Category Archives: Financial

MMA on Senate’s budget

This was from the Massachusetts Municipal Association on the Senate’s version of the state budget –

MMA-2

SENATE BUDGET COMMITTEE OFFERS $40.3B FY 2018 STATE BUDGET THAT MAKES KEY INVESTMENTS IN MUNICIPAL AND SCHOOL AID
 • INCLUDES THE FULL $40M INCREASE IN UNRESTRICTED MUNICIPAL AID (UGGA)

• INCREASES CHAPTER 70 TO $4.63B TO FUND MINIMUM AID AT $30 PER STUDENT

• CH. 70 INCLUDES $10M MORE THAN HOUSE FOR FOUNDATION BUDGET FUNDING

• ADDS $16.5M TO FULLY FUND SPECIAL EDUCATION CIRCUIT BREAKER

• LEVEL-FUNDS MOST OTHER MUNICIPAL AND SCHOOL ACCOUNTS

 

Earlier today, the Senate Ways & Means Committee reported out a lean $40.3 billion fiscal 2018 state budget plan to increase overall state expenditures by 3.3 percent.  The budget proposal makes key investments in municipal and education aid priorities.

S. 3, the Senate Ways and Means budget, includes the full $40 million increase in Unrestricted General Government Aid that the House and Governor have proposed.  Communities are counting on the full $40 million UGGA increase to balance their budgets and maintain essential services.

The Senate budget plan also increases Chapter 70 aid by $37.4 million above the Governor’s recommendation by increasing minimum aid from $20 per student to $30 per student, going farther in implementing the Foundation Budget Review Commission recommendations, and adding $12 million to hold districts harmless in the new calculation of the number of low-income students.  The House-passed budget also set minimum aid at $30 per student and includes the $12 million for low-income students.  After accounting for those changes, the Senate Ways & Means Committee’s budget provides $10 million more for Chapter 70 than the House, primarily by joining the House in increasing the calculation of employee health insurance costs, and then expanding on that by increasing the calculation of special-education-related costs.

In a major step forward for cities and towns, the Senate W&M Committee would add $16.5 million to fully fund the Special Education Circuit Breaker, an important priority for communities.

The full Senate will begin debating the fiscal 2018 state budget on Tuesday, May 23.

Please Click this Link Now to See the Chapter 70 and Unrestricted Municipal Aid Numbers for Your Community

Click this Link to See Your Community’s Local Aid and Preliminary Cherry Sheet Numbers in the Senate Ways & Means Budget, as Posted by the Division of Local Services

$40 MILLION INCREASE IN UNRESTRICTED MUNICIPAL AID
In a major victory for cities and towns, the SW&M fiscal 2018 budget plan (S. 3) would provide $1.061 billion for UGGA, a $40 million increase over current funding – the same increase proposed by Governor Baker and voted by the House. Almost all of UGGA funding comes from $985M in expected Lottery proceeds and $65M from the Plainridge gaming facility. The full $40 million UGGA increase is a top priority for cities and towns, because municipalities are counting on these funds to balance their budgets and maintain essential services for their residents.

CHAPTER 70 MINIMUM AID WOULD INCREASE TO $30 PER STUDENT
The Senate budget committee is proposing a $128.8 million increase in Chapter 70 education aid (this is $37.4 million higher than the $91.4 million increase in House One), joining the House in supporting a minimum aid increase of at least $30 per student (compared to the $20-per-student amount in the Governor’s budget). The Senate budget would continue to implement the target share provisions enacted in 2007. Further, the Senate Ways & Means Committee proposal would build on the proposals by the House and Governor to start addressing shortfalls in the foundation budget framework. In addition to increasing the cost factors for employee health insurance, the Senate budget committee would increase the cost factors for special education, which accounts for why the Senate W&M Chapter 70 proposal is $10M higher than the House.

Both the Senate and House budgets would provide $12M to hold school districts harmless from changes in the method of counting low-income students. This is similar to the Legislature’s handling of the problem in the current fiscal 2017 budget.

In the context of a very tight budget year, the Senate budget committee’s increase in Chapter 70 funding is certainly welcome progress. The MMA continues to give top priority to full funding for the Foundation Budget Review Commission’s recommendations, and over the long-term will work to build on this increase.

$16.5 MILLION INCREASE INTENDED TO FULLY FUND SPECIAL EDUCATION CIRCUIT BREAKER
In another important budget priority for cities and towns, Senate leaders have announced that they support full funding for the Special Education Circuit Breaker program. The Senate budget plan would provide $293.7 million, a $16.5 million increase above fiscal 2017 budget and the Governor’s recommendation for fiscal 2018 (he proposed level-funding). The House added $4 million during its deliberations, and the SW&M proposal goes all the way to full funding. Every city, town and school district relies on the circuit-breaker program to fund state-mandated special education services.

FUNDING FOR CHARTER SCHOOL REIMBURSEMENTS REMAINS FLAT
The SW&M budget would level-fund charter school reimbursements at $80.5 million, far below the amount necessary to fully fund the statutory formula that was originally established to offset a portion of the funding that communities are required to transfer to charter schools. The fiscal 2017 funding level is $54.6 million below what is necessary to fund the reimbursement formula that is written into state law. If this program is level funded, the shortfall will grow to an estimated $76.4 million in fiscal 2018. This would lead to the continued and growing diversion of Chapter 70 funds away from municipally operated school districts, and place greater strain on the districts that serve 96% of public school children. Solving the charter school funding problem must be a major priority during the budget debate.

REGIONAL SCHOOL TRANSPORTATION, PAYMENTS-IN-LIEU-OF-TAXES (PILOT), LIBRARY AID ACCOUNTS, METCO, McKINNEY-VENTO, AND SHANNON ANTI-GANG GRANTS
Compared to current fiscal 2017 appropriations, the Senate budget committee’s proposal would level-fund Regional School Transportation Reimbursements at $60.1M, level-fund PILOT payments at $26.77 million, add $1.25M to library grant programs, add $357K to METCO, and level-fund McKinney-Vento reimbursements at $8.35 million. However, the SW&M budget would reduce Shannon Anti-Gang Grants to $5 million, a $1 million reduction.

SENATE BUDGET PLAN INCLUDES IMPORTANT IMPROVEMENTS TO THE LOCAL AND STATE LODGING EXCISE TAX
The SW&M budget would make several long-sought improvements to close loopholes in the collection of the local and state lodging excise tax. First, the Senate budget proposes language to end the “internet reseller” loophole that allows Expedia and other internet resellers to avoid payment of the full hotel-motel tax. Second, the Senate budget closes the loophole for transient accommodations, including short-term seasonal rentals. Third, the Senate plan would begin to close the Airbnb loophole. These are important steps to bring parity and a level-playing field to the collection of lodging excise payments.

Please Call Your Senators Today to Thank Them for the Local Aid Investments in the Senate Ways and Means Committee Budget – Including the $40 Million Increase in Unrestricted Local Aid, Providing Chapter 70 Minimum Aid at $30 Per Student, and Fully Funding to the Special Education Circuit Breaker

Please Explain How the Senate Ways and Means Budget Impacts Your Community, and Ask Your Senators to Build on this Progress During Budget Debate in the Senate

Thank You!

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State aid for FY18, so far

20170411-state aid

ATM warrant

town meeting

Annual Town Meeting (ATM) Warrant

Kris this morning circulated the warrant for the annual town meeting (ATM).  For those of you who do not want to wait for your mailed copy, it is available in a digital format via this link – 2017 Annual Town Meeting Warrant.  Maybe in the future at the ATM we will all be following along on our tablet versions of the warrant, and voting via buttons on the screens.

For now, mark your calendars and plan to attend the ATM at 7:30PM on Monday, April 24, 2017 at the Medfield High School gym.  This is the annual time and place, open to all, when the voters of the Town of Medfield make all the town’s decisions on how we want our town to work, and how we want to spend our money to make those things happen.

State budget – step 2 (i.e. the House version)

This notice this afternoon from the Massachusetts Municipal Association about the House version of the proposed state budget. The state budget goes through the following steps each year:

  • The Governor starts the budget process with his budget proposal at the end of January,
  • the House then does its version,
  • the Senate then does its own version,
  • then the House and Senate work out the final version via a reconciliation committee,
  • the Governor can veto items, and
  • the legislature can pass what it wants over those vetos, if it has enough votes.

Our local aid monies seem to have been mainly protected in the House version of the state budget.

MMA-2

 
 
April 10, 2017
HOUSE BUDGET COMMITTEE OFFERS $40.3B FY 2018 STATE BUDGET THAT MAKES KEY INVESTMENTS IN MUNICIPAL AND SCHOOL AID

• INCLUDES THE FULL $40M INCREASE IN UNRESTRICTED MUNICIPAL AID (UGGA)

• INCREASES CHAPTER 70 BY $106M TO FUND MINIMUM AID AT $30 PER STUDENT

• ADDS $4M TO THE SPECIAL EDUCATION CIRCUIT BREAKER

• ADDS $1M MORE FOR REGIONAL SCHOOL TRANSPORTATION

• LEVEL-FUNDS MOST OTHER MUNICIPAL AND SCHOOL ACCOUNTS

Earlier this afternoon, the House Ways & Means Committee reported out a lean $40.3 billion fiscal 2018 state budget plan to increase overall state expenditures by 3.8 percent. The House Ways and Means budget is $180 million smaller than the budget filed by the Governor in January, yet it also increases Chapter 70 aid by $15 million above the Governor’s recommendation by increasing minimum aid from $20 per student to $30 per student. The full House will debate the fiscal 2018 state budget during the week of April 24.

H. 3600, the House Ways and Means budget, provides strong progress on many important local aid priorities, including the full $40 million increase in Unrestricted General Government Aid that the Governor proposed and communities are counting on. The House W&M Committee would increase funding for other major aid programs, by adding $4 million to the Special Education Circuit Breaker, adding $1 million to Regional School Transportation, and increasing Chapter 70 minimum aid to $30 per student.

Please Click this Link Now to See the Chapter 70 and Unrestricted Municipal Aid Numbers for Your Community

Later Today or Early Tomorrow – Click on this Link to See Your Community’s Local Aid and Preliminary Cherry Sheet Numbers in the House Ways & Means Budget, as Posted by the Division of Local Services

$40 MILLION INCREASE IN UNRESTRICTED MUNICIPAL AID
In a major victory for cities and towns, the HW&M fiscal 2018 budget plan (H. 3600) would provide $1.061 billion for UGGA, a $40 million increase over current funding – the same increase proposed by Governor Baker. The $40 million would increase UGGA funding by 3.9 percent, which matches the projected growth in state tax collections next year. This would be the second-largest increase in discretionary municipal aid in nearly a decade. Every city and town would see their UGGA funding increase by 3.9 percent.

CHAPTER 70 MINIMUM AID WOULD INCREASE TO $30 PER STUDENT
The House budget committee is proposing a $106.4 million increase in Chapter 70 education aid (this is $15 million higher than the $91.4 million increase in House One), with a provision that every city, town and school district receive an increase of at least $30 per student (compared to the $20-per-student amount in the Governor’s budget). The House budget would continue to implement the target share provisions enacted in 2007. Further, the House Ways & Means Committee proposal would build on the Governor’s initial proposal to start addressing shortfalls in the foundation budget framework, by increasing the cost factors for employee health insurance.

In the context of a very tight budget year, the House budget committee’s increase in Chapter 70 funding is certainly welcome progress over the House One proposal that was filed in January. The MMA continues to give top priority to full funding for the Foundation Budget Review Commission’s recommendations, and over the long-term will work to build on this increase.

$4 MILLION INCREASE INTENDED TO FULLY FUND SPECIAL EDUCATION CIRCUIT BREAKER
In another budget advancement for cities and towns, House leaders have announced that they support increased funding for the Special Education Circuit Breaker program. The House budget plan would provide $281 million, a $4 million increase above fiscal 2017, although this is still short of full funding for a vital program that every city, town and school district relies on to fund state-mandated services. The MMA will work to continue building on this welcome increase.

ADDS $1 MILLION TO REGIONAL SCHOOL TRANSPORTATION
House Ways and Means Committee budget would add $1 million to bring regional transportation reimbursements up to $62 million. The MMA will work to continue building on this welcome increase.

FUNDING FOR CHARTER SCHOOL REIMBURSEMENTS REMAINS FLAT
Both budgets filed by the Governor and the House Ways & Means Committee would level-fund charter school reimbursements at $80.5­ million, far below the amount necessary to fully fund the statutory formula that was originally established to offset a portion of the funding that communities are required to transfer to charter schools. The fiscal 2017 funding level is $54 million below what is necessary to fund the reimbursement formula that is written into state law. If this program is level funded, the shortfall will grow to an estimated $67.1 million in fiscal 2018. This would lead to the continued and growing diversion of Chapter 70 funds away from municipally operated school districts, and place greater strain on the districts that serve 96% of public school children. Solving the charter school funding problem must be a major priority during the budget debate.

PAYMENTS-IN-LIEU-OF-TAXES (PILOT), LIBRARY AID ACCOUNTS, METCO, McKINNEY-VENTO, AND SHANNON ANTI-GANG GRANTS
The House budget committee’s proposal would level-fund PILOT payments at $26.77 million, add $600K to library grant programs, add $500K to METCO, and level-fund McKinney-Vento reimbursements at $8.35 million. However, the HW&M budget would reduce Shannon Anti-Gang Grants to $5 million, a $1 million reduction.

Please Call Your Representatives Today to Thank Them for the Local Aid Investments in the House Ways and Means Committee Budget – Including the $40 Million Increase in Unrestricted Local Aid, Providing Chapter 70 Minimum Aid at $30 Per Student, and Adding Funding to the Special Education Circuit Breaker and Regional School Transportation

Please Explain How the House Ways and Means Budget Impacts Your Community, and Ask Your Representatives to Build on this Progress During Budget Debate in the House

Thank You!

 

DIF & TIF for MSH

The cultural arts center analysis recommends the use of district improvement financing (DIF) and tax increment financing (TIF) as mechanisms for financing the cultural arts center and the needed infrastructure.  A DIF allows one to raise monies by issuing bonds that are paid back only out of property tax monies derived from the lands within the DIF boundaries, so the DIF could be the former Medfield State Hospital campus, and the rest of the town would not have to pay in. A TIF sounds like a straight tax break given to stimulate a particular result.

Interestingly, the DLS newsletter this month had the following article on those –

DLS

Ask DLS: Property Tax Incentive and Financing Program Changes

This month’s Ask DLS features questions relating to changes in economic and housing development property tax incentives and financing programs under the Job Creation and Workforce Development Act, Chapter 219 of the Acts of 2016, and the Municipal Modernization Act, Chapter 218 of the Acts of 2016. A summary of the changes made by the Municipal Modernization Act can be found in the August 18, 2016 issue of City & Town. We have also compiled the questions answered in the Municipal Modernization Act series of Ask DLS for your convenience. Please let us know if you have other areas of interest or send a question to cityandtown@dor.state.ma.us. We would like to hear from you.

What is the District Improvement Financing Program?

Under MGL c. 40Q, cities and towns may create one or more improvement districts within their boundaries to promote increased residential, industrial, and commercial activity. Development districts are created by action of the mayor and council in cities, and town meeting in towns.

The centerpiece of the district improvement financing (DIF) program is the “District Development Program,” which is a statement of means and objectives designed to improve the quality of life, the physical facilities and structures and the quality of pedestrian and vehicular traffic control and transportation within a development district. Development programs may also include means and objectives to increase residential housing, both market rate and affordable. Every development program must include a financial plan, which is a statement of the costs and revenue sources needed to carry out development programs, to include (1) cost estimates for the development program; (2) the amount of indebtedness to be incurred; and (3) sources of anticipated capital. MGL c. 40Q, sec. 2.

How is municipal financing of improvements under the DIF program different than financing of other improvements?

A unique financing option involves setting aside all or a portion of the additional taxes, generated by the public improvements entailed in the development program. Districts that set aside a portion of the rise in property tax revenues (the “increment”) to finance the development program are referred to as “invested revenue districts.” General obligation or revenue bonds can be issued in anticipation of higher property tax revenues spurred by the development program in the district.

The revenue from the retained tax increment is reserved and credited to two accounts. MGL c. 40Q, sec. 3. First in priority is the “development sinking fund account” that is used to cover payment of interest and principal on debt taken out to fund the program. Second priority goes to a “project cost account” to cover separate project costs as outlined in the financial plan for the program. An amendment made by the Municipal Modernization Act provides that the requirement to reserve the increment ends when sufficient monies have been reserved to cover the full, anticipated liabilities of both these accounts. MGL c. 40Q, sec. 3(d).

How is the District Improvement Financing tax increment calculated?

The Municipal Modernization Act amended the calculation of the tax increment reserved for debt service and project costs in cities and towns with invested revenue districts under MGL c. 40Q. It will now equal the actual new growth increase added to the municipality’s levy limit under Proposition 2½ for the development activity and expanded tax base within the district. MGL c. 40Q, sec. 1. The previous formula was based on certain adjusted valuation increases that were difficult to calculate, did not correspond to the new property tax revenue generated by the program and were not fixed until the tax rate for the year was set. The amount will now be known before the rate is set since it is based on Proposition 2½ new growth. Moreover, the assessors can provide a realistic estimate of the increment for budgeting purposes. This will ensure that the revenues generated by the increment are not used to support the budget generally.

The annual increment is based on the increase in the community’s levy limit (“new growth”) attributable to real estate parcels within the district for that year, including the portion attributable to prior years with an assessment date after the base date of the program. The percentage of the increment being reserved for financing the project must be specified as part of the district financing plan.

Example
District is created April 1, 2017
Base date is January 1, 2017 (FY18)
FY19 with January 1, 2018 assessment date is first year for tax increment

$100,000 of FY19 tax base growth is attributable to parcels in district
FY19 increment = $100,000.

$150,000 of FY20 tax base growth is attributable to parcels in district
FY20 increment = $252,500 [$102,500 ($100,000 FY19 increment increased by 2.5%) PLUS $150,000 additional increment]

$100,000 of FY21 tax base growth is attributable to parcels in district
FY21 increment = [$358,813 [$258,813 ($252,500 FY20 increment increased by 2.5%) PLUS $100,000 additional increment]

Where can municipalities enter into TIF Agreements?

The Job Creation and Workforce Development Act, Chapter 219 of the Acts of 2016, made a number of changes in the economic development incentive program (EDIP), which makes state tax credits and local property tax exemptions available for certain economic development projects. MGL c. 23A, secs. 3A3G. The EDIP program is administered by the state Economic Affairs Coordinating Council (EACC), which approves the tax incentives. The Act streamlined the requirements and procedures for the two local property tax exemptions under the program, which are the tax increment financing (TIF) exemption and the special tax assessment (STA).

Municipalities may now apply to the EACC to declare an area in their city or town, or contiguous areas in neighboring cities or towns, as eligible for TIF agreements. An area can be designated as TIF-eligible if the EACC finds that there is a strong likelihood that any of the following will occur within a specific and proximate period of time: (1) a significant influx or growth in business activity; (2) creation of a significant number of new jobs—not merely replacement or relocation of current jobs within the state; or (3) a private project or investment will contribute significantly to the resiliency of the local economy. It is no longer necessary that a TIF-eligible area be within an Economic Target Area (“ETA”).

Cities and towns can enter into TIF agreements with persons or entities undertaking either (1) certified projects, or (2) real estate or facility expansion projects in a TIF-eligible area. Any project must be consistent with the municipality’s economic development objectives and likely to increase or retain employment opportunities for residents of the municipality. MGL c. 23A, sec. 3E. A certified project is a project run by a business for which the EACC has approved state tax incentives. An eligible real estate project must be construction, rehabilitation or improvement of any building or other structure on a parcel of real property which, when completed, will result in at least a 100% increase in the assessed value of the real property over the assessed value of the real property prior to the project. A facility expansion project requires relocation from one location to another in the state or expansion of an existing facility that results in a net increase in the number of full-time jobs at the relocated or expanded facility. See definitions in MGL c. 23A, sec. 3A.

What happens to a local tax incentive for a certified project when the certification is revoked?

The 2016 Act clarified the impact of an EACC revocation of a certified project for a business that is also receiving a local tax incentive. MGL c. 23A, sec. 3F. The EACC can revoke state tax credits for certified projects that are in material non-compliance with the job creation or other requirements agreed to as a condition of the credits. The local tax incentive will now terminate at the beginning of the tax year in which the material non-compliance occurred, unless the agreement between the municipality and business expressly provides otherwise. If a local tax incentive is terminated, the municipality may amend the agreement to continue it. The amended agreement must be approved by the legislative body and EACC. In addition, the municipality may recapture the previously foregone taxes by making a “special assessment” on the taxpayer in the year after the year of the EACC’s decision to revoke project certification. The recapture could go as far back as the finding of material non-compliance. The procedure for municipalities to assess and collect the recaptured amount as a property tax is also spelled out.

What is the new local option to promote creation of middle income housing? (Republished from March 2, 2017 City & Town)

Under G.L. c. 40, sec. 60B, cities and towns may, through their respective legislative bodies, provide for Workforce Housing Special Tax Assessments (WH-STA’s) as incentive to create middle-income housing. Municipal Modernization Act, Chapter 218, sec. 39 of the Acts of 2016. Unlike other property tax incentives, such as economic development tax increment finance (TIFs) agreements, no state-level approval is required. Local WH-STA plans may allow for exemptions as great as 100% of the fair cash value of the property during the first two years of construction. Over a three-year stabilization phase following construction, the exemptions are available in declining maximum percentages of the fair cash value.

To use this incentive, a city or town must designate one or more areas that present exceptional opportunities for increased development of middle income housing as WH-STA zones. The plan must describe in detail all construction activities and types of residential developments intended for the WH-STA zone. The city or town must also promulgate regulations establishing eligibility requirements for developers to enter into WH-STA agreements. The regulations must address procedures for developers to apply for a WH-STA; the minimum number of new residential units to be constructed to qualify for WH-STA tax incentives; maximum rental prices and other eligibility criteria to facilitate and encourage construction of workforce housing.

The city or town may then enter into tax agreements with property owners in WH-STA zones that will set maximum rental prices that may be charged by the owner to create middle income workforce housing.

Finances

Mike Sullivan’s current analysis of the financial impacts of the annual town meeting (ATM) budget and warrant articles –

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TOWN OF MEDFIELD TAX LEVY FY15 – FY18
actual actual est 29-Mar
  all figures are in thousands (000’s) fy15 FISCAL16 FISCAL17 FISCAL18
INCOME:
     TAX REVENUE: (3% inc)
          TAX LEVY $34,026 $35,563 $36,788 $38,144
          DEBT EXCLUSIONS $3,093 $4,795 $4,580 $4,454
          2 1/2 LEVY INCREASE $860 $890 $922 $955
          NEW GROWTH $341 $379 $434 $350
          TAX LEVY OPERATING OVERRIDE $0 $0 $0 $0
         UNEXPENDED TAX LEVY $75
   SUBTOTAL TAX REVENUE $38,320 $41,627 $42,724 $43,978
     NON – TAX REVENUE:
          FEDERAL AID $0 $0 $0 $0
          STATE AID $7,264 $7,358 $7,552 $7,669
          SCHOOL BUILDING ASSISTANCE $327 $0 $0 $0
          LOCAL RECEIPTS $3,954 $4,576 $4,089 $4,300
          REVOLVING FUNDS $0 $249 $564 $358
          OTHER FREE CASH $816 $271 $500 $200
          OTHER AVAILABLE FUNDS ? $2,627 $4,470 $2,753 $2,213
          ENTERPRISE FUND REVENUES ? $3,563 $3,531 $3,885 $3,869
   SUBTOTAL NON TAX REVENUE: $18,551 $20,455 $19,343 $18,609
TOTAL INCOME FROM REVENUE $56,871 $62,082 $62,067 $62,587
EXPENDITURES:
     FIXED:
          FY15 BOND SALE COSTS -HOSP PURCHASE; FY16 COURT JUDGEMENT $174 $622 $0 $0
          SNOW DEFICIT/LAND DAMAGES/TAX TITLE $165 $235 $0 $100
          OVERLAY FOR TAX ABATEMENTS $243 $264 $251 $200
          STATE AID – CHERRY SHEET OFFSETS $25 $16 $15 $16
          STATE CHERRY SHEET ASSESSMENTS $493 $820 $833 $857
                        SUB-TOTAL FIXED EXPENDITURES: $1,100 $1,957 $1,099 $1,173
     APPROPRIATIONS:
          REVOLVING FUNDS $224 $249 $564 $358
          CAPITAL BUDGET/ OTHER ARTICLES $2,556 $4,185 $2,755 $1,690
          EMPLOYEE BENEFITS $6,420 $6,715 $7,067 $7,353
          SCHOOL BUDGET (TOWN) $29,083 $30,363 $31,577 $33,036
          SCHOOL BUDGET (VOCATIONAL) $159 $120 $131 $160
          TOWN BUDGETS $10,341 $10,528 $10,838 $11,190
          WATER & SEWER ENTERPRISE $1,871 $1,854 $1,969 $2,055
                        SUB-TOTAL OPERATING BUDGETS $50,654 $54,014 $54,901 $55,842
` `
           NON-EXCLUDED DEBT $447 $413 $247 $343
           EXCLUDED DEBT (TAX LEVY OVERRIDE) $4,534 $5,167 $5,522 $5,383
           ENTERPRISE FUND DEBT (W&S) $636 $1,159 $1,018 $938
                        SUB-TOTAL DEBT $5,617 $6,739 $6,787 $6,664
TOTAL APPROPRIATIONS & REVOLVING FUNDS: $56,271 $60,753 $61,688 $62,506
TOTAL EXPENDITURES: $57,371 $62,710 $62,787 $63,679
              DEFICIT FINANCED FROM FREE CASH ($500) ($628) ($720) ($1,092)
certified free cash – july 1 $2,671 $2,426 $2,621 $2,756

BoS review of town finances

Mike Circulated this draft of the Board of Selectmen’s annual report material this week –

budget-2

Review of Town Finances

The Warrant for the 2017 Annual Town Meeting is unusually long. This is both because of the number or articles (50) and the length of several of the articles. With the total number of pages approaching 100, it was not possible to prepare this Warrant Report in the usual booklet form without binding it at a considerable expense, similar to the way the town report is bound. The decision was made to print the Warrant Report on 8 ½” X 11” sheets.

The Message from the Moderator at the beginning of this report details the Town Meeting procedures. Please read his Message for information on these matters. Also, in order to avoid adding more pages to this Warrant Report this Review will be shorter than usual.

REVENUES

The tax levy estimate following this Review projects that the total revenues available for fy18 will be approximately $62.6 MILLION. Actual revenue amounts will not be available until well after the Town Meeting, when the State Budget for Local Aid to Cities and Towns is approved, new property tax base growth is determined and books for fy17 are closed. At present, the best estimate for increases in revenues without any new Propositions 2 ½ property tax overrides is $520,000. This, however, is somewhat misleading in that some of the changes in revenues are the results of shifting funds from one account to another, such as moving money from the OPEB Stabilization Fund to the OPEB Trust fund last year.   The main increases in new revenues for next year are $955,000 for the permitted   2 ½ annual property tax levy increase; $350,000 for new growth in the property tax base from new construction, land subdivision, etc.; $117,000 from Local Aid to Cities and Towns, mostly for Chapter 70 School Aid, $211,000 from increases in Local Receipts (Motor Vehicle Excise Tax, licenses and permits, rental income, fees and fines, transfer station stickers, etc.) Other smaller revenue sources make up the rest of the Revenue Total.

EXPENDITURES

                Within the tax levy limit

The tax levy estimate projects that expenditures for fy18 will total $63.7, an increase of about $900,000 over fy17 expenditures. Here also, as with the revenues, the increases are somewhat misleading, as some of the expenditures for special articles are transfers of funds and do not create actual expenditures.  To see what the requested  increases are you should check the expenditure categories in the tax levy estimate, which follows this Review. In addition, since operating budgets comprise about 95% of total expenditures, you can see the increases (decreases) in the individual departmental operating budgets as shown in Article 13, the Operating Budget.  Other operating expenditures are for several of the other warrant articles on this year’s warrant and include $358,500 for Chapter 53E ½ Revolving Funds (see Articles 5 and 6 for explanations and breakdowns);  $472,623 for The Capital Budget (Article 14), funding for the Other Post-Employment Benefits Trust ($400,000) (Article 30), the Iron Manganese Treatment facility ($275,000) (Article 35), to reimburse the Stabilization Fund for last year’s loan to purchase a new ambulance ($50,000) (Article 29), to transfer Sewer Betterment Funds Paid-in-Advance  to the Sewer Betterment Stabilization Fund ($158,287) (Article 28), for maintenance, security and consultants for the former state hospital site ($200,000) (Articles 18 & 19), to purchase street lights ($67,626) (Article 25), to transfer cemetery lot purchase funds to the Cemetery Perpetual Care Fund, ($43,650) (Article 3). Additional  warrant articles with funding requests includes articles for downtown improvements, downtown parking study,  maintenance of the Dwight-Derby House, beaver trapping and dam removal, design of a rail trail, naming  of the Elm Street bridge, payment of a prior year (Fy16) Police Department bill, and wetlands delineation of a potential site for senior housing. For more information on any of these articles you can check the Index of Articles at the end of the Warrant Report to locate the page and/or article number.

Over the tax levy limit

There are two funding articles on this year’s town meeting warrant that weren’t mentioned above. One of these is Article 15, which seeks funds for the Fire Department Budget in order to provide for continuation of Advanced Life Support services in conjunction with the Town’s ambulance. In recent years these services were provided as a private  intercept service (usually meets the ambulance on its way to the hospital)  with a specially equipped vehicle and highly  trained staff called, as necessary, for ambulance runs requiring such services. This past year that company notified the Fire Department that they would no longer be available to provide such services. Another intercept service was brought in but also withdrew. This article presents alternative solutions to maintain ALS service, either by adding ALS certified EMT staff to the Fire Department budget or by finding another private intercept service, perhaps on a regional basis. Either way is expensive and would require a Proposition 2 ½ operating override to provide sufficient funds. Recommendation on how to proceed will be forthcoming at the Town Meeting.

An operating override can only be voted on at an election, not at a town meeting. An operating override adds a permanent amount to the property tax base. If the Town Meeting votes to approve funding requested in this Article, the Board of Selectmen will have to call a Special Town Meeting for an override vote.

The other article not discussed above is Article 17, which calls for an appropriation of  $1 Million to be funded by a bond issue for the purpose of providing funds for affordable housing. This Article was submitted as a citizen petition.  In all likelihood, if Article 17 passes, these funds would be turned over to the Medfield Affordable Housing Trust, created under Article 16. This Trust would determine how to use these funds to best meet the Town’s affordable housing needs/requirements.  Like the ALS article discussed above, funding this appropriation /bond issue would require a Proposition 2 ½ vote at an election. In this case, however, the vote would be a debt exclusion vote, which would exclude annual principal and interest payments over the life of the bond issue from the calculation of the tax levy limit. When the bond issue was paid off, this debt exclusion would end and would not become a permanent part of the tax levy.

USE OF FREE CASH

From the above you should note that the total expenditures are greater than the total revenues, even without the override article amounts, by about $1.1 Million. In other words, the Town’s Budget, is out-of-balance. Since the Town must balance its budget each and every year in order to have its tax rate approved by the Massachusetts Department of Revenue, this difference must be made up. Some of this deficit is raised by using free cash to cover specific appropriations, such as $200,000 for the OPEB appropriation. The rest is covered at the end of Town Meeting by voting to authorize the Board of Assessors to use an amount of free cash in the Treasury. Free Cash consists of unallocated funds on the Town’s books at the end of each fiscal year. It must be certified by the MA Department of Revenue before it can be voted out by the Town Meeting (see explanation for Article 50). At the end of each fiscal year any unused free cash, in effect, disappears until the next fiscal year’s books are closed and a new free cash amount is certified. Local government accountants, auditors and financial advisors recommend that the level of free cash (think checking account) plus stabilization funds (think savings account) should equal or exceed 5% to 10% of its annual budget. In Medfield’s case, that would be between $3.1 million and $6.2 million. In addition to helping the Town maintain its excellent credit rating, free cash is used to avoid short term borrowing interest costs and to have funds on hand to cover emergency conditions. And remember, Free Cash isn’t free.

OTHER ARTICLES

There are a number of articles on this Year’s Town Meeting Warrant that don’t require an appropriation, but are significant in determining how the Town runs and what additional costs may be incurred or saved from passage of these articles. Article 16 would establish the Medfield Affordable Housing Trust, a semi-autonomous Board appointed by the Selectmen to address the needs and requirements for developing affordable housing in the Town. Articles 31 & 32 would accept streets as public ways or public right-of –ways. Article 33 would adopt a water conservation bylaw and Article 34 would authorize the Water Department to enter into private property to inspect, repair or replace water meters, Article 36 would authorize the Board of Selectmen to lease space on the new Hospital water tower for wireless communications, Articles 37 & 38 would adopt new stormwater management and water pollution abatement bylaws to bring the Town into compliance with federal stormwater management permit requirements, Articles 39 to 47 propose changes to the zoning bylaw affecting single, two family and multifamily housing and inclusionary requirements for affordable housing, Articles 48 & 49 deal with regulation of recreational marijuana.

CONCLUSION

At the beginning of this year’s budget process, it looked like the Town might need an operating budget override to cover departmental budget increase and increases in pension and health insurance costs. However, as a result of the hard work of the Warrant Committee, various Town Boards, Committees and  Department Heads, the budget can be balanced without an override and without sacrificing essential Town services. It took a lot of night meetings, deliberations and compromises to accomplish this. Medfield is fortunate to have such a dedicated group of volunteers and employees working on its behalf to keep the Town on a sound financial footing. The voters will still have to decide on the two potential overrides, one to fund the affordable housing efforts and the other to maintain ALS support services. Please do your part in helping to make all of the decisions that are on this year’s Town Meeting Warrant and on whether or not to fund the two potential tax override requests that may have to be voted at a special election, if the Town Meeting passes the corresponding Town Meeting warrant articles. It’s your Town, so please do your part.

Mark L. Fisher, Chairman

Osler L. Peterson, Clerk

Michael T. Marcucci, Third Member

Board of Selectmen