Town of Mount Desert
Board of Selectmen
Special Budget Meeting Minutes
March 8, 2013
A meeting of the Board of Selectmen was held this date in the Meeting Room, Town Hall, Northeast Harbor, Maine.
Those present included: Chairman Tom Richardson; Selectmen John Macauley, and Dennis Shubert; staff members Town Manager Durlin Lunt, Treasurer Kathi Mahar, Fire Chief Mike Bender, Code Enforcement Officer Kim Keene, Assessor Kyle Avila, Harbormaster Shawn Murphy, Public Works Director Tony Smith, and Town Clerk/Recording Secretary Joelle Nolan; and members of the public. Selectmen Martha Dudman and Rick Mooers were excused.
I. Call to order at 4:00 p.m.
Chairman Richardson called the meeting to order at 4:00 p.m.
II. Public Hearing, continued from March 4, 2013
A. Annual Town Meeting Proposed Warrant Articles for Appropriation of Funds
Board agreed to discuss agenda item III. Old Business A. Budget Review prior to having the public hearing.
III. Old Business after call to order, then public hearing
A. Budget Review
It was noted that $25,000 has been added for an Economic Development Director Consultant.
Treasurer Mahar noted the budget total has been reduced by two carry forwards: Code Enforcement line 503-96/Committee Board Expense $45,832, and Public Works Sewer Capital line 507-12/Pump Station Replacement $142,805.
Chairman Richardson explained Selectman Mooers requested that he bring the following subject to the Board for discussion. It is Selectman Mooers belief that citizens need more incentive to run for office; there is difficulty in attracting members. He cited the fact that in recent years two Board vacancies were filled by appointment (rather than election). To that end, he recommends increasing the Board rate of pay to $3,000 annually from $1,200. Chairman Richardson noted the Board has discussed its annual stipend in the past and the amount has not been an issue. He agreed Selectman Mooers makes a point; however, he is unsure why people won’t run. Perhaps people think the town is running well. Chairman Richardson said he does not think money is a part of it. He is bringing this forth on
behalf of Selectman Mooers.
Selectman Macauley agreed he is not in it for the money; but if a rate of pay increase could be tool for encouragement, he supposed it would be okay. He can’t imagine it as an incentive.
Selectman Shubert likened the position to a volunteer fireman, in that it is a mark of respect. He supports increasing the pay to $3,000. Chairman Richardson noted he was unable to reach Selectman Dudman for comment.
MOTION: Selectman Shubert moved, seconded by Selectman Macauley, to increase the Board of Selectman compensation to $3,000 annually for the proposed 2013 – 2014 budget.
DISCUSSION: Warrant Committee member Norris Reddish wondered if $3,000 is adequate considering the price of fuel. Chairman Richardson thought the figure really doesn’t have a lot to do with economy. He said he is trying to express Selectman Mooers’ feelings. He’s hoping to convince the public that it’s worth the time to serve. Selectman Shubert said in trying to fill a budget gap he is uncomfortable with more than $3,000.
VOTE: The vote was in favor, 3-0.
Chairman Richardson reviewed the 2013-2014 Estimated Tax Rate sheet provided by Assessor Avila. The budget has been reviewed with a fine tooth comb; department budgets are tight. We were hit hard last year due to the schools. This year we have two major projects with over $400,000 in payments per year in principle and interest. He said he is reluctant to beat up on reserves, and has expressed his opinions about borrowing versus reserves. We are currently looking at a 7.12% increase in the tax rate.
Selectman Shubert commented that we are replacing the Town garage 5 - 10 year after it should have been. Our financial condition is good. Reserves should be 10 - 20 % and we are at 20%. He said he understands putting money aside for particular purchases, however it reduces the flexibility of using the funds for something else. He stated he will not vote for a tax increase over 4%. He does not support funding the reserves as presented. He suggests reducing reserves and taking funds from unallocated reserve to smooth down tax increase for the next few years.
Selectman Macauley said he is bothered by the increase in the tax rate this year from last year.
Town Manager Lunt reminded the Board he was tasked with development of a Capital Improvement Plan which he did with the Department Heads through a town wide inventory of equipment. If the Board accepts the budget with the reserves, we have done what we set out to do 3 years ago by having close to a fully funded Capital Improvement Plan. This enables the Town to move forward without a lot of surprises, and replace equipment as needed.
Chairman Richardson spoke of the $665,000 spent from the undesignated reserves for the Town Office building addition, of which $295,000 for engineering will be returned to reserves, except we have to borrow to do it. He said this is different than the past. When we had major projects we would borrow the money, invest that money and make money on it; then spend as needed. Today we are not be able to invest to make money. He clarified with Treasurer Mahar that we have 1.3 million in undesignated reserves. Treasurer Mahar referred to the capital gains account. She said the undesignated fund balance is anticipated to be 1.850 million the end of June 2013. If we leave a 10% balance, we will have $300,000 to use and stay within the minimum guidelines we should have on hand.
Selectman Shubert said two issues bother him. One is compounding; it is not a 7% increase this year, it’s 7% every year, with any added increase in subsequent years. The tax rate appears to be low because property values are substantially above other towns. He mentioned year round people cashing out on their homes to summer people because year round people can’t afford the taxes. Their cash flow doesn’t come close to the assessed value of their home. There are people in this community to whom the tax rate is very important. He prefers it doesn’t change dramatically from year to year. In about ten years we will see the tax rate double.
Public Works Director Smith asked if we are paying off any debt this year, and Treasurer Mahar replied yes, although it is not a significant amount and only reduces the payment by $30,000. He also asked if we are asking the voters to approve $300,000 to buy down taxes as usual, and Chairman Richardson replied that is a part of the current discussion.
Chairman Richardson asked Selectman Shubert how he proposes to get to 4% increase. He replied he would reduce the Fire Department reserves by $110,000. He needs to hear more about the radios reserves when Chief Willis is available. And he would remove $25,000 from the refuse truck reserve. Public Works Director Smith suggested he come to the Board on March 18 with ideas for reductions. Chairman Richardson said it appears Selectman Shubert has come up with $175,000 in reserve reduction. Selectman Shubert asked Treasurer Mahar what amount would be needed to get to a 4% increase in the tax rate. Treasurer Mahar referred to Assessor Avila’s 2013- 2014 Estimated Tax Rate Sheet and determined that the difference in the amount to be raised would need to be reduced to $498,607 (from
$923,150).
Chairman Richardson exclaimed we have no control over nearly half the budget, making it very difficult to hold the percent of increase. We have control over roughly eight million dollars and would have to reduce town appropriations by nearly $500,000 to meet a 4% tax increase. We have $482,000 proposed in reserves; however, he is not suggesting we cut reserves.
Selectman Shubert noted we have three million dollars in departmental reserves. Town Manager Lunt explained when the CIP was set up we included items that were never put in the CIP before. We waited until there was a need and purchased. Now all of those items are in reserves and he would not like to see that three year project scratched. Chairman Richardson said the CIP is designed to keep us aware of major expenditures needed over a period of time; without it we end up borrowing. Selectman Shubert suggested that prefunding causes a low resistance to do rather than getting by. He also suggests we have a million plus dollars that could be spent; money in excess of what is required. Treasurer Mahar thought it worth looking into whether or not the capital gains reserve can be tapped. She needs to
research what the purpose was when it was started. The reason it was established is not readily apparent. Chairman Richardson suggested she ask the accountant; it was his idea to set it up years ago. We need to know what we have for investments, what they are called, and what they are for. Treasurer Mahar said there are basically three types: undesignated, reserve funds that are designated, and capital gains. Chairman Richardson said all town investments, until recently, were persona non grata – do not touch. The problem is that we are not making as much money off the investments as we used to. Selectman Shubert noted Town investments lost over a million dollars in the 2007 - 2009 recession; we are now back on track and moving ahead. The Investment Committee recently had a discussion as the whether or not the Town should be in stocks; most towns are not. He suggested it is okay because we are far enough ahead. The
money is in a capital gains account, and we either spend it or not.
Board discussed having another budget meeting; however, could not come to a consensus, and will have to continue at its next regular meeting March 18th.
Norris Reddish said he is not convinced that doing away with reserves would steady out the tax rate. Selectman Shubert said we have 3.1 million dollars in departmental reserves we are not touching. He is not talking about taking away; he is suggesting not adding to. We have things to pay for either with yesterday’s money, today’s money, or tomorrow’s money. We are using a lot of tomorrow’s money for these two large projects. The question is, are we going to pay for everything with today’s money or are we going to use some of yesterday’s money. Mr. Reddish thought money earned from investments should go back into the reserve accounts. Then we would not have to add to them. It was clarified that the interest earned goes to the reserve account; however, capital
gains do not. Earnings for the past few years has been low.
IV. New Business
A. Draft Warrant
No discussion.
B. Such Other Business as May be Legally Conducted
None presented.
V. Adjournment
MOTION: At 5:04 p.m. Selectman Shubert moved, seconded by Selectman Macauley, to table the meeting until 6:00 p.m., March 18, 2013.
Respectfully submitted,
John B. Macauley
Secretary
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