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HomeMy WebLinkAbout2014-10-29 Finance Committee Minutesr � S �'j�MCOa*d°S Town of Reading Meeting Minutes Board - Committee - Commission - Council: Finance Committee Date: 2014 -10 -29 Building: Pleasant Street Senior Center Address: 49 Pleasant Street Purpose: General Business Attendees: Members - Present: Time: 7:30 PM Location: Great Room ACEIVED i OWN CLERK ",DING. MASS. 3i5 MAR Il Ac�II Chairman Mark Dockser, Vice Chairman Paula Perry, Craig Merry, Peter Lydecker, Paul McNeice, Anne Landry, Marc Moll, Karen Herrick Members - Not Present: Others Present: Town Manager Bob LeLacheur, Selectmen John Halsey, Daniel Ensminger and Kevin Sexton; School Committee members Jean Borawski, Chuck Robinson, Chris Caruso, Linda Snow Dockser, Gary Nihan and Elaine Webb; Library Trustees Cherrie Dubois, Vicki Yablonsky, Alice Collins and Andrew Grimes; Library Director Ruth Urell, Assistant Town Manager Ruth Urell, Assistant Public Works Director Joe Huggins, Community Services Administrator Jessie Wilson, Martha Moore, Martha Sybert, Public Works Director Jeff Zager, Craig Martin, Jessica Kaufman, Nancy Dorr, Christine Lusk, Town Accountant Sharon Angstrom, David Zeek, Jane Kinsella and Office Manager Paula Schena Minutes Respectfully Submitted By: Secretary Topics of Discussion: Discussion /Action Items Chris Caruso called the School Committee to order and Daniel Ensminger called the Board of Selectmen to order. Mr. Dockser reviewed the meeting schedule. He noted that the general economy is doing pretty well; the State is okay with revenues; and the Town budgets are more favorable. He feels we need to highlight what is not being done. Unmet needs include 2020, funding full day kindergarten, etc. Revenue enhancements include a proposition 2 1/2 and economic new growth. Mr. Dockser noted that the goal is to look out two years in advance; set rates for healthcare and state aid and decrease capital slightly. Ms. Angstrom noted that revenues are $1.8 million over budget including excise taxes, property taxes and delinquent taxes. She noted that $1.3 of that was one time payments. Motor vehicle excise increased 11% which is up to $3.15 for FY15. New growth has increased $343,905. The expenses were $1.8 million under budget and cash reserves are $8.5 million for a total cash reserve of $9.95 million. She noted that from FY10 to FY14 we were generating $1 million in reserves each year. The general stabilization fund is $1,552,950. Page 1 1 Finance Committee Minutes - October 29, 2014 - Daae 2 The Town Manager noted that new growth is hard to predict. The Library debt exclusion will increase taxes 3 %. The Finance Committee agreed to use 2.50% for state aid and if we don't get that from the state we will use reserves. We will also use $1.70M in free cash to balance the FY15 budget. Surprises would include an increase in state aid, new growth as a result in good planning and development efforts; and there is a rumor the RMLD is threatening to eliminate our yearly payment. Health insurance is increasing nationally from 8% - 14 %. The Town is in health insurance negotiations right now and we will know mid - December what the rates will be. The Finance Committee has agreed to an 8% increase and use free cash if it is more than that. Energy costs are increasing 5% and out of district special ed will increase 4% - 5 %. The Town Manager noted that if no free cash is used in FY16 then there will be cuts. If we use free cash then the operating budget will be hostage to accommodated costs. Revenues will increase 3% and accommodated costs will be 5% increase. We are not providing the services that the community wants. The state is doing well but they are not interested in increasing state aid because they have other things to do. The Town Manager noted that it takes $70 million of new development to yield $1 million in property tax revenues. He noted that the Finance Committee started talking override last year. It is not easy to get an override and he suggests if we go for an override to go for the large amount. He also noted that we won't get an override with $8 - $10 million in the bank. The Finance Committee has agreed to cut $200,000 out of capital for FY16 based on the number of projects that will be taking place in FY16 already. Mr. Dockser asked for questions or comments. Ms. Webb asked how we can communicate this. We need to figure out an approach. Mr. Dockser indicated we need to get the word out to the residents and Town Meeting. He noted that we've been using $1.7 and $1.9 million in free cash and we are still generating $1 million in free cash each year. He suggests using budget increases of 2.50% as a guideline by using $1.7 million per year for FY16 and FY17. Ms. Landry noted that state aid is unknown so we should be conservative in our state aid projections based on what happened last year. The Governor's budget will come out in March due to a new Governor. Ms. Perry noted that she likes the approach we are taking in using free cash as a buffer for health and state aid. If we see a double digit increase in health premiums we should be outraged. The Town Manager noted that the Town's consultant said to budget 14 %. One carrier will give us a two year rate. We have an older demographic pool. Ms. Webb asked if the 8% is built into the $1.7 million in free cash and it was noted that is additional. Ms. Landry asked if we can raise the numbers after the health insurance number comes in and Mr. Dockser indicated no, that we are trying to help the departments build their balanced budgets now. Mr. Robinson asked if the consultant use our loss experience or MIIA's experience in getting the 14% but that is not consistent with what is out there. The Town Manager noted that where we are today is very low and in fact we should be 10% higher. We are in negotiations and he can't say much more on the issue. Mr. McNeice noted that $1.7 million is a realistic number because each year we regenerate. We are leaving ourselves enough runway to react. The Town Manager noted that the operating budget over the past three years has increased 3%-3.50%. Page 1 2 Finance Committee Minutes - October 29, 2014 -gage 3 Ms. Webb noted that there will be cuts and people will not be happy. She doesn't want to start something we can't finish. Some programs are three years. The Governor's late budget won't help. She feels this is the beginning of a much faster course of destruction. Bill Brown noted that in 1915 there was the same problem with the schools. They weren't spending enough on education. There are lots of things he needs and can't afford because he has to pay his tax bill. When will it ever end? Mr. Dockser noted that the Town needs to speak about what we need. The Town Manager noted that last year we discussed adding two Dispatchers at $80,000. We decided to wait to see if it was sustainable so the money was taken away. The Finance Committee needs to be careful of the message they are sending. Recklessness is not what we want. Mr. Dockser noted that if the Dispatchers were not hired then they were not as high a priority as indicated. Ms. Webb noted that there is even less money to work with in year two and that effects this year's decisions. This is even more difficult because it won't be sufficient. She won't make cuts to get attention. Mr. Dockser noted that unmet needs need to be communicated. Linda Snow Dockser asked how we proceed to find revenue raisers. She noted that an override won't go if we have money in the bank. The Town Manager noted that many elderly residents have stronger feelings than Bill Brown. The Library project - absent free cash scenario is not good. The outlook looks poor. Mr. Dockser suggested looking at the Community Preservation Act and Mr. Ensminger noted that the Community Preservation Act will not do what we need. Mr. Lydecker agreed that if you add it all up it's not a lot of money - maybe $1 million. Bill Brown noted that consolidation doesn't always save money. Consolidating the cemetery department with DPW will cost us money. Many towns have separate cemetery departments. Mr. Halsey noted that a resident read in the Chronicle that his taxes were going to increase 3.50% so he came to the tax classification hearing and found out that the tax rate actually went down, but his house value increased. Mr. Halsey responded to Bill Brown's remark that if we want what Lexington has then we have to pay the higher taxes. Mr. Grimes noted that he was on the Finance Committee during the last override. The Town had spent all of its free case and didn't do capital. The Finance Committee's policy is to have 5% free cash and to fund capital. He strongly suggested that the Town not wait until we are at zero. We have lived 10 years within the proposition 2 1/2 and there are a couple of things driving the budget that are out of our control. He suggested looking at databases and see what other towns are doing. A resident noted that if we talk override then we do need to talk cuts. She suggested having a trash fee or cutting back to trash pick -up two times a month. The Town Manager noted that will never work. We squeezed that issue already. A trash fee is a different story though. Ms. Webb noted that "free cash" is a bad name and we should re -label it. The Town Manager noted that other communities have less free cash but have a lot of separate funds Page 1 3 to disguise the free cash. Ms. Herrick noted that we have an AAA bond rating due to the amount of free cash we have. Finance Committee Minutes - October 29 2014 - page 4 A motion by Perry seconded by Herrick to use $1.7 million in free cash to balance the FY16 budget was approved by a vote of 8 -0 -0 Linda Snow Dockser suggested that the leadership send messages to the press to have more control over what is being printed. The Board of Selectmen, School Committee and Library Board of Trustees adjourned at 9:17 p.m. The Town Manager excused himself from the meeting as the Finance Committee had a brief discussion about the subcommittee investigating procurement activities. Approval of Minutes A motion by Perry seconded by Merry to approve the minutes of October 9 2014 was approved by a vote of 8 -0 -0. There was a discussion about the subcommittee minutes and the Town Manager said he would inquire with Town Counsel if only the four members involved were eligible to vote or if a vote of five members total were required to approve any minutes. A motion by Perry seconded by Landry to adjourn the meeting at 10.15 p.m. was approved by a vote of 8 -0 -0. Respectfully submitted, Secretary Page 1 4