Letter from the Selectboard: Budget Updates
Dear Residents,
This year the Selectboard (SB) and Advisory Committee (AC) are working more closely to ensure adequate review and discussion leading up to Annual Town Meeting. We began the budget preparation on November 7th when Town Administrator (TA) Sherry Patch gave the department heads the FY21 guidance for operational budget and capital requests. Those documents and many others referenced in this letter can be found on the Town’s Finances page. Departments were asked for a level funded budget. If they couldn’t level fund, they were asked to justify the increase. Proposed capital expenditures are expected to have at a minimum a five-year life and $10,000 cost. Budgets were due by December 2nd.
The SB, AC, and Sherry met with the various departments between December 5th and 12th to go over their requests. The team worked to understand the rationale behind each budget request. Some department heads were asked to go back and look into other options or to provide more information.
We don’t get the final WRSD and Monty Tech budgets until around the first week of March. However, we will get preliminary views of their budgets approximately a month earlier. Until then, we assume the school budget will go up by 3%.
So far, we will have only been looking at the expense side of the picture. We need to also work to understand the revenue side (see our 10/25/18 letter on Revenue Sources). The Cherry Sheet isn’t finalized until after our fiscal year begins in July. We do see estimates around March 1. We have a good handle on Local Receipts. We have numbers to work with for free cash and stabilization funds already. Until the actual numbers are in, we work with conservative estimates.
The next step after initial budget request review was for the financial team (TA, Tax Collector/Treasurer, Assessor, Accountant) to put all budget requests together into a consolidated budget document. Revenue projections were factored in, an assumption was made on the school budget, and existing debt service was included. This budget at this point does not contain any of the capital requests that were submitted by departments. This preliminary consolidated budget was distributed to the SB and AC on January 9th and was reviewed by the AC, SB Chair, and TA. Though there were several questions about the revenue side, the budget discussion was dominated by the PFAS water contamination issue and how to budget for it.
Sherry has met with the Collins Center to understand the five-year capital plan they created last year. She is working to update that plan with the new and modified information submitted by departments.
The AC has spent many months developing a set of financial policies, some of which can be applied in the next phase of budget development. Each capital request needs to be discussed and the most appropriate method of funding needs to be determined. Some of those methods of funding include appropriation, borrowing, use of free cash, and transfers from a stabilization fund. For example, if we buy a new police cruiser every year, best practice is to fund the cruiser out of the operational budget (funding through appropriation). If you buy a new fire truck every five years, it is probably not funded out of the operational budget. Instead, one option might be to borrow. The process of determining which capital requests will be funded and how is lengthy and complicated. The AC, SB, and TA will work closely together during this time.
Over the four to six weeks of the capital request funding decision process, several interim consolidated budgets will be produced and reviewed. This time is spent trying to make sure that the most important town priorities are funded, that we stay on top of our infrastructure maintenance, and that employees have what they need to safely, legally, and adequately do their jobs. As we have discussed many times on the floor of Town Meeting, borrowing authorized one year will affect us in years to come. In order to better understand the impact of borrowing decisions, we will be updating our 5-year financial forecast for various scenarios.
The output planned by the SB, AC, and TA is:
- fy21 operational budget
- fy22-fy projected operational budget
- five-year capital plan
- five-year debt and debt service projection
Annual Town Meeting is scheduled for Tuesday, May 12th. Our goal is to have the above in taxpayers’ hands in the form of a budget presentation document by early April so you can be adequately prepared to discuss and vote on the various articles in the FY21 warrant. Some warrant articles may come later, but we will work to get them finalized as soon as possible.
We look forward to continuing to work productively with the Advisory Committee on financial matters.