Town Council Budget Subcommittee Meeting
Agenda & Meeting Packet
November 18, 2020 - 6:00 PM
Agenda & Meeting Packet
November 18, 2020 - 6:00 PM
Agenda
1. FY21 Budget Update & Discussion
1. FY21 Budget Update & Discussion
a. Recommendation on Recreation Department & Town Clerk Department
b. Recommendation on Budget Stabilization deposit
b. Recommendation on Budget Stabilization deposit
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November 13, 2020
To: Town Council Budget Subcommittee, Town Council
From: Jamie Hellen, Town Administrator
RE: FY21 Budget Update & Close out
As many recall, when the FY21 town budget was considered and approved in the Spring, there was great uncertainty to the town's budget position. Staff lowered local revenues by about 15% and expected a further state aid cut. I decided to wait to make reductions in the Town budget until we knew exactly what that state aid cut would be. For details of the budget approved in June please visit the Town’s budget page at: https://www.franklinma.gov/town-budget
I am pleased to report that the Town will not need to adjust any portions of the FY21 town budget with two exceptions: the Town Clerk’s Department and the Recreation Department. The Town has revised its revenue projections and will see additional revenues now that we have a commitment from the state on local aid numbers. I have attached a new Budget Control sheet to this memo.
I am recommending to the Finance Committee support two revised budget expenditures of $75,000 to the Town Clerk Department and $75,000 to the Recreation Department. I have included more details below.
I am also recommending to the Finance Committee to appropriate all excess revenues to the Town’s Budget Stabilization Fund (assuming support for the two above appropriation recommendations of the combined $150,000). After all of the revisions to the budget, the Town has an additional $853,842 in revenue. These funds will help offset any budget deficiencies later in FY21 if the state's economy takes a downturn, the Governor makes any 9C cuts or other unforeseen operating budget challenges arise. The funds in the Budget Stabilization fund also could be applied to FY22 or FY23 as a one-time revenue source to continue to address budget shortfalls
Overall Budget Update Highlights
● State Budget Update. The Legislature and Governor have committed to FY20 local aid revenue CH70 and Unrestricted Aid numbers, which are reflected in Governor Baker’s H.2 Budget proposal filed in October. I have attached the updated cherry sheet. While the Legislature has not formally finalized its budget, we have been assured these numbers will be a part of the final FY21 state budget through our legislative delegation. Make no mistake, this policy by the legislature is the reason the Town is anticipating no further cuts to its revenue sources for the year. The Superintendent and I wrote them a letter on this in June and they have concerns.
● Local Receipts. Town local receipts revenues have stayed consistent and on par with predictions through the end of October. I have attached an updated revenue sheet. Please note that the largest category of local receipts is the vehicle excise tax, which is mostly due in the Spring. Fees then licenses and permits are the next largest categories and the Town is currently near 50% of anticipated collections. We do expect a drop in some revenues due to the winter months, but we will monitor it closely.
● Federal COVID-19 Assistance. The Town has received or applied approximately $4.5 million in federal assistance from a variety of sources. I have attached an updated sheet on the federal monies. None of these monies impact the town budget directly. These funds are required to be in special revenue accounts.
● Congressional Update. The prospect of additional federal stimulus to the state for local cities and towns appears unknown at this time. The Superintendent of Schools and I sent Massachusetts’ elected representatives a letter regarding this issue in June. The Superintendent and I also wrote a letter recently encouraging our Congressional delegation to extend the deadline for CARES Act funding.
Revenues Summary
Please reference the “Increase/Decrease” column on the attached control sheet. Revenues are as follows relative to the approved FY21 budget in June:
● New Growth. The Town estimated a very conservative New Growth projection in June at $650,000. The Assessors are now confident the revenue projection will be $1,650,000, or $1 million more than anticipated. Why? Despite the pandemic, actively financed or planned projects continued. This relates to personal residential home improvements, commercial/industrial and residential development. Like the Town’s own infrastructure projects, we did not see any major slow down of development projects in town. This includes home improvements.
A big shout out to the Board of Assessors and the Assessors Department for their commitment and bravery during this pandemic. It is easy to overlook this or take it for granted, but our inspectors picked back up in June and have not looked back. The Town is in the fiscal position it is in due to our Assessors continuing inspections and working diligently to capture revenue.
● Hotel/Motel tax. The Town did see a large decrease in hotel motel tax as expected. We expect this fiscal year to be even lower. Our final number is $285,558, almost half of what has traditionally been received in recent years. This number is reflected in an increase in local receipts.
● Local Receipts. As described above, we increased the assumption made in June to reflect the hotel/motel tax revenue. As described above, steady as we go. The big concern is January through March.
● State Aid. To date, the town will see a decrease in state aid. But this pales in comparison to the expected 10% (+/-) cut of local aid we expected in June. State aid numbers will continue to fluctuate based on the final legislative approval over the coming month.
● After all considerations, the Town $853,842 in unanticipated revenue projections.
Challenges ahead
Outside of the overall uncertainty in America over the pandemic and the economy, these are some of the concerns I have as we move into the winter relative to our local budget:
● Unemployment Insurance. The Town has already overspent its unemployment insurance line item for the year due to the personnel redundancies at the town and school level at the beginning of the pandemic. We believe these cost overruns will be absorbed by other line items in the benefits budget, notably a partial reduction in health insurance premiums for the Town and employees. Our Human Resources Department was successful in working with Harvard Pilgrim to see a 15% rate reduction for April due to the pandemic. We also believe (hope!) that we can withstand any more personnel redundancies for the remainder of the fiscal year, which will ensure this line item does not increase any further. That said, this is an account we will monitor closely.
● PPE & other COVID-19 mandates. CARES Act funding deadlines are December 30th, 2020. The federal government has paid for all of the Town’s PPE and resources to get us to this point. The future is uncertain. If this deadline is not extended, the Town will be on the hook for all costs relative to PPE, disinfectant, personnel costs and so forth.
● Free Cash. The Town recently had its FY20 Free Cash certified by the Department of Revenue. The Town has certified at 2,730,757, which is nearly $1 million less than last year. I am recommending to put the FY20 Capital program on hold to reserve these funds for unintended expenses in the winter and spring. This will put a large strain on our departments who rely on our annual capital program to maintain vehicles, equipment and so forth. I will outline in a deeper memo to the Town and staff how FY20 capital will be recommended at a later date.
Town Clerk Department
I am recommending adding an additional $75,000 to the Town Clerk’s budget to pay for the federal election cycle and local town election on December 5th. This will not be an exact figure as the situation is fluid and ongoing. But the reality is that after the incident on the September 1st primary, our staff did what was needed in order to rebuild the confidence in the community’s election process.
Recreation Department
As has been discussed for years, the Recreation Department is mostly self-sustainable. The fees pay for the majority of the expenses and costs for programs. In June, the FY21 budget approved anticipated a 25% reduction in fees, thus, we reduced the expense budget by 25% as well. We anticipated a very weak summer schedule and even cut Concerts on the Common. By the 4th of July, the plan completely changed.
One positive story during this pandemic has been the successful Recreation programs families have been able to rely on. Beginning almost immediately after the budget was approved in June, the Governor’s Executive Orders offered the Town more latitude to conduct programs. Ryan Jette and his staff set out some exceptionally safe programs for kids and families in need of supervised, safe and structured sports. We also were able to have some concerts on the common this summer, too. We anticipated none of this in June.
I am recommending an additional $75,000 to be added to the Recreation budget to compensate for the expenses we did not anticipate in June for many of the Summer and Falls programs. Recreation’s expenses are over 50% expended so far and we will need to add money in personnel and expenses in order for us to get through the year.
Five Year Forecast
It will continue to be difficult for me to draft any relevant or meaningful “five-year fiscal forecast” that is valuable for any longer than a week. The global geopolitical and economic climate is still simply too uncertain to predict. I remain steadfast, however, that in order for certainty and stability in our economy to appear, the public health crisis must continue to be contained, if not solved.
As for FY22, I am hopeful that once we reach the holidays, the staff can get back on a regular budget schedule. I am hopeful we can begin the FY22 budget process after the tax rate is set on December 2nd. I am optimistic as the new year begins, the Town can pivot to the FY22 budget in January and get back on a regular budget cycle.
--------------
To: Town Council Budget Subcommittee, Town Council
From: Jamie Hellen, Town Administrator
RE: FY21 Budget Update & Close out
As many recall, when the FY21 town budget was considered and approved in the Spring, there was great uncertainty to the town's budget position. Staff lowered local revenues by about 15% and expected a further state aid cut. I decided to wait to make reductions in the Town budget until we knew exactly what that state aid cut would be. For details of the budget approved in June please visit the Town’s budget page at: https://www.franklinma.gov/town-budget
I am pleased to report that the Town will not need to adjust any portions of the FY21 town budget with two exceptions: the Town Clerk’s Department and the Recreation Department. The Town has revised its revenue projections and will see additional revenues now that we have a commitment from the state on local aid numbers. I have attached a new Budget Control sheet to this memo.
I am recommending to the Finance Committee support two revised budget expenditures of $75,000 to the Town Clerk Department and $75,000 to the Recreation Department. I have included more details below.
I am also recommending to the Finance Committee to appropriate all excess revenues to the Town’s Budget Stabilization Fund (assuming support for the two above appropriation recommendations of the combined $150,000). After all of the revisions to the budget, the Town has an additional $853,842 in revenue. These funds will help offset any budget deficiencies later in FY21 if the state's economy takes a downturn, the Governor makes any 9C cuts or other unforeseen operating budget challenges arise. The funds in the Budget Stabilization fund also could be applied to FY22 or FY23 as a one-time revenue source to continue to address budget shortfalls
Overall Budget Update Highlights
● State Budget Update. The Legislature and Governor have committed to FY20 local aid revenue CH70 and Unrestricted Aid numbers, which are reflected in Governor Baker’s H.2 Budget proposal filed in October. I have attached the updated cherry sheet. While the Legislature has not formally finalized its budget, we have been assured these numbers will be a part of the final FY21 state budget through our legislative delegation. Make no mistake, this policy by the legislature is the reason the Town is anticipating no further cuts to its revenue sources for the year. The Superintendent and I wrote them a letter on this in June and they have concerns.
● Local Receipts. Town local receipts revenues have stayed consistent and on par with predictions through the end of October. I have attached an updated revenue sheet. Please note that the largest category of local receipts is the vehicle excise tax, which is mostly due in the Spring. Fees then licenses and permits are the next largest categories and the Town is currently near 50% of anticipated collections. We do expect a drop in some revenues due to the winter months, but we will monitor it closely.
● Federal COVID-19 Assistance. The Town has received or applied approximately $4.5 million in federal assistance from a variety of sources. I have attached an updated sheet on the federal monies. None of these monies impact the town budget directly. These funds are required to be in special revenue accounts.
● Congressional Update. The prospect of additional federal stimulus to the state for local cities and towns appears unknown at this time. The Superintendent of Schools and I sent Massachusetts’ elected representatives a letter regarding this issue in June. The Superintendent and I also wrote a letter recently encouraging our Congressional delegation to extend the deadline for CARES Act funding.
Revenues Summary
Please reference the “Increase/Decrease” column on the attached control sheet. Revenues are as follows relative to the approved FY21 budget in June:
● New Growth. The Town estimated a very conservative New Growth projection in June at $650,000. The Assessors are now confident the revenue projection will be $1,650,000, or $1 million more than anticipated. Why? Despite the pandemic, actively financed or planned projects continued. This relates to personal residential home improvements, commercial/industrial and residential development. Like the Town’s own infrastructure projects, we did not see any major slow down of development projects in town. This includes home improvements.
A big shout out to the Board of Assessors and the Assessors Department for their commitment and bravery during this pandemic. It is easy to overlook this or take it for granted, but our inspectors picked back up in June and have not looked back. The Town is in the fiscal position it is in due to our Assessors continuing inspections and working diligently to capture revenue.
● Hotel/Motel tax. The Town did see a large decrease in hotel motel tax as expected. We expect this fiscal year to be even lower. Our final number is $285,558, almost half of what has traditionally been received in recent years. This number is reflected in an increase in local receipts.
● Local Receipts. As described above, we increased the assumption made in June to reflect the hotel/motel tax revenue. As described above, steady as we go. The big concern is January through March.
● State Aid. To date, the town will see a decrease in state aid. But this pales in comparison to the expected 10% (+/-) cut of local aid we expected in June. State aid numbers will continue to fluctuate based on the final legislative approval over the coming month.
● After all considerations, the Town $853,842 in unanticipated revenue projections.
Challenges ahead
Outside of the overall uncertainty in America over the pandemic and the economy, these are some of the concerns I have as we move into the winter relative to our local budget:
● Unemployment Insurance. The Town has already overspent its unemployment insurance line item for the year due to the personnel redundancies at the town and school level at the beginning of the pandemic. We believe these cost overruns will be absorbed by other line items in the benefits budget, notably a partial reduction in health insurance premiums for the Town and employees. Our Human Resources Department was successful in working with Harvard Pilgrim to see a 15% rate reduction for April due to the pandemic. We also believe (hope!) that we can withstand any more personnel redundancies for the remainder of the fiscal year, which will ensure this line item does not increase any further. That said, this is an account we will monitor closely.
● PPE & other COVID-19 mandates. CARES Act funding deadlines are December 30th, 2020. The federal government has paid for all of the Town’s PPE and resources to get us to this point. The future is uncertain. If this deadline is not extended, the Town will be on the hook for all costs relative to PPE, disinfectant, personnel costs and so forth.
● Free Cash. The Town recently had its FY20 Free Cash certified by the Department of Revenue. The Town has certified at 2,730,757, which is nearly $1 million less than last year. I am recommending to put the FY20 Capital program on hold to reserve these funds for unintended expenses in the winter and spring. This will put a large strain on our departments who rely on our annual capital program to maintain vehicles, equipment and so forth. I will outline in a deeper memo to the Town and staff how FY20 capital will be recommended at a later date.
Town Clerk Department
I am recommending adding an additional $75,000 to the Town Clerk’s budget to pay for the federal election cycle and local town election on December 5th. This will not be an exact figure as the situation is fluid and ongoing. But the reality is that after the incident on the September 1st primary, our staff did what was needed in order to rebuild the confidence in the community’s election process.
Recreation Department
As has been discussed for years, the Recreation Department is mostly self-sustainable. The fees pay for the majority of the expenses and costs for programs. In June, the FY21 budget approved anticipated a 25% reduction in fees, thus, we reduced the expense budget by 25% as well. We anticipated a very weak summer schedule and even cut Concerts on the Common. By the 4th of July, the plan completely changed.
One positive story during this pandemic has been the successful Recreation programs families have been able to rely on. Beginning almost immediately after the budget was approved in June, the Governor’s Executive Orders offered the Town more latitude to conduct programs. Ryan Jette and his staff set out some exceptionally safe programs for kids and families in need of supervised, safe and structured sports. We also were able to have some concerts on the common this summer, too. We anticipated none of this in June.
I am recommending an additional $75,000 to be added to the Recreation budget to compensate for the expenses we did not anticipate in June for many of the Summer and Falls programs. Recreation’s expenses are over 50% expended so far and we will need to add money in personnel and expenses in order for us to get through the year.
Five Year Forecast
It will continue to be difficult for me to draft any relevant or meaningful “five-year fiscal forecast” that is valuable for any longer than a week. The global geopolitical and economic climate is still simply too uncertain to predict. I remain steadfast, however, that in order for certainty and stability in our economy to appear, the public health crisis must continue to be contained, if not solved.
As for FY22, I am hopeful that once we reach the holidays, the staff can get back on a regular budget schedule. I am hopeful we can begin the FY22 budget process after the tax rate is set on December 2nd. I am optimistic as the new year begins, the Town can pivot to the FY22 budget in January and get back on a regular budget cycle.
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The full agenda and released documents for this meeting, including connection info, can be found:https://www.franklinma.gov/budget-subcommittee/agenda/budget-subcommittee-meeting-agenda-2
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