Present: Chris Carlin, Richard Crane, Paul Desmond, Peter Fimognari, John Goodrich, Bob Margerison, Maureen O’Sullivan, Peter Ross, Ann Lee (FinCom Admin. Asst.)
Also Present: Gretchen Neggers (Town Administrator), Deb Mahar (Town Accountant), Ed Harrison, Carol Woodbury (School Superintendent), Dorothy Jenkins (Town Collector), Marty Harris (Fire Chief), Karen Patenaude, John Morrell (Highway)
Absent: Christine Edwards , Jim Pennington
The meeting was convened at 6:30 p.m.
A motion was made, seconded, and SO VOTED to accept the minutes of the 2/14/05 meeting, with one correction per discussion. Page 2, paragraph 4, states “Mr. Ross requested where the $200,000 Reserve Fund money comes from;”. It was corrected to state “Snow & Ice Fund.”
CORRESPONDENCE
A letter dated February 24, 2005, was received from the Massachusetts Municipal Association announcing the 2005 MMA Spring Regional Update Meetings. Ms. Neggers and Ms. Mahar plan to attend the March 31 meeting in Amherst.
A letter was received from the Monson Tourism Committee requesting meeting dates, to be posted on the Community Meetings and Events Calendar on the town’s web site. Ms. Jenkins explained that particular calendar is not the official Town meeting calendar. Mr. Carlin asked if FinCom minutes can be posted to a town web site. Ms. Lee will forward minutes to Ms. Neggers, who will post them.
OLD BUSINESS / NEW BUSINESS
Financial Components Capital Funding Proposal: Ms. Neggers presented the attached proposal to the FinCom committee.
The Town Administrator, Town Accountant, Town Collector, Town Treasurer and Assessor met regularly to discuss capital needs and funding sources. The annual appropriation for capital, historically $100,000, was eliminated several years ago. It appears extremely unlikely there will be adequate funds available the coming fiscal year to restore capital funding.
Recommended capital items to be purchased include:
Fire Department Tanker $200,000
Highway Department Dump truck $ 90,000
Garage doors $ 18,000
School Department Q.H. sidewalk $ 35,000
Q.H. Emergency exits $ 30,000
Selectmen Fire escape repairs $ 10,000
Assessors Software upgrade $ 6,000
Selectmen Landfill assessment $ 57,000
TOTAL $446,000
The recommended funding sources are:
Gifts to the town account $ 34,000
Stabilization fund $412,000
TOTAL $446,000
The stabilization fund’s current balance is approximately $800,000. Mr. Fimognari discussed that typically Monson runs a bond, the bond runs out, and it rolls over. Ms. Neggers explained both bonds, 1 for $200,000 and 1 for $250,000, are consumed by large fire apparatus: a rescue truck and a forest fire truck. Mr. Ross asked if there is one for the ambulance. Ms. Neggers replied the ambulance has a separate bond, currently in the budget. Mr. Margerison asked if using stabilization funds will hurt the town’s bond rating. Ms. Neggers said it is highly unlikely the bonders will look at Monson as the town has no plans to go out to bond.
Mr. Margerison asked Chief Harris if Monson can find a replacement truck in government surplus. He said he realizes Monson needs a new tanker, but the $200,000 could be used other places, and mentioned town mutual aid. Chief Harris explained the current tanker, a government surplus, was designed for runway use, and is unsuitable for the town’s roads and hills. He added the tanker has been welded 9 times, leaks, and is generally unsafe. As for mutual aid, Monson can not count on mutual aid, especially for a large fire, noting the time frame for getting apparatus to the scene. He explained the new tanker would hold approximately 3500 gallons of water, and have a life expectancy of 20 to 25 years. Mr. Goodrich mentioned a used tanker; Chief Harris explained it would not be NFPA
certified. Mr. Carlin mentioned prior success with lease to own programs, and asked if that is an option. He said he’d like to see a cost/benefit analysis to see the comparison. Ms. Neggers explained that lease payments, disbursed over a period of years, need to be funded in recurring costs, i.e. built into the budget. A lease is more costly because of the interest paid. Mr. Morrell mentioned interest on the leased loader added approximately $15,000 to the cost.
Mr. Ross asked Mr. Morrell if a new truck would lower maintenance costs. Mr. Morrell answered yes, but there would still be many repairs on other vehicles. The new dump truck would replace a 1986 truck; the newest truck is a 2000. Mr. Ross asked if the current $20,000 yearly lease payment would replace trucks in a timely manner. Ms. Neggers replied the current lease option is for 5 years, and we are looking at 3-year lease options.
Mr. Goodrich questioned the rate of return on the stabilization fund, and wondered if it would be prudent to wait until rates rise and the fund earns a higher return, during which time we consider a lease purchase. Ms. Neggers replied the stabilization fund earns a small amount, and reiterated a lease requires payments made over time and funded as a recurring cost. Ms. Mahar added the rates range from 1.9 % to 2.6 % earned.
Ms. O’Sullivan asked if the large stabilization fund affects the town’s ability to quality for grants. Ms. Neggers explained it is difficult to justify the need for grant money when the account is this large, and noted Monson has one of the larger funds in the state. Mr. Carlin stated FinCom needs to see this data, in order to make a data-based decision as a committee. Ms. Neggers will e-mail Mr. Carlin and Ms. Lee the web site that contains the information, and give FinCom the information for a lease/purchase option for the dump truck.
Mr. Margerison expressed his concern of what town members will think when they “see personnel cuts and a shiny new fire truck.” Mr. Ross said he would be “happy to make that argument.” Mr. Goodrich stated he is a believer in regular, high quality maintenance, and views a new tanker as an investment – at $200,000 it equals 20 years service for $10,000 per year with no interest. Ms. O’Sullivan said to Mr. Margerison that his answer could simply be that the town isn’t simply cutting services, but keeping operational expenses level. Mr. Carlin agreed with Mr. Goodrich, and added FinCom needs to explore every option in order to tell the town “we looked at every option.” Mr. Morrell noted the large capital needs are occurring now because capital
expenditures have not been funded for several years. Mr. Carlin replied that he didn’t disagree, and added FinCom wants to be able to answer any potential questions. He asked where the proposed expenditure figures are from. Ms. Neggers replied they are estimates from the respective departments.
In conclusion, Mr. Ross thanked everyone who took part in compiling this proposal. He added it was well thought out. Mr. Goodrich asked if the Capital Planning committee being led by Richard Guertin will be looking at departmental requests that are not on this list. Ms. Neggers answered those requests are being prioritized. Many of those items require a great deal of leg work.
Mr. Carlin again mentioned the importance of having all information, and trying to anticipate voters’ questions. Ms. Neggers replied that this proposal would not go before voters without support from FinCom. She added she would appreciate a consensus. Mr. Goodrich replied that FinCom might be able to reach a consensus at the March 14 meeting if the committee has all necessary data that evening.
Mr. Fimognari’s Historical Free Cash Gain Worksheet: Mr. Fimognari compiled a worksheet comparing Free Cash gain for the last several years.
FY 1998 to FY 1999 $409,424
FY 1999 to FY 2000 $626,300
FY 2000 to FY 2001 $345,504
FY 2001 to FY 2002 $384,950
FY 2002 to FY 2003 $665,746
FY 2003 to FY 2004 $919,137
FY 2004 to FY 2005 $392,113
Removing the highest year from the equation, the average for the remaining six years equals an average gain of $470,672.
Mr. Fimognari feels we can anticipate a gain in Free Cash going into FY 06. Mr. Goodrich stated that after reviewing the above figures, and looking at budget shortages in light of a $541,000 structural deficit, he would be willing to re-open the discussion regarding the amount of Free Cash to use the coming fiscal year. He said he has looked at the FY 06 budget and can not find the “fat”; he questioned where reductions could possibly come from.
Mr. Fimognari’s recommendation is use more than the $384,000 Free Cash previously voted. He stated FinCom attempts to “stretch Free Cash, but at what cost to the town.” He recommends using $480,000 Free Cash, which would leave a balance of $228,000 plus any gain. Mr. Goodrich noted that budget cuts will be perceived as cuts in town services. He added the town saves sixty cents on the dollar when laying off an employee because of unemployment costs. Ms. O’Sullivan stated that the more the town funds operationally, the more it spends continually. Mr. Morrell asked FinCom to leave a cushion in the free cash account so departments aren’t asked to absorb any contractual negotiations in a funded budget.
Mr. Margerison motioned to increase Free Cash usage for Fiscal Year 2006 to $541,000. It was not seconded.
Mr. Carlin noted the projected large increase in oil costs, stating it will be a major issue in the upcoming year’s budget. Ms. O’Sullivan reminded the committee we still have unknowns, such as Pathfinder.
Mr. Margerison motioned to use increase Free Cash usage for FY 2006 from $384,000 to $480,000.
Discussion – Mr. Ross said this is a “180” turn from the last meeting. Mr. Fimognari stated Free Cash is a line item that keeps the town from experiencing large impacts in times of economic downturns. Mr. Goodrich stated there may soon be positive signs from the economy, and Mr. Ross agreed FinCom would have to look at this scenario again at that time.
Ms. O’Sullivan no
Mr. Desmond yes
Mr. Ross no
Mr. Crane no
Mr. Goodrich yes
Mr. Margerison yes
Mr. Fimognari yes
The motion was seconded and SO VOTED to increase the Free Cash used for Fiscal 2006 to $480,000.
Ms. Mahar noted that additional monies given to Monson have been in Chapter 70, but not other departments. She does not see an anticipated growth in revenues, and added this decision scares her, as she tends to be more conservative.
March 8 Selectmen’s Meeting: Mr. Carlin asked Ms. Neggers if FinCom could forego presenting any information at the meeting. He asked she tell the Selectmen FinCom is struggling with unanswered questions, is encouraged by the homework being done by the members, and believes by May FinCom will have a plan. Mr. Goodrich said FinCom has 2 choices – spend additional Free Cash to maintain town services, or reserve Free Cash and make cuts. He questioned if FinCom should say that in a room of voters. Mr. Ross believes it would be a positive thing, as it is FinCom’s responsibility to keep voters informed.
Mr. Carlin summed up: FinCom will look at Mr. Fimognari’s figures, go over departments’ budgets with an eye for potential cuts, and present recommendations at the March 14 meeting.
Council on Aging: Ms. White telephoned Ms. Mahar and requested to meet with FinCom to discuss the FY 06 budget. Ms. Lee will e-mail Ms. White and invite her to speak with FinCom at 8:00 March 14 for 15 minutes.
By-Laws: Ms. Neggers reminded FinCom of town by-laws governing committees. Ms. Lee will get a copy of that information for the next meeting.
The next scheduled meeting of the Finance Committee is March 14, 2005 at 6:30 p.m. at the Town Accountant’s Office.
The meeting was adjourned at 8:30 p.m.
Respectfully submitted,
Ann M. Lee
Administrative Assistant to the Finance Committee
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