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HomeMy WebLinkAbout2003-02-12 Finance Committee MinutesE CEIV EQ Wednesday, February 12, 2003 i J '0' NG, IN CLERK MASS. FINCOM meeting - Arnold Berger Room/Reading Town Mail 11 1) 0 4: 7:35pm call to order. Those present include Town Manager PeterZW1J ribhe ,kAer; 5 0 FINCOM members Cathy Martin(chair); Dick McDonald; Jim Francis; Randy Mason; Hal Torman; Karen Epstein; Chuck Robinson; Bob LeLacheur Review upcoming meetings scheduled for February & March. Assign FINCOM members to rotate taking minutes of each meeting 7:40pm FINCOM member Andrew Grimes joins the meeting Liaison Reports: Chuck (Police & Fire) Saturday 4.5-hour meeting - reviewed 2004 budget reductions. Jim (RMLD) Vince Cameron hired as permanent GM. Special Town Meeting (March 3) will consider changes to the audit committee, and to the Reading Home Rule Charter, both as recommended by the ad hoc Governance Advisory Committee. . RMLD must change to a fiscal year identical to the town (begins July l'). RMLD Board has approved this, but GM is hesitant. Peter H. expects change to be not later than 7/1/04. Randy (Water) The water treatment plant will need some upgrades & renovations. FINCOM will try to schedule a visit on Saturday March 22 to see some of the new pilot programs that are being run. Bob (SWAG) Storm Water group has not met since last FINCOM update. Andrew (School Bldg) State SBA announces moratorium today - details to follow tonight when School folks arrive. Karen - Your Community Connection is scheduled for publication in June. FY 2003 Budget: FINCOM will track budget versus actuals on a monthly basis - consolidated from weekly data that both the school and town gather. Cathy agrees that it is sensible to wait until April Town Meeting to amend the 2003 budget - the quality of the financial information at that point will be quite high (e.g. Snow & Ice hopefully will be known by this time. Repeat, hopefully). Article 5 of Special Town Meeting on March 3, 2003: The Audit Committee (AC) is proposed to be enlarged from. five members currently to seven members. The text in the motion will entirely replace old text, rather than do several modifications. Spm School Committee members Tim Twomey and Pete Dahl join the meeting Wednesday, February 12, 2003 FINCOM meeting - Arnold Berger Room/Reading Town Hall - page 2 In addition to two extra members, there are some proposed changes to how the AC is built. The BOS will appoint two members, up from one at present. The School Committee and Board of Selectmen will each also appoint two members, up from one at present. RMLD will appoint one member. The Town Moderator will no longer make an appointment to the AC. MOTION by Jim Francis to recommend the subject matter of this Article, seconded by Chuck Robinson. Discussion: Pete Dahl (current member of the AC) points out that the FINCOM retains the ability to make two appointments to the AC. Thus Town Meeting, through the FINCOM, still has a strong say, despite losing the Town Moderator selection. The aforementioned bodies that make the appointments to the AC typically select from their own ranks. This is not required, however - anyone may be selected. The AC will select the auditor(s) for both the Town and RMLD. It might be economic to use one auditor for both purposes, but it is not required. What is required is that the AC retains full independence from both RML,D and the Town. Future AC meetings will likely include employees from either RMLD or the Town only on an exception basis. FINCOM votes 9-0-0 to support this motion. Additional Funding Options for FY 2004: Four methods of raising (and lowering) property-tax revenues are discussed, led by Peter H. These include (a) over-rides; (b) under-rides; (c) capital exclusions and (d) debt exclusions. Salient points include that only a majority vote (3 of 5) of the Board of Selectmen is required in order to place (a) or (b) on a ballot. A two-thirds vote (4 of 5) is required to place (c) or (d) on the ballot. A specific dollar amount is mentioned for (a), (b), and (c), as well as plenty of descriptive text for the voter to read. For (d), no dollar figure is used, and by law the text has little description for the voter to read. 8:1Opm School Supt. Harry Harutunian joins the meeting Choices (a) and (b) technically only bind the Town as to the use of the funds for one year from a legal standpoint. Thereafter, the funds may be placed into the general fund. The Board of Selectmen and School Committee have historically agreed, however, that the wishes of the voter are to be honored and the funds spent as designated in perpetuity. Karen expresses concern that this policy will tie the hands of future Town governance. It is easy to imagine these wishes on a relatively minor item being honored, at a time when significant services such as public safety might be in financial jeopardy. Bob mentions that this honorable intent is not legally binding in such circumstances. Wednesday, February 12, 2003 FINCOM meeting - Arnold Berger Room/Reading Town Hall - page 3 Peter H. indicates the best prospects for voter approval seem to be this order: (c), (d), and then a menu approach to (a). A lengthy discussion of the options for Reading is discussed by the entire group. Focus is on two methods - (1) a "past-debt issued" exclusion is discussed, and (2) a trash fee is discussed (a residential-only disposal fee of $470k - the total cost trash cost to the Town is just over $1 million annually). If this trash fee concept is pursued, it is likely that an enterprise fund is the best vehicle to establish. The group compares calendars to set up a Financial Forum. It is decided that a smaller meeting this Friday will set that date. Emphasis is on the brief time that is available before a March 4 deadline. FINCOM urges the Board of Selectmen Board of Selectmen to snake haste 8:55pm Harry Harutunian - school updates Harry presents and rebuts a letter (dated 2/7/03) from citizen Linda Phillips, concerning the 50150, Metco, and SPED areas of the budget. Harry updates the FINCOM on the decision by the state SBA to place a moratorium on school building projects. While guessing what the state might do is an inexact science, this may have no financial impact at all on the proposed RMHS project. There are two keys: (1) the moratorium is lifted before Reading is close to breaking ground on the project (a time estimated to be 18 months away); and (2) any changes to the re- imbursement rate for the project. The press release from the state suggests the moratorium will last through the end of the fiscal year (June 30, 2003). 9:1Opm School Committee member Carl McFadden joins the meeting Harry cites the sharp decline in expected construction costs. The appetite for the construction industry to bid on this and the Sunset/Barrows projects seem very strong as the state economy weakens. Seventy firms have pulled papers for the elementary school project - ten or twenty has been typical in recent years. Harry urges the FINCOM to abide by the recent split of 2/3 school, and 1/3 town in allocating FY2004 budget reductions. Dick and Cathy point out that the method used in allocating revenue or reductions for the past several years would yield a much smaller dollar figure difference between a 67-33% split versus a 70-30% split, which has been suggested by Peter. This difference is estimated to be $80k, and not $500k as Harry initially mentioned. Peter agreed to supply the FINCOM more information on how this allocation has been executed during the past several years. Wednesday, February 12, 2003 FINCOM meeting - Arnold Berger Room/Reading Town Hall - page 4 MOTION by Chuck Robinson to restrict the use of free cash in the FY2004 budget, seconded by Andrew Grimes. Discussion: Randy discusses the differences between the reserve fund and free cash. The reserve fund is used during the current fiscal year at the discretion of FINCOM. Historically, only unusual/unpredictable expenses, such as Snow & Ice, are paid for from this fund. Free cash is used only through a vote of Town Meeting. Peter mentions that so- called regeneration of free cash will be very small next year. Bob agrees that the restriction of free cash will lead to more honest FY2004 budgeting. However, he suggests that the balance in the reserve fiord be increased by an additional $100k, from a typical $150k level. This is because neither the Town nor School budgets in 2004 will have any flexibility at all to deal with unusual/unpredictable expenses. Any significant amount beyond this should go before Town Meeting, to determine the appetite to use additional free cash. It is agreed that this is a logical step to examine at a future date during the spring. FINCOM votes 9-0-0 to support the motion to restrict the use of free cash to balance the ( FY 2004 budget. 10:15pm MOTION by Jim Francis to adjourn, seconded by Randy Mason. FINCOM votes 9-0-0 to support the motion to adjourn. Respectfully submitted,