Showing posts with label fiscal year. Show all posts
Showing posts with label fiscal year. Show all posts

Sunday, November 6, 2022

Finance Committee Meeting - Agenda - November 9, 2022 at 7 PM

Finance Committee Meeting 
November 9, 2022

Meeting will be held at the Municipal Building
2nd floor, Council Chambers
355 East Central Street

Agenda
1. Call to Order
2. Public Comment
3. Approval of Minutes:10-26-2022
4. FY23 Operating Budget Adjustment
a. Town Administrator Memo
b. FY23 Budget Revenue and Control Sheet, adjusted
c. Resolution
5. Future Agenda Items
6. Adjourn

Please find the agenda and links here:   https://www.franklinma.gov/sites/g/files/vyhlif6896/f/uploads/fin_com_mtg_agenda_nov_9_2022.pdf 

Finance Committee Meeting - November 9, 2022 at 7 PM
Finance Committee Meeting - November 9, 2022 at 7 PM

FY 2023 Budget Adjustments for Review by Finance Committee - Nov 9, 2022

November 4, 2022
 
Memorandum
 
To: Finance Committee
From: Jamie Hellen, Town Administrator
Alecia Alleyne, Assistant to the Town Administrator

Re: FY23 Budget Adjustment & Five-Year Fiscal Forecast Update

We are requesting the Finance Committee to support the amendment to the FY23 Town operating budget as outlined in this memo and recommend the changes to the full Town Council for their approval prior to setting the annual tax rate on November 30th.

Overall, the budget appears to be right on track through 9/30/22. Revenues have hit targeted projections and the staff has done a terrific job of managing cost increases in their expense budgets. We have attached an updated revenue sheet for local receipts through 9/30/22.

Five-Year Fiscal Forecast Update

There is very little updated news since the published forecast in August 2022. Click here for the forecast. Since August, the Federal Reserve has raised interest rates an additional ¾ of 1%. Home mortgage rates have reached a near 40-year high and many economic experts continue to predict a recession within the next 12 to 18 months. The federal government also announced the federal deficit is at $31 trillion. We have attached a recent Massachusetts economic analysis from MassBenchmarks, which is published through a partnership between the UMass-Amherst Donahue Institute and Federal Reserve Bank of Boston, that notes in its October 27, 2022 quarterly report the state’s “declining workforce and interest rate exposure in key industries make the Commonwealth vulnerable to an economic downturn”. The Town should be cognizant of these dynamics and will present new fiscal pressures on the operating budget in the coming fiscal years.

The only additional commentary is it will be our objective throughout the fiscal year to monitor the Town’s financial situation through the lens of the recently awarded AAA bond rating from the rating agencies. As anyone can see in the report, recent financial actions by the Town have resulted in a top rating. As the global economy continues to adapt to geo-political situations, it is prudent to follow these trends, which will ensure the Town maintains its AAA bond rating. This policy approach is a key technique to maintain services within the tax levy.

For those who have not read the ratings report, please click here. It is the most important document to read.
 
Revenue Adjustments

The following is a macro-synopsis of the revenue adjustments to the FY23 budget from the budget approved earlier this year at the annual budget hearings in May:

1. According to the Assessors, New Growth should attain approximately a $271,000 increase.
2. The Local Receipts bottom line will stay the same except for the additional funds received from the J&J opioid settlement and Host Community Agreement (HCA) funds. Two revised items are:
a. Host Community Agreements, as predicted, will decline. The numbers here depict actual receivables to date and NOT anticipated. I expect this revenue source to be eliminated at a date uncertain in this fiscal year. The Town still has the local option excise tax at 3%.
b. J&J Opioid settlement is a new line item of revenue received due to the national opioid settlement. The Town has received $67,505 to date. Expenditure for these funds have strict restrictions per state law, but amounts will be as follows:
i. SAFE Coalition will receive $50,000 for direct substance abuse support; and
ii. Franklin Fire and Franklin Police will receive $17,505 for narcan, training and support in responding to opioid cases in Franklin.
3. State Aid, Assessments & Other Revenues should see an overall increase of approximately $290,000 after the state local aid, education, county assessment and state budget formulas settle out.

Expense Adjustments

The attached resolution depicts the changes within each departmental account on the voting document. All of the changes to this document reflect the actual costs of the municipal collective bargaining agreements that have been ratified, as well as the 2.5% COLA adjustment for all municipal nonunion staff. The exceptions are:

1. The Town Administrator’s expense budget increased just over $103,000, which is where the opioid and host community agreement funds will be expended from.

2. Line item 164 Elections increased $14,738 due to state laws on mail in and early voting.

3. Line item 610 Library is noted due to the large shift from Expenses to Personnel due to collective bargaining agreement. The germane note is that the overall budget maintains the state required funding (“MAR”) requirement.

4. Line items 710/750 Debt & Interest have increased $225,044 to reflect the actual costs of the borrowing for the Municipal Building improvements and the Horace Mann drainage project.

5. Line item 910 - Comp Reserve is reduced approximately $430,000, which are the funds transferred for the COLA and CBA’s. The remaining amount in comp reserve will go toward the usual reasons for appropriation, such as unforeseen personnel decisions, retirement costs, recruitment and retention of employees, collective bargaining, etc. Additionally, I expect some funds to be used to begin implementing the Compensation & Classification Plan, which should be completed later this Fall. Any unused funds revert to the Town’s Free Cash allotment for the annual Capital Plan.

Please let us know if you have any questions


Shared from the Finance Committee agenda ->

Town of Franklin Earns AAA Bond Rating

Friday, September 30, 2022

Finance Committee votes new leadership slate, approves recommendation of additional funds for Red Brick renovation (audio)

FM #852 = This is the Franklin Matters radio show, number 852 in the series. 


This session of the radio show shares the Finance Committee meeting held on Wednesday, Sep 28, 2022


The meeting was conducted in a hybrid format: 7 members of the Finance Committee were in the Council Chambers along with some of the public, 1 member was remote along with some members the public via conference bridge, all to adhere to the ‘social distancing’ requirements of this pandemic period. 


First item of business was to vote for new Chair, Vice Chair, and Clerk. Only 8 members for this meeting, the 9th was approved by the Town Council in the meeting after this so they will be available for the next meeting.

  • voted to select new Chair - George Conley; Vice-Chair - Natalie Riley; Clerk - Nicole Corbosiero
  • Discussion on 5 year fiscal outlook provided by Town Administrator
  • Approves recommendation of $50K additional for Red Brick exterior renovation
  • Reviews stabilization funding balances and how they pay in the fiscal outlook for the Town
  • Future meeting items requested Board of Assessors, School Committee

The meeting recording runs about thirty-three minutes, so let’s listen to the Finance Committee meeting Sep 28, 2022.


Audio file ->  https://franklin-ma-matters.captivate.fm/episode/fm-852-finance-committee-mtg-09-28-22


--------------


Meeting agenda =>  https://www.franklinma.gov/sites/g/files/vyhlif6896/f/agendas/2022-09-28_finace_committee_meeting_agenda.pdf  

 

Link to Finance Committee => https://www.franklinma.gov/finance-committee 


My notes for the meeting =>  https://drive.google.com/file/d/1khlAwYemfQS4-lc8OyBd-YnStwRzaHHB/view?usp=sharing 


YouTube recording => https://youtu.be/9ANddS7JyAA


--------------


We are now producing this in collaboration with Franklin.TV and Franklin Public Radio (wfpr.fm) or 102.9 on the Franklin area radio dial.  


This podcast is my public service effort for Franklin but we can't do it alone. We can always use your help.

 

How can you help?

  • If you can use the information that you find here, please tell your friends and neighbors

  • If you don't like something here, please let me know


Through this feedback loop we can continue to make improvements. I thank you for listening.


For additional information, please visit Franklinmatters.org/ or www.franklin.news/

If you have questions or comments you can reach me directly at shersteve @ gmail dot com


The music for the intro and exit was provided by Michael Clark and the group "East of Shirley". The piece is titled "Ernesto, manana"  c. Michael Clark & Tintype Tunes, 2008 and used with their permission.


I hope you enjoy!

------------------


You can also subscribe and listen to Franklin Matters audio on iTunes or your favorite podcast app; search in "podcasts" for "Franklin Matters"

 

Franklin, MA: Finance Committee agenda for meeting scheduled Sep 28, 2022 at 6:00 PM
Franklin, MA: Finance Committee agenda for meeting scheduled Sep 28, 2022 at 6:00 PM

Thursday, September 29, 2022

Franklin TV: Finance Committee meeting available for replay - 09/28/22 (video)

The Finance Committee met and did their business in about thirty minutes before the Town Council came into the Council Chambers for their meeting to start at 7 PM on Wednesday, September 28, 2022.

The Finance meeting did start a little after 6, so you get to listen to the intro of my radio show interview with Health Director Cathleen Liberty before the live stream of the meeting jumps into YouTube. If you want to continue listening to the health episode follow this link -> https://www.franklinmatters.org/2022/09/conversation-with-town-of-franklin-ma.html   or find Franklin Matters on your favorite podcast app.

Finance Committee link to YouTube -> https://youtu.be/9ANddS7JyAA

Meeting agenda and documents released for this meeting ->



Franklin TV: Finance Committee meeting available for replay - 09/28/22 (video)
Franklin TV: Finance Committee meeting available for replay - 09/28/22 (video)

Monday, September 26, 2022

Franklin, MA: Finance Committee agenda for meeting scheduled Sep 28, 2022 at 6:00 PM

Finance Committee Meeting
Agenda & Meeting Packet
Wednesday, September 28, 2022 - 6:00 PM

Meeting will be held at the Municipal Building
2nd floor, Council Chambers, 355 East Central Street


Agenda
1. Call to Order

2. Election of Officers: Finance Committee Chair, Vice-Chair & Clerk

3. Public Comment

4. Town Administrator Fiscal Forecast

5. Discussion: CPA Project Approvals
a. CPA Master Plan  
https://www.franklinma.gov/sites/g/files/vyhlif6896/f/uploads/2022_cpa_plan_v.2_4.pdf
i. Discussion on Red Brick Schoolhouse additional funds request of $50,000
ii. Project Updates
6. Stabilization Fund Balances - 3 Year Comparison  (see page 5 of agenda doc)

7. Future Agenda Items

8. Adjourn

Agenda doc (includes remote connection info)

Franklin, MA: Finance Committee agenda for meeting scheduled Sep 28, 2022 at 6:00 PM
Franklin, MA: Finance Committee agenda for meeting scheduled Sep 28, 2022 at 6:00 PM

Thursday, September 1, 2022

Talk Franklin: Jamie Hellen and I talk the 5 year fiscal forecast and #1 complaint to the Town (speeding) (audio)

FM #836 = This is the Franklin Matters radio show, number 836 in the series. 


This session of the radio show shares my "Talk Franklin" conversation with Town Administrator Jamie Hellen. We had our conversation via conference bridge.  

Topics for this session

  • EDC prioritized their ‘short list’ at Aug 10 meeting

  • Green community & Cultural Council presentations at August 17 Town Council meeting

  • Dean College President/Chancellor scheduled for the Sep 7 Council meeting

  • 5 year fiscal outlook published 

  • #1 complaint to the Town - speeding

The conversation runs about 33 minutes. Let’s listen to my conversation with Jamie. Audio file -> https://anchor.fm/letstalkfranklin/episodes/Franklins-Forecast-e1n7023


--------------

Franklin for All webpage https://www.mapc.org/resource-library/franklin-for-all/

Cultural Council presentation -> https://www.franklinma.gov/sites/g/files/vyhlif6896/f/uploads/8b._fcc_presentation.pdf 

Green Community presentation -> https://www.franklinma.gov/sites/g/files/vyhlif6896/f/uploads/8b._green_community_presentation_0.pdf 

Green Community story map https://www.franklinma.gov/administrator/pages/green-community 

5 year fiscal outlook ->  https://www.franklinma.gov/sites/g/files/vyhlif6896/f/uploads/2022-08-15_fy23_to_fy27_town_administartor_fiscal_forecast_1.pdf 

Town budget page  https://www.franklinma.gov/town-budget 

Community & Cultural District calendar https://www.franklinmatters.org/p/blog-page.html 

--------------

We are now producing this in collaboration with Franklin.TV and Franklin Public Radio (wfpr.fm) or 102.9 on the Franklin area radio dial.  

This podcast is my public service effort for Franklin but we can't do it alone. We can always use your help.

How can you help?

  • If you can use the information that you find here, please tell your friends and neighbors

  • If you don't like something here, please let me know

Through this feedback loop we can continue to make improvements. I thank you for listening.

For additional information, please visit Franklinmatters.org/ or www.franklin.news/

If you have questions or comments you can reach me directly at shersteve @ gmail dot com

The music for the intro and exit was provided by Michael Clark and the group "East of Shirley". The piece is titled "Ernesto, manana"  c. Michael Clark & Tintype Tunes, 2008 and used with their permission.

I hope you enjoy!

------------------

You can also subscribe and listen to Franklin Matters audio on iTunes or your favorite podcast app; search in "podcasts" for "Franklin Matters"

Talk Franklin: Jamie Hellen and I talk the 5 year fiscal forecast and #1 complaint to the Town (speeding) (audio)
Talk Franklin: Jamie Hellen and I talk the 5 year fiscal forecast and #1 complaint to the Town (speeding) (audio)

Wednesday, August 31, 2022

Town of Franklin (MA): Five Year Fiscal Forecast - FY 2026 & beyond (part 5 of 5)

This continues to share the Five Year Fiscal Outlook for the Town of Franklin as published by the Town Administrator, Jamie Hellen:

FY26 and Beyond Financial Outlook

After reading the first eight pages of this document and with the adversity and challenges we are experiencing in our own personal lives, I can relate to most readers who feel as if FY26 is an eon away! Yet, our professional perspective is to always keep a keen eye into the future. But what we do know is:

As long as property revenues continue to increase, the town should see steady growth in order to work within the Proposition 2 ½ constraints. Without any adjustments to the tax levy, it is critical for the community to understand real estate values are the key sustainability factor to local expenses in the budget. The Town cannot count on a state aid bailout and should not count any additional federal assistance.

FY26 will see collective bargaining return for most school and municipal unions.

One-time federal assistance in the form of ARPA and ESSER funds will be exhausted.

The status of the Beaver Street Interceptor project and other capital projects will still be in development.

After the busy “end of fiscal year/start of the fiscal year” this summer, I will prepare a full five year revenue forecast before the FY23 tax rate hearing on November 30th, 2022.

How can I learn more?

All municipal budget matters will always be posted on our town budget archive

The School Department budget page is here.

Finance committee meetings can be found on their website.
 
Town Council meeting agendas, Town Blog News, Legal Notices, Job Postings and more on the Town’s email notifications page.

The School Committee connections are here.

As a savings to each homeowner, call your homeowners insurance company to get a savings on the Fire Department’s ISO-1 designation. Many property owners will see a reduction in their homeowners insurance. Just print out the linked paperwork and submit it to your insurer.

What can I do to help TODAY?

Let’s end the forecast on a fun note; and maybe some homework!

People always ask me what we can do today to support the Town today? Answer: Eat Local!

Like many towns, Franklin has a .75 percent of every one cent out local option tax on meals purchased in Franklin. It’s the one area of our “local receipts” revenue source that is driven by consumer choice. Since the pandemic, the town has been fortunate to see most of its restaurants continue in business today. We have also seen an influx of new places to eat out and more will be opening in 2022 & 2023. It’s an excellent opportunity to eat local, support our large profile of locally owned restaurants and also support the town budget.

So have fun eating out in Franklin with your family and friends and ultimately support the town’s schools, public safety, DPW, roads and other excellent town services!



Note: Pages 1-11 covers the fiscal forecast and outlook. Pages 12-18 is the Standard & Poors AAA rating letter. Pages 19-20 is the ISO 1 award letter on the Fire Department achievement.


Part 4 (FY 2025)

Town of Franklin Earns AAA Bond Rating
Town of Franklin Earns AAA Bond Rating

Tuesday, August 30, 2022

Town of Franklin (MA): Five Year Fiscal Forecast - FY 2025 (part 4 of 5)

This continues to share the Five Year Fiscal Outlook for the Town of Franklin as published by the Town Administrator, Jamie Hellen:

FY25 Financial Outlook

It is impossible to predict the state of our economy or world next week, let alone three years from now. Regardless of those factors, FY25 is when the confluence of flooded rivers are likely to converge for a very challenging year. Those factors are:

FY25 will be a full two fiscal years into a 40-plus year high of inflation with most costs rising;

There will not be any remaining authorized federal stimulus money and there will be less one-time revenues to plug gaps;

Difficult choices will need to be made regarding investments in schools, public safety, public works and capital projects and equipment;

The full assessment of the regional dispatch center (“The MECC”) will be coming back on the town's operating budget at about $1.5 million; and, most notably

The Franklin School Department’s financial sustainability on one-time revenues, continued declining enrollment and the required net school spending dynamic sets up a possible budget deficit in FY25. The outgoing Superintendent warned that FY25 could be facing “more [financial] challenges given the continued needs of the district, the local fiscal forecast and the expiration of the local coronavirus relief funding.”

Franklin Public School District

The Franklin School Department has three current trends that should give the community a pause for concern over the long term financial sustainability and challenges of the department.

1. Declining Enrollment. At its peak in 2008, the District had 6,464 students enrolled. The enrollment in 2021-2022 was 4,764 students, or a decrease of 24% in 14 years. The Kaestle Boos Associates, Inc study suggests the District is projected to lose enrollment throughout the rest of the decade. In the 2029-2030 school year, the district is estimated to have 4,458 students enrolled - a near 2,000 student enrollment drop in two decades.

The Kaestle Boos analysis also “indicates that the Franklin Public Schools facilities are currently 26% under capacity and are anticipated to continue to decline to 31% in the next 10 years. If no changes were to occur the school facilities would: all continue to operate under capacity, continue to create a financial burden in the maintenance of these underutilized facilities [and] suffer reduced educational adequacy in schools built prior to 1996.” Closing Davis-Thayer has produced some savings and space, but not nearly the amount of savings envisioned.

The Kaestle Boos Associates, Inc. study released on December 1, 2020 shows plenty of data on this topic and the options before the School Committee. A Space Needs and Facilities Use Subcommittee of the School Committee has been established and will be charged to “analyze data sources and forecast space utilization to comprehensively review Franklin's school facilities' needs.” A redistricting analysis has also commenced to follow up on the Kaestle Boos study from last December.

2. Net School Spending. As has been discussed at many legislative and local forums, the Franklin Public School District is seeing a very unique dynamic in its finances relative to state aid. This dynamic is real and is a result of the extreme spike in growth and enrollment in the 1980’s through 2010, followed by an significant pause in growth and enrollment in the 2010’s continuing on in the 2020’s.

In short, due to state education finance law, the “required local district contribution” is accelerating at a pace that far exceeds the rate of state aid increases. Please view the Superintendent's slide on page 12 to see this trend. This dynamic presents some short and long term sustainability concerns.
 
Despite these two dynamics, local investments have continued in the School Department budget by almost $15 million in total dollars since 2015, an average of over
$1.8 million a year, despite the two lower pandemic years.

3. One-time revenues. The schools will be using one-time revenues from revolving funds and federal assistance to augment their operating budget for at least the next two fiscal years. The good news is the School Department has its highest amount of reserves in at least the past five fiscal years. Even if the Town does not have enough revenue to maintain a $2.4 million-a-year increase, which will be challenging, the Schools should have enough reserves in those one-time sources to meet their budget projections over the next two years.



Part 1 (FY 2022 closing)

Part 2 (FY 2023)

Part 3 (FY 2024)



Town of Franklin Earns AAA Bond Rating
Town of Franklin Earns AAA Bond Rating

Monday, August 29, 2022

Town of Franklin (MA): Five Year Fiscal Forecast - FY 2024 (part 3 of 5)

This continues to share the Five Year Fiscal Outlook for the Town of Franklin as published by the Town Administrator, Jamie Hellen:

FY24 Financial Outlook

FY24 will be the fiscal year to monitor the new impacts of inflation and/or a recession on the quantity of town services that can be delivered. FY24 will also be the year to monitor the overall condition of the economy, consumer spending and trends on residential households and their ability to withstand the cost increases that we know will be going into effect: stormwater and the Beaver Street Interceptor. A year from now, all town officials should keep a close eye on the ability of residents to afford the increases that are coming from these mandatory projects. These projects could have an effect on other town services.
 
As written above, rising costs will likely set up a sustainability imbalance with what the purchasing power was in FY22 versus FY24. The Town will begin its FY24 budget process later this fall where we will look at our local summer and fall revenue trends, as well as take a cautiously optimistic gaze toward how the global economy modifies over the next six months. Keep your fingers crossed!

I would expect a Joint Budget Subcommittee meeting sometime in October to check in on FY23 revenues and early prospects for FY24.

Areas of expected operational increases due to inflation include: roads, snow and ice removal, construction supplies, all basic goods and services, and personnel and labor costs. The DPW and Facilities Departments will see the greatest impacts from rising inflation on expenses.
Most departments will feel this increase as both of their departments supply basic services such as fuel, gas, electricity, water to other departments. All departments will see an increase in personnel costs due to the competitive labor market and the successful performance of our current staff.

The stormwater utility fee goes into effect townwide for all property owners on July 1, 2023. The average fee per household on a half-acre lot will be about $56. As a result, stormwater expenditures from the DPW will be transferred to the utility. A significant reduction in the DPW budget will show in FY24. This dynamic will be deceiving given the cost increases coming from goods, services, and labor/personnel throughout the entire organization, but most notably the DPW. Also, additional funds will be needed for roads and infrastructure due to rising costs. Most of the reduction of stormwater will likely give way to overall cost increases from inflation.

Lastly, FY24 is when the effects of interest rates will possibly alter town services. As I have pointed out in every budget narrative in recent years, the ratio of debt and interest as a percentage of the town budget has been slowly shrinking as old debt and interest are paid off. Of all seven major budget categories, Debt & Interest was the only category to decrease in the FY23 budget. As a result, other services are taking up a larger percentage of the budget pie, leaving less room for capital projects that require borrowing. With rising interest rates and rising project costs, future capital projects may be in jeopardy if they require borrowing. For more information, please read the Budget Narratives on Debt & Interest from previous fiscal years.

FY23 debt levels are currently at about 2.5% of recurring general fund revenues. These line items support both school and municipal projects.

The town will have some difficult decisions to possibly postpone projects. These projects will undoubtedly become much more complicated, expensive and difficult to fund based on rising interest rates and costs. The following projects will require some borrowing authority, which will increase interest in the operating budget or enterprise funds:
 
Beaver Street Interceptor;
The future of Davis-Thayer;
A future decision on a new or renovated police station;
A future decision on the Remington-Jefferson School renovation; and
A future decision on a new recycling center.

Those are just the large projects that have been in the pipeline for years. This list is obviously not exhaustive and this is even before we tackle the issues of infrastructure, roads, sidewalks, parks, open space plans, staffing investments, among many other things the community has on its wishlist.

The Town recently received a 3.38% interest rate with the AAA bond rating. I suspect those rates will climb closer to five percent (at best) in FY23 and FY24.

In short, FY24 will likely begin a harsh reality in the community. There will likely be choices to postpone capital projects or move forward with those projects and operating services may need to be adjusted to reflect the costs of services. Unless the economy can hit a rhythmic state, some difficult financial decisions will have to be made.

Sunday, August 28, 2022

Town of Franklin (MA): Five Year Fiscal Forecast - FY 2023 (part 2 of 5)

This continues to share the Five Year Fiscal Outlook for the Town of Franklin as published by the Town Administrator, Jamie Hellen:

FY23 Financial Outlook

Revenues

As the Town enters FY23, revenues look to be stable in all areas: local receipts, state aid, and new growth. Up until FY23, state aid has remained at less than a 1% annual increase due to the dynamics of the Chapter 70 formula, town demographics and the Town’s growing affluence. Local receipts have remained on a steady increase due to the incredible work of our municipal staff due to an increased demand in services, such as ambulance, EMS services and permitting. FY22 saw a decrease in New Growth from FY19, FY20 and FY21. I expect a modest, stable year again. It is important to reemphasize that our permitting boards continue to see a lukewarm construction market relative to the pre-pandemic years with a notable leveling off of applications before the permitting boards. With supply chain problems continuing globally, I expect property improvement investments will maintain a plateau until there is greater confidence in those goods being provided and/or cost increases subside.

Property values, which are the foundation of the entire town budget through the property tax levy, remain strong due to supply and demand dynamics in the real estate and housing markets. Property taxes are the baseline, as well as largest source of revenue, for the town's services. As long as property values maintain a high value, the town will see decent stability in the budget.

As usual, once the state legislature is done with the legislative session and the various legislative packages being considered are complete, including the state budget, staff will see where all the numbers fall later this summer and propose any adjustments to the Town budget prior to the tax rate hearing in December. I anticipate an increase in state aid, but as discussed for years, not by enough to make a significant new investment impact in the local budget. Any additional revenues will be used to cover shortfalls in other areas due to rising costs of goods and services and labor/personnel.

Expenditures

As of this publication, the main fiscal concerns and challenges for the Town in FY23 are the issues we are all seeing in the news: rising interest rates; inflation; gas/diesel and electricity/gas costs; rising costs of goods and services; health care costs; labor and personnel costs; and the overall uncertainty of the economy. FY23 appears to be a “settle into a new normal” year of actually feeling the impacts of inflation within the local budget.

There will be stress on the FY23 budget due to inflation and increased costs. For example, the Town is looking at a doubling of the cost of fuel/diesel over FY22. Additionally, we are looking at escalating electricity rates of possibly two-plus cents a KW higher. As basic operating costs, such as utilities rise, this will have an impact on other areas of the budget.

We are also seeing bids for construction projects coming in much higher than anticipated. For example, the recent SNETT trail project we are working on with the state DCR was estimated at $200,000 a year ago when the work was designed and approved by the Conservation Commission. The bids came in between $400,000 to $800,000 - double to four times the estimated cost from one year ago! We are seeing similar issues on smaller projects. The Red Brick Schoolhouse bids came in $50,000 to $250,000 over the estimated cost, which was just designed four months ago! These examples depict an environment everyone will need to get used to: money will not be going “as far” as it did a year ago. The Town is only one month into the fiscal year and inflation is going to settle into the budget.

To weather this storm, the Town must use nimble strategies throughout the fiscal year to make sure there are no significant cost overruns by next spring. The community should be prepared
 
that costs for basic services, such as snow and ice removal, parts, supplies, personnel, goods, services, etc., will all place a strain on the FY23 budget throughout the year and therefore may require services to be reduced in areas of the budget. FY23 has all the markings of an adjustment year in terms of what levels of service the tax levy can support and how consistent the economy can be for revenues.

FY23 should also see all major collective bargaining agreements being resolved, which is good for labor relations and recruitment, staff morale, as well as financial predictability. The downside is that to complete these contracts, the use of one-time revenues for the school and town unions sets up an inflationary situation within the Town’s operating budget come the expiration of those funds in the next couple of years.

FY23 capital projects

To ensure the Town is ready for the altering dynamics in FY23, any new capital improvement projects (facilities, roads, infrastructure, borrowing) that come to our attention after August 1st, 2022 will be postponed and put on hold for discussion to ensure the Town has the accurate resources to fund current projects. All capital projects currently authorized by the Town Council or in the Town Council’s goals for 2022-2023 will continue to move forward. However, as we move through the phases of a project (design, procurement, borrowing, awarding contracts, beginning work), I will not commit to any new projects until the town has greater certainty around the cost effects of that project. In other words, unless there is a significant public emergency, do not expect new projects entering the pipeline. As described above, inflation is caused by the high demand in spending with not enough supply to accommodate the demand. Franklin will need to consider doing our part to decrease the demand in the marketplace.

I will have to evaluate and view the FY22 capital program in a new light when free cash is certified later this fall. I cannot make any commitments for new projects due to rising interest rates and the fact that many of the projects currently in the pipeline are seeing cost increases that may need to be augmented from capital funding later this fall and winter.

The American Rescue Plan Act (ARPA) federal stimulus money is proving to be a bridge for the town on many fiscal obligations that could have had a negative effect on the town’s budget and delivery of services. ARPA money allowed the town to push the implementation date of the new stormwater utility fee out one year to FY24 (July 1, 2023), which has provided financial relief to all citizens for this upcoming FY23. Other financial obligations such as water main infrastructure, sewer infrastructure, personnel and labor costs, and the mental health crisis are all areas that the Town would not have been able to subsidize or invest in without these funds.

Speaking of sewer, an issue to watch in FY23 is the Beaver Street Interceptor project: the 109-year old pipe that hauls ⅔ of all town sewerage to the Charles River Pollution Control District. This will be one of the most expensive and complicated public works projects in town history. Sewer rates are expected to rise in late FY23/FY24 to pay off the borrowing with this project. While some may say to put a project like this on hold, the truth is the cost of inaction will be far more expensive and damaging to the community than the cost of the rate increases. Nonetheless, a project of this size and importance will be taken step by step to ensure the best return on investment for the ratepayers and may require nimble decision making based on market conditions as the project moves forward. These rate increases will only affect sewer system customers, not private septic residents.

In closing, FY23 appears to be a transitional year toward a new, inflated normal with inflation, interest rates and rising costs. I remind all readers, what happens in the news on a daily basis around the economy can take months or years to actually settle in at the local level. That relates to both the good and bad news. Also, reversal of these trends also can take months or years (even decades) to recover from. As everyone knows, every day has both positive and negative signs for future economic fortunes. I have provided a few economy related reference points as the fiscal year starts to offer context as to how international and national affairs have an impact on the state and local budgets:

On July 27, 2022, WBUR provided a great summary on the national economics and the Federal Reserve. Many of the trends in this story ring true in Franklin.
Massbenchmarks’ latest “Current and Leading Index” report shows what we all know: inflation, labor supply, labor and personnel costs, and uncertainty weigh on consumers in Massachusetts.
The message coming from Fortune 500 CEOs shows a recession is inevitable.

One thing is for certain: economic volatility and mixed signals will continue for the foreseeable future, as the country struggles to get into a pre-pandemic economic rhythm. ALL departments need to be cautious about overspending. The effects of inflation could be significant as the fiscal year evolves.


Part 1 (FY 2022 closing) was shared previously


Town of Franklin Earns AAA Bond Rating
Town of Franklin Earns AAA Bond Rating