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Dec 06

From the Town Administrator's Desk - December 6, 2020

Posted on December 6, 2020 at 9:05 PM by Tiffany Marletta

FY22 Preliminary Budget Presentation
By Gregory T. Federspiel

On Monday, December 7, a presentation on the proposed FY22 Budget will be given to a joint session of the Select Board and the Finance Committee.  The presentation will be the first public look at the proposed budget for the new fiscal year that runs from July 1, 2021 through June 30, 2022.  Ultimately voters will vote on the budget at the Annual Town Meeting next spring.

Department leaders have been assembling their budget requests over the last two months.  These requests have been reviewed and, with various adjustments, have formed the basis of the preliminary budget.  From here the budgets will undergo detailed scrutiny by the Finance Committee and the Selectmen during January and February.  These meetings are open to the public.  The deadline for finalizing the proposed budget is early March in order to be ready for Town Meeting.

Budgets are based on various data points, guiding principles and assumptions.  Important fiscal policies of the Town include: revenues within the confines of Proposition 2 ½  must be sufficient to support operations; debt should not exceed 10% of expenditures; reserve funds should total 10-12% of expenditures; retiree liabilities should be fully funded by the early 2030’s; infrastructure investments should stay abreast of maintenance/upgrade needs; and current level of services should be provided.

The Town’s overall fiscal picture remains relatively strong.  We enjoy a AAA bond rating.  Our reserves are a bit higher than our targeted range.  We are funding our retiree liabilities at the recommended rate and our non-school debt load is shrinking as we have transitioned to paying for most of our capital needs with cash.  

Our multi-year budget projections show a town budget that is sustainable assuming voters are comfortable with annual tax increases of 2 to 2.5% and assuming the Town continues to experience modest but steady growth in new construction.  However, we do face challenges.

From a fiscal perspective the three biggest issues we have are determining the appropriate staffing levels for our public safety operations, including whether to keep dispatch in house, funding our longer-term infrastructure needs, likely to be exacerbated by sea level rise/greater storm severity, and the cost of the regional school district.

As in many communities the ranks of our call firefighters have shrunk and most of our career firefighters live out of town.  We continue to provide excellent para-medic level response to medical emergencies, a service that is highly valued by the community, but this comes at a premium cost.  Past discussions about shifting to a less expensive regional dispatch service has shown a preference for keeping our current operations.  The regional center has improved and may be worth revisiting.

We have increased our annual capital spending to some $3 million.  This has helped to catch-up on a backlog of needs.  Over a ten-year period this represents $30 million worth of new water and sewer lines, repaved roads and sidewalks and rebuilt drainage systems to name a few areas. This is good progress.  Come the 2030’s we will have retired even more debt and will no longer be catching up to fund our retiree liabilities which should enable us to tackle larger capital needs assuming big storms do not severely impact us in the meantime.    

While town operating costs tend to increase in the 2-2.5% range, the school district’s cost trend higher, in the 3-3.5% range.  Schools are more labor intensive and have union wage scales that generally escalate quicker than town union contracts.  Given that school costs represent roughly 50% of total municipal expenditures, the sustainability of our budget is heavily influenced by the District’s budget. 

For FY21, the current budget year, we cut back on various expenses, primarily deferring needed capital expenses.  We did this in order to not increase tax burdens on residents in the face of the COVID crisis. With property values rising, our tax rate for this year decreased by a similar percentage keeping tax burdens level (though some property values rose much higher causing these property owners to face a higher tax bill; others experienced the opposite.)  The preliminary budget restores the funds cut from our capital plan and, in its current form, will increase property taxes 2.5%.  This means another $220 or so for the owner of a median valued home.

While much work has gone into the preparation of the preliminary budget there remains many hours of discussion and review over the course of the next few months. Public input is welcome along the way.