TOWN OF EASTON MASSACHUSETTS

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DAVID A. COLTON

Town Administrator

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Interoffice Memorandum

Board of SeLectmen Finance Committee

Department Heads MichaeL Green, Superintendent gfSchooLs ...~'

David A. Colton, Town Ad,tn;~tr~:;0'f\ L FiscaL Year 2014 prelimin~,BUdget Memo February 11, 2013

Introduction. The FY 2013 preLiminary budget memo began, "When we Look back at FY 2013 I hope we remember it as the beginning of a sustained economic recovery for the Town of Easton." We are a LittLe more than haLf way through the year and I have to report that the jury is still out. After three years of reorganizing, cutting back, and spending reserves, we were abLe to restore some of the cuts (primarily in pubLic safety and education) and add to our reserves; however indications are that FY 2014 will allow for onLy incrementaL change.

The good news is that the progress we have made is, for the foreseeabLe future, sustainabLe and I foresee no retrenchment in FY 2014. The challenge is in continuing the process of restoring cuts to important services in a way that will aLso be sustainabLe. FiscaL Year 2014 is likeLy to allow a very Limited set of changes aimed at, but failing to achieve, a return to pre-recession service LeveLs.

Revenue Projections. Revenue from aLL sources for FY 2014 is projected to be $70,206,503 which is $1,682,443 or 2.46% more than FY 2013. However, certain expenses, such as State charges and overLay, are not subject to appropriation. These

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136 Elm ~hEEt, Ea1.ton, c:Jltlc4 02356 (508) 230-0510 fax (508) 230-0579 dcolton @ Ea1.ton.ma.u1.

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"unappropriated expenditures" are projected to reach $1,242,446; therefore funds available for appropriation are $68,964,057 or 2.17% more than FY 2013. This amount may change as unappropriated expenses also includes $200,000 for any snow and ice deficit that may result from this winter. A continued mild winter will increase the amount available for appropriation. The various sources of revenue are discussed below:

• Taxation. Taxation accounts for approximately 67% of all revenue. Our property tax levy has three basic components. First is the 2.5% increase allowed by state law. Second is new growth and the third is exempt debt. When all three factors are considered the growth in tax levy is projected to be $1,394,884 or 3.06%.

• Local Receipts. Local receipts contribute approximately 8% to the bottom line. There are over a dozen individual components including motor vehicle excise, licenses, permits, fees, interest income and the local option meals tax to name a few. For purposes of this preliminary budget we are projecting no change in revenue. We do believe that there is some room for growth here, but have held off as a hedge against negative changes in local aid. Now that the Governor's budget has been released we will reexamine these revenues at the next meeting of the budget subcommittee.

• State Revenue. State revenue or local aid makes up 18% of our operating revenue so any change has a significant impact. It is expected to increase state-wide by 3.5% under the Governor's budget. The state budget is based, in part, on the consensus revenue estimate for growth in state tax revenues (not including the new tax proposals offered by the Governor) for FY 2014 is 3.9%. This is used by the Governor and legislative budget committees to create the gross level of revenue available for the fiscal year. The Governor's budget, aka House 1, adds $165,428 in overall local aid to Easton. However, House 1 relies on a number of new revenue proposals that mayor may not be adopted. On the other hand, notwithstanding a failure to approve the new revenue, given the consensus revenue estimate the state would be hard pressed to justify a reduction local aid.

• Reserve Position. The stabilization fund balance peaked in 2009 at $2.9 million, but finished 2012 at $1,471,593. It now stands at $1,426,798. The stabilization fund was increased at the November Special Town Meeting by $250,000, but approximately the same amount was appropriated to fund capital needs. At this rate we won't see the stabilization fund return to pre-recession levels until FY 2018. This budget proposes no use of stabilization.

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On the other hand, our free cash balance of just over $1.5M will be tapped 'in the amount of $1.1M.

Expense Projections. Expenses, not including unappropriated expenditures, are projected to rise to $69,943,343 or 3.62% more than FY 2013. Town departments were asked to submit budgets which restored them to pre-recession service levels. This resulted in departmental requests of $14,171,668. Unfortunately, I cannot recommend a complete return to 2009 levels and have cut this request by $192,375. When this is compared with the FY 2013 funding level we see a proposed increase in general government operating budgets of $465,171 or 3.44%. For purposes of preparing this preliminary budget, I have added a similar percentage increase (3.5%) to the School Department budget understanding that their budget process rests with the School Committee and is not complete.

• Public Safety. Police and Fire have been given priority and I am recommending partial funding of the personnel requests of the Fire and Police Chiefs. Each Chief has requested two additional positions. In the case of the Police Department these positions restore those that were cut at the onset of the recession and would leave the department 1 short of the 2009 level. On the other hand, the Fire Department is currently 1 position shy of the 2009 level. The addition of two firefighters would fully staff the department's three stations in accordance with the Fire House Study Committee's recommendation in 2011.

Additionally, this is the first year the Town will have a fully staffed public safety dispatch center capable of handling police, fire, and emergency medical service calls. The Public Safety Dispatch budget (separated from Police in FY 2013) will increase by $61,762 mostly in overtime and the addition of an additional part time dispatcher.

I am, however, recommending that we fund the new police and fire positions for only Yz the year. In this way we can hire up to two uniformed firefighters and up to two uniformed police officers half way through the year if the outlook for FY 2015 is healthy. The most optimistic outcome would bring the budgeted number of uniformed personnel to 72. However, this approach will give us the flexibility to add fewer positions should economic conditions dictate.

• Public Works. The conversion to town-owned street lights presents an opportunity to improve the technological and engineering capabilities at the DPW. I agree with Director Field that investment in our geographic information systems (GIS) is overdue. We need to expand the number of users of the system to take full advantage of this powerful tool. This operating budget and the upcoming capital budget will address this need. David Field will discuss this in detail with both the Selectmen and Finance Committee over the coming months. In total the DPW budget will increase by only 3.53% while making a technological leap forward.

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• Other departments. The other departments are divided into three categories and all will see minor increases as follows:

o General Government 2.28% o Health and Human Services 2.78% o Culture and Recreation 2.96%

• Employee and Retiree Benefits. We project a 6% increase in employee health insurance costs which is an unofficial estimate. We expect the Southeastern Massachusetts Health Group to set a formal rate in the coming weeks. It is anticipated that the rate of increase will not exceed 6%.

Our contribution to the Bristol County Retirement System will increase by $219,524 or 7.81%. This is before the prepayment discount that is offered each year. Once the County board sets the discount we will revise this accordingly.

• Insurance. Our cost for general liability, property, and workers compensation insurance will increase by $73,000. More than half ($40,000) is in school workers compensation premiums. While some of this is due to increases in payroll costs, we are working with the School Department to reduce accidents and improve our workers compensation claims history. The other large piece of this increase ($25,000) is in the town's general insurance because we recently increased coverage on computers and communication equipment.

• Regional School. We are projecting a 5% increase in the regional school assessment. This is merely a placeholder as the actual amount will be set later this budget season.

Obviously, the budget is not yet balanced having a projected deficit of $979,286; however, I am confident that with continued effort the gap will be bridged successfully.

Next Steps. The most important next step is for the School Committee to complete its budget process, as the expense projection I have made is merely a place holder based on available revenue and parity with town operating departmental increases. It is the responsibility of the School Committee to adopt a budget that meets the various needs of their department. In addition, we must monitor the Massachusetts budget process as it moves from the Governor to the House and Senate. At any point in this process projected local aid could be revised in either direction.

We will continue to monitor expense categories that have not been finalized and our local revenue projections for opportunities to capture more funding.

I look forward to working with you over the next few months to, for the seventh consecutive year, bring a balanced budget to Town Meeting for approval in May.

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FY 2014 FY 2014FY 2013 Preliminary Bud Administrator Adjusted Increase/

Description Budget Projection Adjustments Projection Decrease % ChgRevenue & Available Funds:

General Fund Operating Revenue

Taxation 45,537,416 46,932,300 - 46,932,300 1,394,884 3.06%

State Revenue 12,543,446 12,708,874 - 12,708,874 165,428 1.32%

Local Receipts 5,580,000 5,580,000 - 5,580,000 - 0.00%

Total GF Operating Revenue 63,660,862 65,221,174 - 65,221,174 1,560,312 2.45%Reserves/One-Time Revenues 1,141,543 1,114,449 - 1,114,449 (27,094) -2.37%Total General Fund 64,802,405 66,335,623 - 66,335,623 1,533,218 2.37%Enterprise Funds 3,721,655 3,870,880 - 3,870,880 149,225 4.01%Total Revenue & Available Funds 68,524,060 70,206,503 - 70,206,503 1,682,443 2.46%Unappropriated Expenditures 1,027,095 1,242,446 - 1,242,446 215,351 20.97%Net Funds Available for Appropriation 67,496,965 68,964,057 - 68,964,057 1,467,092 2.17%Appropriations:

General Government Operating Budget

General Government 1,998,275 2,079,158 (35,367) 2,043,791 45,516 2.28%

Public Safety 7,732,113 8,142,343 (115,768) 8,026,575 294,462 3.81%

Public Works 2,549,884 2,639,906 - 2,639,906 90,022 3.53%

Health & Human Services 750,839 783,841 (12,140) 771,701 20,862 2.78%

Culture & Recreation 483,011 526,420 (29,100) 497,320 14,309 2.96%Total Gen Govt Operating Budget 13,514,122 14,171,668 (192,375) 13,979,293 465,171 3.44%School Operating Budget 33,731,471 34,912,072 - 34,912,072 1,180,601 3.50%

Fixed Costs

SE Regional School Assessment 698,795 733,735 - 733,735 34,940 5.00%

Debt & Interest 4,986,199 4,929,063 - 4,929,063 (57,136) -1.15%

Employee Benefits & Insurance 11,392,476 12,066,053 - 12,066,053 673,577 5.91%Total Fixed Costs 17,077,470 17,728,851 - 17,728,851 651,381 3.81%Enterprise 3,173,902 3,323,127 - 3,323,127 149,225 4.70%Total Appropriations 67,496,965 70,135,718 (192,375) 69,943,343 2,446,378 3.62%Net Surplus/(Deficit) - (1,171,661) 192,375 (979,286) (979,286)

TOWN OF EASTONFY 2014 PRELIMINARY BUDGET SUMMARY

FY 2014 FY 2014FY 2013 Preliminary Bud Administrator Adjusted Increase/

Description Budget Projection Adjustments Projection Decrease % ChgGeneral Fund Operating Revenue:TaxationProperty Taxes 41,329,914 42,801,581 42,801,581 1,471,667

2 1/2% Increase (budget/projection only) 1,033,248 1,070,040 1,070,040 36,792

New Growth 413,005 400,000 400,000 (13,005)

Debt Exclusion 2,761,249 2,660,679 2,660,679 (100,570)

Other Taxes - -

Total Taxation 45,537,416 46,932,300 - 46,932,300 1,394,884 3.06%State RevenueState Aid Chapter 70 9,343,416 9,437,566 9,437,566 94,150 1.01%

General Unrestricted Aid/Lottery 1,852,233 1,852,233 1,852,233 - 0.00%

Annual Formula Local Aid 82,880 82,880 82,880

Charter Tuition Reimbursement 7,214 7,346 7,346 132 1.83%

Police Career Incentive - -

Veterans Benefits 197,886 182,145 182,145 (15,741) -7.95%

State Owned Land 66,190 66,238 66,238 48 0.07%

Exemp: Vets, Blind, Surv Sp & Elderly 92,527 96,486 96,486 3,959 4.28%

Supplemental Distribution - -

School Construction 983,980 983,980 983,980 - 0.00%

Total State Revenue 12,543,446 12,708,874 - 12,708,874 165,428 1.32%Local ReceiptsMotor Vehicle Excise 2,750,000 2,750,000 2,750,000 - 0.00%

Licenses & Permits 550,000 550,000 550,000 - 0.00%

Fees - Ambulance 650,000 650,000 650,000 - 0.00%

Fees - Other 275,000 275,000 275,000 - 0.00%

Ames Fund 340,000 340,000 340,000 - 0.00%

Local Option Meals Tax 250,000 250,000 250,000 - 0.00%

Penalties & Interest on Taxes & Excise 255,000 255,000 255,000 - 0.00%

Fines & Forfeitures 30,000 30,000 30,000 - 0.00%

Investment Income 25,000 25,000 25,000 - 0.00%

Medicare Part D Subsidy 130,000 130,000 130,000 - 0.00%

Medicaid Reimbursement 125,000 125,000 125,000 - 0.00%

School Resource Officer Reimb 50,000 50,000 50,000 - 0.00%

Chapter 46, Supplemental Tax 50,000 50,000 50,000 - 0.00%

Other Miscellaneous Income 100,000 100,000 100,000 - 0.00%

Total Local Receipts 5,580,000 5,580,000 - 5,580,000 - 0.00%

Total General Fund Operating Revenue 63,660,862 65,221,174 - 65,221,174 1,560,312 2.45%Reserves/One-Time Revenues:Free Cash 1,100,000 1,100,000 1,100,000 - 0.00%

Stabilization - - - 0.00%

All Other Reserves/One-Time Revenues 41,543 14,449 14,449 (27,094) -65.22%

Total Reserves/One-Time Revenues 1,141,543 1,114,449 - 1,114,449 (27,094) -2.37%Total General Fund Operating Revenue & Available Funds 64,802,405 66,335,623 - 66,335,623 1,533,218 2.37%EnterpriseWater 2,875,155 2,870,880 2,870,880 (4,275) -0.15%

Solid Waste & Recycling 810,500 1,000,000 1,000,000 189,500 23.38%

Surplus Enterprise Revenue 36,000 - (36,000) -100.00%

Total Enterprise 3,721,655 3,870,880 - 3,870,880 149,225 4.01%Total Revenue & Available Funds 68,524,060 70,206,503 - 70,206,503 1,682,443 2.46%

TOWN OF EASTONFY 2014 PRELIMINARY BUDGET: REVENUE & AVAILABLE FUNDS BREAKDOWN

FY 2014 FY 2014FY 2013 Preliminary Bud Administrator Adjusted Increase/

Description Budget Request Adjustments Request Decrease % ChgTotal Revenue & Available Funds 68,524,060 70,206,503 - 70,206,503 1,682,443 2.46%Unappropriated Expenditures:Cherry Sheet Charges/Assessments County Assessment 290,775 312,026 312,026 21,251 7.31%

Mosquito Control 64,813 69,765 69,765 4,952 7.64%

Air Pollution Districts 6,812 7,014 7,014 202 2.97%

Old Colony Planning Council 7,638 7,829 7,829 191 2.50%

RMV Non-Renewal Surcharge 19,800 20,100 20,100 300 1.52%

MBTA 144,390 143,517 143,517 (873) -0.60%

Regional Transit 5,802 7,869 7,869 2,067 35.63% Special Education 11,277 8,890 8,890 (2,387) -21.17%

Charter Schools/School Choice 125,654 115,436 115,436 (10,218) -8.13%

Subtotal Cherry Sheet Charges/Asmts 676,961 692,446 - 692,446 15,485 2.29%

Other Charges to be Raised Overlay 350,134 350,000 350,000 (134) -0.04%

Snow & Ice Overexpended - 200,000 200,000 200,000 0.00%

Subtotal Other Charges to be Raised 350,134 550,000 - 550,000 199,866 57.08%

Total Unappropriated Expenditures 1,027,095 1,242,446 - 1,242,446 215,351 20.97%Net Funds Available for Approp 67,496,965 68,964,057 - 68,964,057 1,467,092 2.17%Appropriations:General Government 120 Selectmen 328,872 337,551 337,551 8,679 2.64%

131 Finance Committee 1,500 1,500 1,500 - 0.00%

132 Reserve Fund 60,000 60,000 60,000 - 0.00%

135 Accountant 192,481 197,906 197,906 5,425 2.82%

140 Assessors 231,700 235,159 (700) 234,459 2,759 1.19%

145 Collector /Treasurer 324,623 332,535 332,535 7,912 2.44%

150 Town Counsel 150,000 150,000 150,000 - 0.00%

155 Information Technology 182,187 193,748 (9,000) 184,748 2,561 1.41%

160 Town Clerk 195,586 216,515 (12,718) 203,797 8,211 4.20%

175 Planning and Community Dev 243,460 266,244 (12,949) 253,295 9,835 4.04%

920 Other General Government 87,866 88,000 88,000 134 0.15%

Subtotal General Government 1,998,275 2,079,158 (35,367) 2,043,791 45,516 2.28%

Public Safety 210 Police 3,616,892 3,781,537 (60,272) 3,721,265 104,373 2.89%

211 Public Safety Dispatch 399,874 466,636 (5,000) 461,636 61,762 15.45%

220 Fire 2,997,147 3,067,998 (50,496) 3,017,502 20,355 0.68%

231 Ambulance 439,051 536,659 536,659 97,608 22.23%

240 Inspectional Services 279,149 289,513 289,513 10,364 3.71%

Subtotal Public Safety 7,732,113 8,142,343 (115,768) 8,026,575 294,462 3.81%

Public Works Administration 562,384 564,509 564,509 2,125 0.38%

Buildings & Grounds 846,863 859,181 859,181 12,318 1.45%

Highway 951,937 1,027,516 1,027,516 75,579 7.94%

Snow & Ice 188,700 188,700 188,700 - 0.00%

Subtotal Public Works 2,549,884 2,639,906 - 2,639,906 90,022 3.53%

Health & Human Services 510 Board of Health 204,691 220,218 (7,090) 213,128 8,437 4.12%

541 Council on Aging 249,405 261,900 (5,050) 256,850 7,445 2.99%

543 Veterans Department 296,743 301,723 301,723 4,980 1.68% Subtotal Health & Human Services 750,839 783,841 (12,140) 771,701 20,862 2.78%

TOWN OF EASTONFY 2014 PRELIMINARY BUDGET: EXPENDITURE BREAKDOWN

FY 2014 FY 2014FY 2013 Preliminary Bud Administrator Adjusted Increase/

Description Budget Request Adjustments Request Decrease % ChgCulture & Recreation 610 Library 457,561 491,370 (26,000) 465,370 7,809 1.71%

630 Recreation Department 25,450 35,050 (3,100) 31,950 6,500 25.54%

Subtotal Culture & Recreation 483,011 526,420 (29,100) 497,320 14,309 2.96%

Total Gen Govt Operating Budget 13,514,122 14,171,668 (192,375) 13,979,293 465,171 3.44%School Operating Budget 33,731,471 34,912,072 34,912,072 1,180,601 3.50%Fixed Costs: SE Regional School Assessment 698,795 733,735 733,735 34,940 5.00% Debt & Interest - Nonexempt Town 900,521 965,819 965,819 65,298 7.25%

Nonexempt School 169,600 182,358 182,358 12,758 7.52%

Capital Budget Reserve 170,849 136,227 136,227 (34,622) -20.26%

Exempt School Debt 3,745,229 3,644,659 3,644,659 (100,570) -2.69%

Subtotal Debt & Interest 4,986,199 4,929,063 - 4,929,063 (57,136) -1.15%

Employee Benefits & Insurance EE Health Ins - Town (Retirees) - 668,641 668,641 668,641 0.00%

EE Health Ins - School (Retirees) - 1,325,920 1,325,920 1,325,920 0.00%

EE Health Insurance - Town (Active) 2,193,973 1,713,186 1,713,186 (480,787) -21.91%

EE Health Insurance - School (Active) 5,126,800 3,916,724 3,916,724 (1,210,076) -23.60%

Executive Loss Control Committee 2,500 2,500 2,500 - 0.00%

Retirement Assessment - County 2,811,558 3,031,082 3,031,082 219,524 7.81%

Reserve for Salary Increase 35,645 100,000 100,000 64,355 180.54%

General Insurance - Town 200,000 225,000 225,000 25,000 12.50%

General Insurance - School 192,000 190,000 190,000 (2,000) -1.04%

Worker's Comp - Town 70,000 80,000 80,000 10,000 14.29%

Worker's Comp - School 150,000 190,000 190,000 40,000 26.67%

Police IOD Medical Pmts 8,000 8,000 8,000 #DIV/0!

Fire IOD Medical Pmts 5,000 5,000 5,000 #DIV/0!

Tuition - - #DIV/0!

Medicare - Town Share 180,000 180,000 180,000 - 0.00%

Medicare - School Share 430,000 430,000 430,000 - 0.00%

Subtotal Employee Benefits & Ins 11,392,476 12,066,053 - 12,066,053 673,577 5.91%

Total Fixed Costs 17,077,470 17,728,851 - 17,728,851 651,381 3.81%Enterprise Water 2,327,402 2,323,127 2,323,127 (4,275) -0.18%

Solid Waste & Recycling 846,500 1,000,000 1,000,000 153,500 18.13%

Subtotal Enterprise 3,173,902 3,323,127 - 3,323,127 149,225 4.70%Total Appropriations 67,496,965 70,135,718 (192,375) 69,943,343 2,446,378 3.62%Net Surplus/(Deficit) - (1,171,661) 192,375 (979,286) (979,286)

TOWN OF EASTONFY 2014 PRELIMINARY BUDGET: EXPENDITURE BREAKDOWN

Detail.pdfFY14 Preliminary Budget Attachment Page 1 2-5-13.pdfFY14 Preliminary Budget Attachment Page 2 2-5-13.pdf