WVN #447: FinCom cuts budget as TM approaches
- Dear Wayland Voter,
Usually the Wayland printed warrant booklet provides the budget total that voters discuss and then vote on, give or take a few typographical errors and minor changes. Not this year.
In two steps the Finance Committee has sliced millions from the Fiscal 2013 budget it planned to recommend at the Annual Town Meeting beginning on Monday April 9. As a result of the changes, the FinCom website estimates the resulting tax rate for FY 13 will be $18.15. The current rate is $19.01.
The first step came at a meeting on March 28, hours after the FinCom received an email from some of the petitioners who had led a successful effort for a special Town Meeting in November that resulted in $4 million in property tax relief. The FinCom made some of the cuts recommended in the email.
Then, two days after the April 3 town election that showed voters favoring change, cooperation and transparency over defenders of the status quo, the FinCom met again. Some of those petitioners were on hand. The audience outnumbered the committee. By the end of the meeting, the budget recommendation was even smaller.
"Wayland has once again generated an inordinate amount of free cash through overtaxation," the lead petitioners of the November Special Town Meeting asserted in a letter in the April 5 Town Crier. Donna Bouchard, Tony Boschetto and Kent George were joined in the letter by Shawn Kinney, a member of the School Committee, speaking only for himself. The letter, like their earlier email, outlines how the town could save taxpayers approximately $5 million without cutting services.
Cuts suggested by citizens include $700,000 for a wireless water meter reading system and some of the $825,000 in Public Works equipment. Some of the DPW-requested items were never on its five-year capital plan and are proposed to be funded by surplus water reserves (cash). The writers also proposed borrowing $1.5 million to repair the Middle School roof instead of using free cash. The largest item is deleting $2.2 million from an obscure category called Unclassified Insurance 32B, about which citizens had serious accounting questions.
A widely distributed green flyer containing some of that information encouraged residents to attend Town Meeting and vote to "save over $1,000 on F13 property tax (based on $600,000 house value) without cutting services."
After the Thursday night cuts the Fiscal 2013 budget request is now $59.95 million to be raised by taxation instead of the $65.5 million in the warrant. The total budget request will be $71.12 million rather than $73.45 million. The FinCom warned that this could mean tax increases in the future.
The FinCom's action can be viewed as collaborating with citizens who present persuasive information. It can also be viewed as reading the handwriting on the wall and trying to avoid a stormy debate at Town Meeting, where voters make the final decision.
The last-minute cuts don't necessarily mean that citizens won't ask for more when the budget article, No. 8, is introduced.
Reserve Cash Would Lower FY 2013 Taxes
The new budget relies on $4.8 million from unreserved fund balance (free cash) and $1.72 million transfer from overlay surplus to balance the budget. The assessors voted on April 2 to declare $1.348 million as overlay surplus (money set aside for such things as tax abatements).
The use of free cash highlights the reality that expenses are larger than revenues. That such large amounts of reserve cash keep accumulating reflects the petitioners' accusation of a "free cash generating machine."
In the past, the town has used free cash to balance budgets. The largest past amounts were $4.5 million in Fiscal 2012, $1.1 million in FY 10, $1.87 million in FY 05 and $2.4 million in FY 04 (see Table 5 in warrant).
The FinCom states in the warrant that it supports "using judicious amounts of free cash to balance the operating budget with the understanding that as we tighten revenue and expense estimates, additions to free cash will decrease leaving future budgets without the same source of free cash."
FinCom members agreed on a target for free cash of about 7.5% of the budget. However, they remarked several times that agreeing to citizen demands for use of free cash this year would lead to larger increases in tax rates in coming years, with the rate going over $20 per $1,000 of assessed valuation for FY14 and FY15. They estimated a ten percent increase in taxes for FY14 over FY13.
The FinCom and selectmen have boasted that since 2008 they have managed to avoid seeking operational overrides. However, in each of the prior five years voters were asked to approve new debt beyond statutory limits.
The FinCom defends holding more free cash than in many towns, and making larger or earlier payments for future retirement benefits, as conservative and prudent. On the other side are those who call the result "overtaxation."
That Mysterious "Unclassified" Category
Donna Bouchard questioned the FinCom about apparent discrepancies in the line item on page 53 of the warrant, Insurance 32B. This is the bulk of the "unclassified" category. One concern is the cost to fund OPEB, Other Post-Employment Benefits (not pensions) for town employees. Bouchard said it was unclear how the fund grew so quickly. The FinCom agreed to provide more information.
Under Article 10 at the November 2008 Special Town Meeting, voters approved contributing to OPEB under the supervision and management of the town administrator and finance director. The town treasurer is custodian of the OPEB Trust Fund.
Wayland is among the minority of Massachusetts towns that make such contributions. Weston votes its OPEB funding in a town meeting warrant article. Wellesley presents the information to voters as a debt exclusion. In Wayland, it's embedded in Unclassified, in the health insurance for current employees line item.
The FinCom told the town in FY09 that it planned to make $1 million annual contributions, but somehow the balance is now nearly $10 million.
The Unclassified section represents more than 10% of the total proposed budget, yet it is not well understood by voters. Requests by the public in recent years for the warrant to show greater specificity for Unclassified have gone unanswered. Until the FY2007 budget, there were more published line items.
Meanwhile, the Roof Leaks
After public comment at the Thursday FinCom meeting, most of the discussion concerned how to pay for repairing the roof at the Middle School, which was renovated and expanded a decade ago. The FinCom voted 3-2 to borrow rather than use free cash. The $1.5 million in free cash could then be used to further reduce FY13 residential taxes. All five FinCom members present agreed that the leaking roof should be repaired as soon as possible. FinCom Chair Cherry Karlson said this would have consequences later, as debt service would be added to the budget for several more years.
Proponents of borrowing argue that the cost of something with a life of many years should be spread over a long period rather than burdening taxpayers in one year. Furthermore, they say, it isn't known yet whether the state will contribute to the cost.
If voters eventually approve a new Public Works building, that debt will contribute to tax increases. (Article 12 asks voters to approve money to begin designing the project.) If there is little free cash, residential taxes will have to pay for a greater part of the debt service for a project estimated to cost $13 million, the FinCom said.The tentative plan is to ask voters in FY 14 or FY 15 to approve new debt.
-- WVN Staff
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Wayland Voters Network
Michael Short, Editor