In compliance with Article Six, Sections 6-3-1
through 6-5-2 of the Franklin
Town Charter, we are submitting the proposed FY23 Budget Message & Budget to the Town
Council and Finance Committee.
We are presenting a balanced budget proposal for Fiscal Year 2023 (FY23).
The Executive Summary
explains the budget process, highlights, assumptions, and some general
statistics about the budget. Further below are detailed department budget
narratives that speak about the mission and strategic initiatives within each
department. Detailed budget
line item numbers
are in Appendix A. The staff will continue
to update the budget
model as new information becomes available. We
have a Town Budget page and
people should consult the website for the latest information.
As the Town, state and country exit the two year
pandemic and enter FY23 on July 1, 2022, the
Town of Franklin is more prepared and better than ever before.
Town department operations have excelled throughout these past two years adapting
to the pandemic, but continued to accomplish all of their goals and have
positioned the town for continued excellence in 2022-2023 and beyond. The facts
present an organization performing at a very high level with tremendous
accomplishments for the constituents we serve.
Enough cannot be said for the dedication, commitment, passion, innovation, humility
and teamwork the staff of this organization showcase on a daily
basis. The overall achievements in
this organization have been tremendous. We should
all be thankful and appreciate what this team has achieved
and the role the municipal and school staff play in the
community. The future for the
organization remains as bright as ever and the quality of life in Franklin is
as exceptional as it has ever been.
The organization is poised to support the budget requests
from all departments in FY23, including the Franklin Public Schools.
While the DPW financial request
was the only one not met, the organization was able to begin
to implement a financial remedy for this when the stormwater utility set to
take effect on July 1, 2023.
Here are the assumptions being incorporated into the FY23 budget:
Revenues Highlights
●
The proposed FY23 budget does not include any revenues from the Budget Stabilization “Rainy Day'' Fund. The fund currently has a balance of $2,038,652. These reserves
set the town up to be prepared in the event of an emergency, but equally as
important, these reserves show bond rating agencies and financial institutions
good financial policy and execution. Strong
financial annual audits, an effective OPEB policy, voter approved Community
Preservation Act, a stormwater
utility and increasing emergency reserves
puts the town in a greater position
to be competitive with interest
rates and maintain a stable bond rating.
●
The Property
Tax Levy and
“New Growth” revenue forecast
will increase a cumulative $3,202,527 in new property tax revenue from FY22. Traditionally, the Town
has used a ten-year average model for the new growth figure. For FY23 this would be $1,224,716. However,
the town did not meet its revenue projections in new growth in FY22
and remain conservative and cautious of this dynamic in FY23. Thus, staff have
adjusted the revenue figure lower than the ten year average and assume
$1,000,000 in new growth revenue by the time the town sets the tax rate in
December. This is largely due to uncertain economic
factors in the commercial development, housing construction and residential home improvements. Over the past year, the staff have seen a small downturn in
planning board and conservation commission applications for larger
developments. Also, many new state
regulations are set to take effect on housing in the next year. New Growth assumptions will be revisited
in November prior to the tax rate hearing as we have done in previous years.
●
State Aid is assumed at the Governor’s FY23 budget levels.
As it currently stands, a $91,255 increase in local aid from FY22 is the
net result. The House of
Representatives and the State Senate have historically increased local aid and ended
up with a higher figure
than the Governor. That said, as staff,
stakeholders, and elected officials have discussed for many years, state aid is
highly unlikely to be a financial savior this coming fiscal year or in the near
future.
●
The Town’s Local Receipts look to rebound closer
to pre-pandemic numbers. Staff assume an additional $930,000 in local receipts. The Town
is still predicting we’ll be shy of the FY21 record breaking year. However, the Recreation Department, Building Department, Board of Health and other permitting departments should see an
enthusiastic public, ready to be active again with COVID restrictions removed. The Town
should see a steady stream of revenues for town service permits, hotel, meals
and motor vehicle excise taxes. To see FY 2023
assumptions, see below.
Finally, per a new town policy,
the cannabis excise tax (or “local option sales tax” of 3% of all sales) will be included in this figure. Two retail medical and non-medical stores
have opened in Franklin over the course of the past year. The Town
has limited data on sales at this point. FY23 should show the community a good
baseline year for revenue anticipated through this source. This local option
tax diversifies the towns local receipts
profile and we anticipate approximately $250,000 a year in revenues to add to the operating budget.
●
The recommendation for the two active Host Community
Agreements (HCA’s) will be:
○ $300,000
will go to the Department of Public Works to provide revenue for the Grove
Street/Washington Street traffic flight and intersection redesign. Combined with last year’s appropriations and a $2.2 million MassWorks
grant, this project
will now have almost $3 million
to rebuild the road with traffic lights, pedestrian friendly crossings, a bike
lane and a rebuilt roadway; and
○ $125,000 to the Franklin
Police Department for an officer
(and benefits, gear,
uniform, salary, etc.) who will focus
on management of the new dynamics of legal cannabis
in town and serve
many roles toward ensuring there is proper public service dedicated to
substance abuse in town.
HCA Note:
A revenue line item has now been created to budget for these agreements. Staff fully expect continued changes to this line
item in assumptions, revenues streams and impacts. It will remain fluid due to
state regulatory changes. Funds are
earmarked in state law for impacts of a marijuana facility and are not general fund revenues to be used
anywhere in the town budget.
One major
factor in FY23 is the rollout of a new state law relative to Host Community Agreements and, in
general, the cannabis industry. Corrective
legislation on a myriad of issues with the industry are poised to in effect
within the next 1-2 years, including a requirement that cities and towns
re-negotiate all agreements with their licensed
businesses in their communities. FY23 and FY24 will see substantial changes in this
revenue source. Regardless, the mitigation projects from the impacts are good
community investments to help solve
issues that have arisen from the presence
of the industry in Franklin.
Expenditures Highlights
●
The Franklin Public
School District will see an increase of $2,400,000 over FY22. This represents 100% of the request from the School
Committee and Superintendent’s Recommended Budget.
●
Municipal employee pension costs will absorb almost
$500,000 in new revenue for the municipal departments (and some non-teacher employees). These numbers
do not include the school department
portion of health insurance, which is included in the Superintendent’s budget.
●
Overall, debt is still low relative to past years
as a percentage of the overall town budget. The proposed
budget decreases $296,405 in
non-excluded debt and interest as two significant projects, a $2 million School
Repairs Bond and a $824,000 Public Buildings Remodeling Bond come off the
books. This offsets the debt service increases from Town borrowing $1.55 million for technology infrastructure and $808,000 for two fire trucks
in FY22.
●
The Department of Public Works will see an overall
increase of $350,842. The increase is for restoration of smaller services
that have been reduced over the past two years
at the DPW due to the
impending requirements for stormwater. The FY23
budget restores the two ground and highway positions that were eliminated from
the FY22 budget.
In addition,
the community has established a stormwater utility
and fee, which should significantly help the funding challenges the DPW has been experiencing in
recent years.
See the narrative on the proposed
changes in the DPW narrative below.
●
On January 1, 2021, the Mendon-Millville regional
dispatch center merged into the Metacomet Emergency Communications Center
(MECC), which gives the special district access to state development grants. This move will save the Town approximately half of its annual
assessment in operating budget capacity
in FY23. We have budgeted
a half year assessment at $610,664, which is
anticipated to be ½ of the actual assessment.
The state 911 Department is paying for the other half.
In FY24, the District
will be eligible for the final grant award as part of this merger.
The Town will be
obligated to pay 25% of the FY24 assessment.
The Town has established a MECC Stabilization account, which has deposited savings
from the MECC into this account to ensure that the Town has the resources when the full MECC
assessment comes back on the Town’s books
in FY25. Staff anticipate a large increase
in one year and will need to phase
that share of the budget back in with one-time revenues from the Stabilization
account.
Additionally, as part of the merger agreement with Mendon and Millville, excess
and deficiency (unspent savings, similar to free cash) funds from the four original
communities will be seeing a savings rebate of
the first two years of the MECC that will come back to the Town. This rebate is $230,857. Those
monies will also be deposited into the Stabilization account, which will
then have a balance of approximately $1.134 million.
● New municipal positions in operating
budget:
○ Two additional staff for the DPW, which were eliminated from the FY22 budget;
○ Two additional part-time kitchen staff for the Senior Center
cafe;
○
Full-time Benefits Coordinator under the supervision of
the Town Human Resources Department, but will service all Municipal and School benefits
programs and employees; and
○
Full-time Conservation
Agent/Natural Resource Protection Manager (formerly part-time at 19
hours) will now be full-time given the volume of community planning work being
asked of the town on its parks, open space planning,
Franklin Greenway, Delcarte
management, Earth Day coordination and many more projects.
The former part-time position barely met the Town’s needs. Additionally, part-time professional work
is a difficult recruitment task these days.
●
Community Preservation Act (CPA). In FY23, the Town will see its first state match for CPA and the first slate of projects. The CPA
is completely outside of the general budget of the Town (like water, sewer, trash and
stormwater utilities). For those interested, please see the CPA Plan HERE.
●
The FY23 budget proposal does not include dollars from
various federal stimulus allocations (such as CARES Act, American Rescue
Plan Act) or federal stimulus grants. All of those revenues are in “special revenue
accounts” by state statute. For a complete
update on federal
stimulus, please visit the
Town website here.
Future Trends
Municipal and School
departments have been doing a great job managing their
budgets, investing in value
added services and adapting to citizen feedback
and a changing world. Moving
forward in to FY23 and the
following two fiscal years, we see a handful of issues to monitor:
●
Net School Spending. The Superintendent of Schools and
School Business Administrator
foresee a likely “fiscal challenge” coming in FY25 relative to net school spending requirements in state law. See
the recent School
Department Budget flier as an issue of significant takeaways.
●
MECC. The full assessment for the MECC Regional Dispatch
Center comes back on in FY25. While there are reserves
set aside for the transition back to a full assessment, this is expected
to last only 1-2
fiscal years depending on cost drivers to the regional district. By the time
FY25 arrives, the Town assessment
will be anticipated at approximately $1.5 million.
●
Stormwater Utility. July 1, 2023, or FY24, the
stormwater utility implementation will be a tremendous amount of work and will require
a 1-3 year transition out of the operating budget and into the utility.
The start of this process in FY24 will be exhausting and time consuming for Finance, HR and DPW.
●
Inflation will be a factor as wages, petroleum and
costs are increasing across the board for materials, goods and services, which will increase
town budgets especially for departments such as Facilities and Public Works.
●
Debt & Interest.
The next three fiscal years will see a demand for increased share of
debt and interest with projects that are in the pipeline or are anticipated to
start within the next year. Projects
that will require borrowing, debt and interest
are Police Station,
Remington-Jefferson Rehabilitation, the Beaver
Street Interceptor, Davis-Thayer School and potential open space investments. While some outside
the operating budget sources will pay for these projects, it is a
reminder costs will continue to rise due to projects that are badly needed or
will have significant community interest.
●
Recruitment and Retention. Maintaining Franklin as an attractive place to work as employment markets shift as we adapt to the pandemic. A Compensation
and Classification Study to analyze market competitiveness in the current
environment for nonunion Municipal Departments and the Technology Department. The Town
has an exceptional work culture. The Town has invested heavily in facilities,
gear, apparatus and equipment that make Franklin an attractive place to work by
getting our staff the gear they need to do their jobs.
Revenue trends. As in any
year, monitoring revenue trends is important. However, FY23 will give the Town
a greater sense of where the economy is post-COVID-19 pandemic, with rising
inflation, petroleum costs, interest
rates, consumer shopping
trends and global finance markets.
These dynamics are critical to the Town’s new growth and local
receipts revenue sources.
Find the full set of docs for the FY 2023 budget online
