's Credit Rating and Outlook for the Town. In response to a statement from Moody's Investors Service that it had assigned a "negative outlook" to a dozen Aaa -rated towns in Massachusetts (including Lexington), Mr. Addelson discussed the political considerations underlying the action, which followed the downgrading by Standard & Poor's of U.S. Treasury debt, and the factors determining the town's credit rating. The biggest concern is the ability of the Town to service its debt, and in this regard the Town continues to be in a strong position on all relevant factors. Not all Massachusetts towns with a Aaa rating were assigned a negative outlook, but towns that are located in regions where the local economy is heavily influenced by federal spending, were deemed to be at risk in the event of a federal default. Boston, Cambridge, and Winchester did not receive a negative outlook because they each maintain a financial reserve fund with at least 30% of their annual budget. Moody's will conduct an individualized review sometime during the next few months of the towns affected, including Lexington, and may then reconsider its position. The Committee discussed the federal debt -limit negotiations, town reserves, federal grants and the impact to the Town if there were cuts. August 18, 2011 4. Town Year -end Budget Report for FYI I. Mr. Addelson gave a synopsis of the FYI I year -end budget report including results for the General Fund and various Enterprise Funds. Regarding the General Fund, approximately 96.5% of the total budget was expended or encumbered, leaving $4.9m returning to fund balance (a subset of these funds will revert to free cash and some will remain in continuing balance accounts). This included school department funds, $2m from the employee health insurance fund, the Reserve Fund, the Salary Transfer Account (see discussion in July 7, 2011 minutes, Item 1), and funds that had been set aside for a snow and ice deficit that will instead be covered from other sources (see discussion in July 7, 2011 minutes, Item 3). The bulk of the $2m balance coming from the employee health insurance fund arose from reductions due to earlier contract negotiations, i. e, an increase in employee contributions and savings from plan design changes. There were also savings from a double - counting of open positions (14), fewer employees electing coverage than anticipated, and generally lower health care costs attributable to fewer and less severe claims. On the revenue side, $2.3m was collected in excess of expectations due mostly to an increase in motor vehicle excise taxes, strong collections for building - related permits, and an increase in the local hotel and meals tax receipts. The FYI I end -of -year budget surplus will not impact the estimates of local receipts for FYI 2. Although there is no detailed estimate of the anticipated free cash balance yet as of the end of FYI I , it will likely be of a size commensurate with last year's, which will be helpful in preparing the FYI budget; however, concerns about the sustainability of free cash at these levels in future years continue. Regarding the Enterprise Funds, actual expenditures were below budget by $99k for water, $20k for sewer and $83k for recreation. Revenues exceeded expenses by about $360k for water, fell short of expenses by $460k for sewer, and exceeded expenses by $326k for recreation. Mr. Bartenstein questioned the accuracy of these numbers, particularly in view of an MWRA Lexington Water Consumption Chart that indicated a dramatic spike in usage last year due to the dry summer and heavy irrigation use and the report at the time of the Annual Town Meeting that water revenues were running approximately $1 million over budget. Mr. Addelson agreed that further investigation was in order. 5. Changes in State Health Insurance Options. Mr. Addelson and Mr. Pato gave an update regarding health insurance negotiations in view of recent legislation allowing municipalities to unilaterally make plan design changes within specified limits or, alternatively, join the state's Group Insurance Commission (GIC). Mr. Pato said Lexington is planning to open coalition bargaining negotiations for FY2013 contracts in October or November of this year. Given the state law's timing constraints, the earliest date the Town could join the GIC would be 7/1/2012, although there is no desire to short- circuit the existing coalition bargaining agreement. However, the town will need to make a decision by mid - January 2012 in order to resolve negotiations in time for the GIC notification deadline of 3/1/2012. 2 August 18, 2011 The Committee discussed the arbitration and time -lines that would apply, assuming the Town and its unions were to bargain to an impasse over this issue, to meet the March 2012 deadline. Town staff will be attending a Massachusetts Municipal Association (MMA) seminar on August 25 and will begin researching future plan design options after Labor Day. The Committee briefly discussed the Town's tier plan being compared to the Navigator plan, bargaining leverage, as well as the progress that has been made by the Town to date in controlling health care costs. 6. Planning for Anticipated Special Town Meeting. Mr. Addelson informed the Committee that interest has recently been expressed in expanding the scope of the Center Fields drainage renovation project that is currently underway to install synthetic turf. The goal would be to help address the Town's shortage of playing fields by increasing the amount of time the Center Fields can be maintained in use. The CPA does not currently permit the use community preservation funds for a project that enhances recreational fields, as opposed to restoring them to their original condition. Thus, if the town decided to proceed with a synthetic turf project, it would have to be funded with non -CPA sources, and would potentially require a debt exclusion override vote. The Town will seek legal guidance regarding how much of the CPA funds currently assigned to the center fields drainage project can be used if the town decides to install synthetic turf instead of natural grass. In the meantime, preliminary field work and a boring analysis to determine the scope of work that would be needed has been scheduled for early September and time is of the essence. A funding source needs to be identified before a contract can be signed to perform the preliminary testing, which would cost about $20,000. One option would be to request the Committee to approve a transfer from the Reserve Fund. Alternatively, the expense could be posted against the DPW budget now and a request could later be made, either at a Special Town Meeting in the fall of 2011, or at the Annual Town Meeting in the spring of 2012, for a supplemental appropriation to restore the DPW budget. The opinion of some members of the Committee was that the best route would be to use DPW funds and seek to restore them later with Town Meeting action. 7. Liaison Reports by Staff and Members. Snow and Ice — Mr. Michelson and Mr. Neumeier met with Bill Hadley at the DPW. They found no reason to pursue a change in the snow and ice contract. The meeting was adjourned at 9:25 p.m. A list of documents and other items used at the meeting is attached. Respectfully submitted, Andrea Yepez Recording Secretary Approved October 6, 2011 3 August 18, 2011 Exhibits Town of Lexington Appropriation Committee Meeting August 18, 2011 1. Meeting Agenda, posted by Glenn Parker, Chair. 11