Franklin Matters: Executive Summary (Part 1) for the FY 2025 Town of Franklin Budget

Monday, April 22, 2024

Executive Summary (Part 1) for the FY 2025 Town of Franklin Budget

The first couple of pages from Town Administrator Jamie Hellen's Executive Summary for the FY 2025 Budget.

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In compliance with Article Six, Sections 6-3-1 through 6-5-2 of the Franklin Town Charter, I am submitting the proposed FY25 Budget Message & Budget to the Town Council and Finance Committee.

I am presenting a balanced budget proposal for Fiscal Year 2025 (FY25). The Executive Summary explains the budget process, highlights, assumptions, and some general overview statistics and trends. Detailed department budget narratives that speak about the mission and strategic initiatives within each department are included in Section 2 of this document and detailed budget line item numbers are in Appendix A. The budget process is a year round exercise. Throughout the entire fiscal year (July 1, 2024 to June 30, 2025), Town staff continuously update the budget model as new information becomes available. A budget review typically occurs every November prior to setting the annual tax rate. I encourage residents to sign up for Town Council agendas and legal notices here, which disclose the most up to date townwide budget actions and discussions in town.

Residents who seek to take a deeper dive into departmental or project specific finances can review the Franklin Finance Committee meetings. The Finance Committee meets regularly to discuss and debate townwide financial issues at length. Please visit the Town Budget page and consult the website for the latest FY25 budget information. All budget meetings can be viewed on the Town’s YouTube channel, live and in archive, and on Franklin TV.

Despite the public discussions around School finance, the organization continues to perform at a very high level. The Town and Schools provide exceptional services to constituents at a very good value. I encourage every person who reads this to reflect on their own success: very high graduation rates and college readiness, incredible school athletic achievements, superior special education services, and the vibrancy of school extracurricular activities, arts, music and more. Franklin Police is now a fully accredited agency and the Fire Department is the 459th fire department out of 45,000 in the United States to reach an ISO-1 rating. In the last two years over 200 acres of open space have been preserved, with new acquisitions on the horizon. Over the next five years we will be planning how to use this open space to meet the needs of the community. The Department of Public Works (DPW) continues to be a regional leader in rebuilding the Town’s infrastructure, including the largest public works project in history over the next three years in the Beaver Street Interceptor. Recreation, Library and Senior Center programs have never been more popular as we continue to see record breaking numbers in customer demand. For the first time in the Town’s history, we received a AAA Bond Rating in 2022 and I am proud to say we have maintained this noteworthy status. This rating allows the Town to borrow at a lower rate, saving the Town as well as our residents and taxpayers significant money over time.

Despite the overwhelming amount of requests the Town receives for services, departmental operations have excelled throughout these past few years and have become even more efficient. We continue to innovate ways to do more with less.

Enough cannot be said for the dedication, commitment, passion, innovation, humility and teamwork the staff of this organization continues to showcase on a daily basis. The overall achievements of this organization have been tremendous, and we should all be thankful and appreciative of what this team has achieved and the role the municipal and school staff play in the community. The future of the organization remains as bright as ever, and the quality of life in Franklin is as exceptional as it has ever been.

As I have documented in prior Fiscal Forecasts and Budget Narratives, while services in FY25 will remain highly effective, inflation has now settled into the local budget. We are still feeling the effects of 40-year high inflation and the money we raise each year simply does not go as far as it once did. While the Town and

Schools received over $12.2 million in grant funds, including the remaining ARPA funds, and over $475,000 in donations in FY23, we will not see grants at this volume in FY25. Inflation, coupled with the loss of significant grant funding, will make it challenging to make substantial new strategic investments that the community is asking for.

Here are the assumptions being incorporated into the FY25 budget:

Revenues Highlights

● The proposed FY25 budget does not include any revenues from the Budget Stabilization “Rainy Day'' Fund. The fund currently has a balance of $3,156,460. It is vital for the Town to continue to maintain and grow the Rainy Day fund rather than deplete it. Budget Stabilization reserves set the town up to be prepared in the event of an emergency, but equally as important, these reserves illustrate to bond rating agencies and financial institutions sound financial policy and execution. Well founded financial annual audits, an effective OPEB policy, passage of the Community Preservation Act, the implementation of a stormwater utility and increasing emergency reserves puts the town in a healthy position to maintain a stable AAA bond rating and quell interest rates in an era of record high inflation.

● The Property Tax Levy and “New Growth” revenue forecast will decrease a cumulative $137,751 to

$3,264,366 from FY24. Traditionally, the Town has used a ten-year average model for the new growth figure. However, the Town’s New Growth has plateaued and is now at the decreasing end of the arc from the front end of the pandemic years.

● State Aid is assumed at the Governor’s FY25 budget levels. Currently, the town stands to realize a net loss of $76,782 in local aid from FY24. The House of Representatives and the State Senate historically increase local aid in their subsequent budgets and the Town ends up with a higher figure than the Governor’s proposed budget. Given the timing of the final state budget, the Town will need to readjust for the final state budget in November. That said, as staff, stakeholders, and elected officials have discussed for many years, state aid is likely not to increase substantially.

● One-Time Revenues will be used to accommodate $2 million of the FY25 operating budget revenue projections. This decision will result in a structural deficit of just over $2 million going into FY26. The breakdown is as follows:

○ $1.507 million in Free Cash; and
○ $500,000 from the MECC Stabilization account to help ease the full assessment back into the budget.

● The Town’s Local Receipts look to rebound past pre-pandemic numbers, while also recognizing that hotel tax revenue and cannabis excise sales taxes are both now in this revenue category. Staff assume an additional $1,116,253 in local receipts over FY24. The preliminary budget model was level service, but in evaluating the forecast, we believe FY25 will show an uptick due to several additional factors:

○ $100,000 in ambulance receipts have climbed steadily due to a record breaking amount of ambulance calls and the Fire Chief’s ability to stay at market levels for ALS/BLS rates. Those numbers will be evaluated by the end of March and a small increase will be made in the formal budget proposal in April. However, revenues will be invested in additional paramedic positions to reflect the increased demand and we will bring the backup ambulance into the peak, daytime rotation to address the high volume of calls we are seeing.

○ $100,000 in cannabis excise local option tax (3%) is well ahead of projections in FY24, and we expect a revised number with additional revenue by the April 12th budget submission.

○ $300,000 due to a fourth hotel opening and numerous events in the area from Gillette Stadium, Great Woods Xfinity Center, Dean College and sporting and entertainment events from Marlborough to Mansfield.

○ $500,000 Motor Vehicle Excise Tax estimates based on the automobile market, which has historically come in over estimated amounts and the valuation of automobiles increasing due to innovation and limited supply.

○ A reminder that most of this revenue source is fee-for-service and reflects fees collected to perform services (e.g. licensing, building permits, ambulance receipts, recreation fees). Motor vehicle excise tax is slightly less than half of the revenue. See FY 2025 assumptions below.