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Fellow Citizens of Needham:
The Finance Committee is required by law to prepare a budget that balances authorized expenditures with projected revenues. The Finance Committee this year, as was the case last year, had sufficient projected revenues to at least meet the "level funded" budget requests of each department. In addition, as will be discussed in more detail below, the Committee was able to fund this year a portion - but far from all - of the requests made by the departments for increased funding to maintain the same level of Town services. The Finance Committee was once again faced with difficult choices as to how to allocate available revenue between the competing interests of the operating and capital needs of the Town.
The Finance Committee devoted substantial attention in its deliberations to the funding of capital projects and the level of debt being assumed by the Town. The Committee continues to be strongly of the view that when circumstances allow, at least some of the Town's capital needs should be funded with cash. The Committee therefore has recommended that $328,015 in capital projects be funded with cash this year, and that a number of other projects be deferred unless additional revenue becomes available.
The Finance Committee proposes that no funds be withdrawn from the Town's savings account, the Stabilization Fund, to fund the FY99 operating budget. Town Meeting will recall that in both FY96 and FY97, circumstances dictated that $250,000 be withdrawn from the Stabilization Fund to help fund operating expenses. The replenishment of the Stabilization Fund began at the Special Town Meeting in the fall of 1996 when the Finance Committee recommended, and Town Meeting voted, that $500,000 be restored to the Stabilization Fund (using unexpected revenues from new growth). That action brought the then current balance of the Stabilization Fund to approximately $1,050,000. Town Meeting will further recall that this past fall, at the Special Town Meeting in November, 1997, the Committee recommended, and Town Meeting voted, that an additional $463,379 be restored to the Stabilization Fund, once again utilizing revenues from new growth. As a result of the vote at Special Town Meeting this past fall, the balance of the Stabilization Fund was increased to $1,545,281. Given the substantial capital needs of the Town and the level of debt being carried, it is important that adequate reserves be maintained. It is the goal of the Finance Committee to maintain a Stabilization Fund equal to at least 2% of gross revenue and up to as much as 3% of gross revenue. The current balance in the Stabilization Fund rests at approximately the mid point of the range in which the Finance Committee recommends that the Stabilization Fund be maintained.
Total projected revenue available for appropriation to fund FY99 operating budgets is $56,233,877. When appropriate adjustments are made to account for changes in the FY99 operating budget as a result of the creation of the Solid Waste and Recycling Enterprise Fund (established by vote at Special Town Meeting in November, 1997), the total projected revenue for FY99 represents an increase of $2,223,387, or 4.12%, over revenue which was available for appropriation in FY98. Of this amount, however, $780,000 is accounted for by the release of funds which had been previously held in overlay reserve accounts for FY95, FY96 and FY97.
A better measure of real increases in Town revenue is the rate of increase in the three principal components of the Town's revenue stream: (1) the property tax levy; (2) state aid; and (3) local receipts. For FY99, projected increases total $2,182,778 and constitute an increase over FY98 of approximately 4%.
This past fall, the Finance Committee issued guidelines to all departments for the preparation of FY99 budgets. These guidelines again called for all departments to "level fund" all line items, except for mandatory step and longevity salary increases and the projected additional costs of statutorily mandated programs and other contractual obligations (in essence, those costs the Town cannot legally avoid without staff layoffs). In addition, the Finance Committee guidelines requested each department to identify and prioritize additional amounts necessary to maintain the same level of service provided in FY98. These level service requests from non-school departments alone totaled $544,137. Finally, the Finance Committee requested departments to identify additional funding requests should funds be available.
A comparison of the "level funded" budget requests to the projected revenues for FY99 yielded a surplus of $1,299,213. Of that amount, the Finance Committee is recommending that $311,481 be allocated to cover additional "level service" requests by various departments other than schools. With respect to schools, the Finance Committee is recommending that $520,625 be allocated to augment its level funded budget to achieve a number of prioritized requests to meet increased needs for FY99. The Finance Committee is further recommending that $328,015 be utilized to fund capital projects with cash. Of the remaining balance, $139,092, the Finance Committee is further recommending that $57,875 be allocated to fund new levy supported debt obligations with regard to various additional capital needs of the Town, and $17,500 be allocated to the financial warrant articles for the Tax Work-Off Program (Art. 18) and Hazardous Waste Collection Day (Art. 19). Finally, the Finance Committee is recommending that the balance be placed in the Finance Committee's Reserve Fund.
Of the $311,481 in additional operating expenses, approximately $31,000 relates to expense items in the "bare necessity" category (paper, postage, supplies, increased cost of routine maintenance, etc.). An additional amount totaling approximately $212,000 relates to one-time costs to fix or replace items within the various Town departments or to fund smaller capital expenses. Within this same sum is an allocation of $56,000 to fund certain repair and maintenance items recommended as priority items by the Municipal Building Maintenance Board. Finally, this sum also includes an allocation of $20,000 for the Planning Board to fund a requested purchase of service to recodify the Zoning By-Law for the Town.
In addition to the items described above, there are new personnel costs
in a few critical areas recommended for approval in this year's budget.
They are:
| (1) | Additional 4.5 hours of staff support, Board of Selectmen - $2,900; |
| (2) | Upgrade firefighter to officer, fire prevention, Fire Department - $1,200; |
| (3) | Park Department, grounds, DPW - $13,700; |
| (4) | Senior Engineer/Co-op student, Department of Public Works - $63,000 (net impact on FY99 operating budget of $9,450 due to 85% contribution toward salary cost from Chapter 90 Funds and Enterprise Funds); |
| (5) | Administrative support, Board of Health, including recording secretary - $4,500; |
| (6) | Increase social worker from .8 to full time, Youth Commission - $6,316; |
| (7) | Reference Librarian, part-time 18.5 hours, Library - $13,574; |
| (8) | Outreach worker, Council on Aging for additional 10 hours - $7,190. |
There is included in the Warrant a breakdown of the Town's debt service. The schedule breaks down debt into four categories: Hospital debt; levy supported debt; fee funded (landfill and water/wastewater) debt; and override debt. The principal and interest payments for Hospital debt, levy debt and the landfill portion of fee funded debt are included in lines 17 and 18 of the operating budget. The Water Enterprise Fund debt service is contained in line 907 of Art. 25. The Waste- water Enterprise Fund debt is contained in line 914 of Art. 26. The proposed budget for the newly created Solid Waste/Recycling Enterprise Fund is contained in Art. 27. The debt service on override debt is not covered by the operating budget.
After deliberations, the Finance Committee has recommended that thirteen capital projects be funded by debt supported by the levy: Art. 39, High School roof, $575,000; Art. 40, DPW building roof, $250,000; Art. 41, Hillside boiler replacement, $150,000; Art. 48, High Rock School renovation and equipment, $420,000; Art. 50, Handicapped Ramp construction, $50,000; Art. 51, DPW vehicle replacement, $191,550; Art. 54, sidewalk repair/resurfacing, $65,000; Art. 64, Townwide Telephone System, $300,000; Art. 65, computer upgrade - police/fire station, $60,000; Art. 67, replacement of a Fire Engine, $300,000; Art. 42, Elementary School roof repairs, $60,000; Art. 45, High School extraordinary repairs, $210,000; and Art. 28, School Technology Plan, $200,000. The total impact on the FY99 operating budget for debt service is $57,875. A further comment on levy supported debt is in order.
This year, throughout its deliberations, the Finance Committee considered the appropriate level for a recommended ceiling on levy supported debt. Historically, the debt management policies of the Town have recommended that general purpose (tax supported) debt service requirements be limited to 2% of gross revenues. This amount does not include debt service for enterprise-type capital or debt excluded from the limits of Proposition 2 1/2. Those same debt management policies have historically stated that total debt service, including debt exclusions and self-supporting debt, will not exceed 10% of gross revenues. Given the compelling capital needs of the Town and the current total debt obligations of the Town, which fall under the 10% of gross revenues guideline, the Finance Committee is persuaded that it is appropriate to amend the Town's debt management policies to limit annual levy supported debt to 3% of gross revenue. Within this amended guideline, the recommended levy supported debt for FY99, when projected out through FY' 03, maintains debt service within the 3% guideline and allows a reasonable margin for considering additional levy funded debt in each of those years as existing debt is retired. The Finance Committee will present its detailed report on the status of capital at Annual Town Meeting.
The Finance Committee is recommending for FY99 that the following capital requests be funded with cash: Art. 43, Mitchell School boiler design, $18,000; Art. 46, High School gym renovation design, $10,000; Art. 47, High School Auditorium renovation design, $18,000; Art. 49, Pollard School furniture and equipment, $48,000; Art. 55, renovation of High Rock/High School grounds, $154,000; Art. 63, storm drain improvements (Pine Hill Road, Grove Street), $30,000; Art. 70, Rosemary Pool maintenance, $15,000; and Art. 72, computer upgrade (assessors), $35,000. The total of proposed cash funded capital items is $328,015.
The Finance Committee has disapproved for debt funding this year the following capital requests: Art. 44, improvements to the High School parking lot, $350,000; Art. 51 (in part) for DPW vehicle replacement, $133,050; Art. 52, multi-purpose trackless sidewalk tractor, $65,000; Art. 53, purchase of material screener (Finance Committee has recommended continuing the funding for renting the material screener), $128,000; Art. 56, Parish Road reconstruction, $575,000; and Art. 57, improvements to Memorial Park parking lot, $30,000.
The Finance Committee has also disapproved for cash funding this year Art. 68, emergency management radio equipment, $31,000, Art. 69, replacement of the Fire Chief's vehicle, $28,000 and Art. 71, repairs to fields, fences and buildings, $25,000, totaling $84,000.
The Finance Committee has directed considerable attention to the Enterprise Funds during its deliberations this year. At present, the Finance Committee is continuing its deliberations regarding the Enterprise Funds for Water, Wastewater and the Solid Waste/Recycling Transfer Station. Consequently, the Finance Committee is presently deferring its recommendation with regard to those capital items which are proposed to be funded from water and wastewater revenues. The Finance Committee will be making its recommendations in these areas at or before Annual Town Meeting.
As with FY98, the Town fortunately finds itself in position to fund all of the Departments' level funded budgets while simultaneously funding some of the requested items necessary to maintain level services. The Town benefited from the release of substantial funds, $780,000, from prior years' Overlay Reserve Accounts. Moreover, the uncertainty of unsettled collective bargaining agreements in FY98 has been resolved, with the exception of the Custodians' contract, and this has added a significant element of stability to the Finance Committee's deliberations of the FY99 budget.
The Finance Committee continues to feel, however, that fiscal vigilance must be the constant guide to the Town's financial management. Significant capital projects remain queued in the Town's Capital Improvement Plan, and the restraints of Proposition 2 ½ continue to challenge the Town's ability to maintain services and improve its capital resources.
The Finance Committee wishes to thank the Board of Selectmen, the Town
Administrator and Finance Director, and all Department Heads and other
Town officials and employees with whom we have worked this past year. The
Chairman also wishes to thank each of the Finance Committee members, who
have volunteered their time and worked so hard to examine the budgets and
various capital requests presented to Finance Committee. In addition, I
would like to personally acknowledge the invaluable contribution and tireless
efforts by our Executive Secretary, Gerry Sullivan, now in his 12th year
of service to the Finance Committee.
| John P. Ryan, Chairman | Paul T. Milligan | |
| Paul G. Smith, Vice Chairman | Ford H. Peckham | |
| Thomas H. Hannigan, Jr., Past Chairman | Susan R. Herman | |
| James G. Healy, Past Chairman | Michael R. Nowlan | |
| Ronald P. Culgin | Executive Secretary, Gerard G. Sullivan |
