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Town of Newbury
Finance Committee Meeting
Tuesday March 1, 2011 7:00 pm, Byfield Fire Hall
Meeting Summary
Committee: Bob Connors, Larry Guay, Marshal Jespersen, Dick Passeri, Frank Remley (Chair),
Anna Tenaglia
Ex-Officio: Chuck Kostro, Town Administrator/Finance Director
1. February 17 Meeting Summary: adopted unanimously without modification
2. Review results of Financial Task Force efforts to date and formulation of
recommended actions to Task Force: The entire meeting was spent discussing
various option for a potential override request. All agreed at the outset that there was
serious revenue gap causing projected deficits. The purpose was to examine
alternatives and recommend a “best” solution to the Task Force in its Thursday, Mar.
3 meeting. A pro-forma business model was used to examine various scenarios.
Various issues and options discussed included:
a. The impact of no new revenues on a projected “level services” budget.
Based on current data, the model (Scenario 1) showed that if no new
revenues were generated in FY 12, a deficit of $727,000 would result. Thus,
current projection of cuts in services of $336,000 would not be enough, even
with the complete depletion of the current stabilization fund of $340,000.
This model was quickly rejected as fiscally inadequate without even larger
cuts than currently contemplated. The committee also did not favor the
depletion of the stabilization fund, and it was felt that this may well be simply
pushing off the growing deficit to the future. In addition, it was noted that
costs are currently increasing with the growing snow and ice deficit, and lack
of money for town barn repairs.
b. The amounts financially needed to enable the Town to survive the current
projected deficit due to the recession: After further discussion, the
committee agreed that preservation of existing services, albeit with previous
cuts but no further draw on stabilization funds, would require an additional
$725,000 in revenue. (Scenario 2). This level of increase would not
contribute to restoration of depleted reserves unless through robust economic
improvement. It is also vulnerable to future increases in education
assessments and other cost increases, such as large increases in health care
and pensions, or other contingencies. Thus, additional overrides may be
needed in the future unless the economy recovers more quickly than
expected.
c. The amounts needed to enable the Town to recover financially and to
replenish key reserve account that have been nearly depleted:
Consideration was given to adding $1,000,000 or more to revenues in FY12
(scenario 3). This scenario should result in eliminating new deficits, sans
unforeseen increases, and would render additional override requests over the
next 3-4 years less likely. It was also noted that this scenario, combined with
modest economic growth, might enable the replenishment of Town Financial
reserves over a period of three years. However, it would also require a nearly
10% increase in taxes if accomplished through an override, which would
reduce the feasibility of passage.
d. The amounts that might be politically palatable to the public in the severe
economic recession, not withstanding financial needs of the Town. A
fourth scenario which combined a more modest $450,000 increase in
revenues, with draw-down $300,000 in stabilization funds was discussed
(Scenario 4). While this scenario would lower the tax impact, it would
completely deplete all reserves (stabilization fund), would not eliminate
completely future deficits, and would virtually guarantee the near term
request for additional tax overrides, should the economy not dramatically
improve soon.
e. The durability of any override amount requested and approved in the
May 10 vote. There was discussion about the prospect of getting additional
overrides over the next 2-3 years, especially given the impact of impending
cost growth and the conclusion to this was it was very unlikely given past
history. The committee also agreed that current projected cuts in services
were going to be very difficult, much less the potential for additional cuts that
will very possibly be needed
CONCLUSIONS: Ultimately it was concluded that Scenario 2, while not ideal,
would provide the best chance of short term coverage of current services, while
eliminating projected large deficits. It would also provide some safety against
future cost growth, and possibly even enable modest recapture of reserves with
continued good cost management and expected slow economic recovery. The
committee also concluded that it would be the fiscally responsible alternative
without overreaching in a difficult time. It would result in a 5.48% increase in
taxes above the 2.1% baseline increase allowed by Prop 2 ½. This tax growth
would be midway between Scenario 2’s 7.6% ($1,000,000 ) and Scenario 4’s
3.4% increase ($400,000 combined with $300,000 from Stabilization).
As a result of the discussion, which lasted 2 hours, the recommendation of a
$725,000 override in FY 12 was unanimously voted to advance to the Task
Force.
3. Next Meeting: Tuesday, March 15, 7:00 pm, Byfield Fire Hall
PROJECTED SURPLUS/DEFICIT--$0.0 REVENUE GAP
REVENUES
Fiscal Year
2010 Actual FY 2011 Recap
FY 2012
Initial 2013 Estimates 2014 Estimates 2015 Estimates
Projected Revenue Gap $ - $ - $ - $ - $ - $ -
Maximum Allowable Levy $ 1 3,027,859 $ 1 3,132,695 $ 1 3,403,516 $ 13,672,857 $ 13,907,204 $ 14,336,810
State Aid $ 1,380,861 $ 1 ,355,876 $ 1,318,214 $ 1,333,214 $ 1 ,358,214 $ 700,000
Total Local Receipts $ 1 ,952,483 $ 1,614,775 $ 1,504,000 $ 1,579,900 $ 1,679,000 $ 1,641,500
Stabilization Fund $ 75,000 $ - $ - $ - $ - $ -
Overlay Surplus $ - $ - $ - $ - $ -
TOTAL REVENUES $ 17,143,203 $ 17,019,391 $ 16,987,298 $ 1 7,335,971 $ 17,694,418 $ 17,428,310
LEVEL SERVICES BUDGET $ 17,139,349 $ 16,994,881 $ 17,714,098 $ 1 7,810,859 $ 18,163,568 $ 1 8,065,972
RECOVERY BUDGET $ 17,139,349 $ 16,994,881 $ 18,442,298 $ 18,539,059 $ 18,891,768 $ 18,794,172
LEVEL SVCS GAP $ 3,854 $ 24,510 $ (726,800) $ (474,889) $ (469,150) $ (637,662)
RECOVERY GAP $ 3,854 $ 24,510 $ (1,455,000) $ (1,203,089) $ (1,197,350) $ (1,365,862)
FY 12 CHANGE AMT Change % Difference
FY12 vs. FY11 FY12 vs. FY11
Override $ -
Max Levy 270,822 2.06%
State Aid (37,662) -2.78%
Local Receipts (110,775) -6.86%
Stabilizatin Use -
Internal Funds 134,045 -16.86%
Revenues (32,092) -0.19%
Lev. Svcs Budget $ 719,217 4.23%
Recovery Budget 1,447,417 8.52%
Lev. Svcs Gap (751,310)
16,000 Recovery Gap (1,479,510)
16,500
17,000
17,500
18,000
18,500
19,000
19,500
FY10 FY11 FY12 FY13 FY14 FY15
Thousands
RECOVERY BUDGET
LEVEL SVCS BUDGET
REVENUES (DEFAULT BUDGET)
SCENARIO 1: No increase in revenues
PROJECTED SURPLUS/DEFICIT--$0.0 REVENUE GAP
REVENUES
Fiscal Year
2010 Actual FY 2011 Recap
FY 2012
Initial 2013 Estimates 2014 Estimates 2015 Estimates
Projected Revenue Gap $ - $ - $ 725,000 $ - $ - $ -
Maximum Allowable Levy $ 1 3,027,859 $ 1 3,132,695 $ 1 4,128,516 $ 14,397,857 $ 14,650,329 $ 15,098,513
State Aid $ 1,380,861 $ 1 ,355,876 $ 1,318,214 $ 1,333,214 $ 1,358,214 $ 700,000
Total Local Receipts $ 1 ,952,483 $ 1,614,775 $ 1,504,000 $ 1,579,900 $ 1,679,000 $ 1,641,500
Stabilization Fund $ 75,000 $ - $ - $ - $ - $ -
Overlay Surplus $ - $ - $ - $ - $ -
TOTAL REVENUES $ 17,143,203 $ 17,019,391 $ 17,712,298 $ 1 8,060,971 $ 18,437,543 $ 18,190,013
LEVEL SERVICES BUDGET $ 17,139,349 $ 16,994,881 $ 17,714,098 $ 1 7,810,859 $ 18,163,568 $ 18,065,972
RECOVERY BUDGET $ 17,139,349 $ 16,994,881 $ 18,442,298 $ 18,539,059 $ 18,891,768 $ 18,794,172
LEVEL SVCS GAP $ 3,854 $ 24,510 $ (1,800) $ 2 50,111 $ 273,975 $ 124,041
RECOVERY GAP $ 3,854 $ 24,510 $ (730,000) $ (478,089) $ ( 454,225) $ (604,159)
FY 12 CHANGE AMT Change % Difference
FY12 vs. FY11 FY12 vs. FY11
Override $ 725,000
Max Levy 995,822 7.58%
State Aid (37,662) -2.78%
Local Receipts (110,775) -6.86%
Stabilizatin Use -
Internal Funds 134,045 -16.86%
Revenues 692,908 4.07%
Lev. Svcs Budget $ 719,217 4.23%
Recovery Budget 1,447,417 8.52%
Lev. Svcs Gap (26,310)
16,000 Recovery Gap (754,510)
16,500
17,000
17,500
18,000
18,500
19,000
19,500
Thousands
RECOVERY BUDGET
LEVEL SVCS BUDGET
REVENUES (DEFAULT BUDGET)
SCENARIO 2: $725,000 increase in revenues in FY 12
PROJECTED SURPLUS/DEFICIT--$0.0 REVENUE GAP
REVENUES
Fiscal Year
2010 Actual FY 2011 Recap
FY 2012
Initial 2013 Estimates 2014 Estimates 2015 Estimates
Projected Revenue Gap $ - $ - $ 1,000,000 $ - $ - $ -
Maximum Allowable Levy $ 1 3,027,859 $ 1 3,132,695 $ 1 4,403,516 $ 14,672,857 $ 14,932,204 $ 15,387,435
State Aid $ 1,380,861 $ 1 ,355,876 $ 1,318,214 $ 1,333,214 $ 1 ,358,214 $ 700,000
Total Local Receipts $ 1 ,952,483 $ 1,614,775 $ 1,504,000 $ 1,579,900 $ 1,679,000 $ 1,641,500
Stabilization Fund $ 75,000 $ - $ - $ - $ - $ -
Overlay Surplus $ - $ - $ - $ - $ -
TOTAL REVENUES $ 17,143,203 $ 17,019,391 $ 17,987,298 $ 1 8,335,971 $ 18,719,418 $ 18,478,935
LEVEL SERVICES BUDGET $ 17,139,349 $ 16,994,881 $ 17,714,098 $ 1 7,810,859 $ 18,163,568 $ 18,065,972
RECOVERY BUDGET $ 17,139,349 $ 16,994,881 $ 18,442,298 $ 18,539,059 $ 18,891,768 $ 18,794,172
LEVEL SVCS GAP $ 3,854 $ 24,510 $ 273,200 $ 5 25,111 $ 555,850 $ 412,963
RECOVERY GAP $ 3,854 $ 24,510 $ (455,000) $ (203,089) $ (172,350) $ (315,237)
FY 12 CHANGE AMT Change % Difference
FY12 vs. FY11 FY12 vs. FY11
Override $ 1,000,000
Max Levy 1,270,822 9.68%
State Aid (37,662) -2.78%
Local Receipts (110,775) -6.86%
Stabilizatin Use -
Internal Funds 134,045 -16.86%
Revenues 967,908 5.69%
Lev. Svcs Budget $ 719,217 4.23%
Recovery Budget 1,447,417 8.52%
Lev. Svcs Gap 248,690
16,000 Recovery Gap (479,510)
16,500
17,000
17,500
18,000
18,500
19,000
19,500
FY10 FY11 FY12 FY13 FY14 FY15
Thousands
RECOVERY BUDGET
LEVEL SVCS BUDGET
REVENUES (DEFAULT BUDGET)
SCENARIO 3: $1,000,000 increase in revenues in FY 12
PROJECTED SURPLUS/DEFICIT--$0.0 REVENUE GAP
REVENUES
Fiscal Year
2010 Actual FY 2011 Recap
FY 2012
Initial 2013 Estimates 2014 Estimates 2015 Estimates
Projected Revenue Gap $ - $ - $ 450,000 $ - $ - $ -
Maximum Allowable Levy $ 1 3,027,859 $ 13,132,695 $ 13,853,516 $ 1 4,122,857 $ 14,368,454 $ 14,809,591
State Aid $ 1,380,861 $ 1 ,355,876 $ 1,318,214 $ 1,333,214 $ 1 ,358,214 $ 700,000
Total Local Receipts $ 1 ,952,483 $ 1,614,775 $ 1,504,000 $ 1,579,900 $ 1,679,000 $ 1,641,500
Stabilization Fund $ 75,000 $ - $ 300,000 $ - $ - $ -
Overlay Surplus $ - $ - $ - $ - $ -
TOTAL REVENUES $ 17,143,203 $ 17,019,391 $ 17,737,298 $ 1 7,785,971 $ 18,155,668 $ 17,901,091
LEVEL SERVICES BUDGET $ 17,139,349 $ 16,994,881 $ 17,714,098 $ 1 7,810,859 $ 18,163,568 $ 18,065,972
RECOVERY BUDGET $ 17,139,349 $ 16,994,881 $ 18,442,298 $ 18,539,059 $ 18,891,768 $ 18,794,172
LEVEL SVCS GAP $ 3,854 $ 24,510 $ 23,200 $ (24,889) $ (7,900) $ (164,881)
RECOVERY GAP $ 3,854 $ 24,510 $ (705,000) $ (753,089) $ (736,100) $ (893,081)
FY 12 CHANGE AMT Change % Difference
FY12 vs. FY11 FY12 vs. FY11
Override $ 450,000
Max Levy 720,822 5.49%
State Aid (37,662) -2.78%
Local Receipts (110,775) -6.86%
Stabilizatin Use 300,000
Internal Funds 134,045 15.89%
Revenues 717,908 4.22%
Lev. Svcs Budget $ 719,217 4.23%
Recovery Budget 1,447,417 8.52%
Lev. Svcs Gap (1,310)
16,000 Recovery Gap (729,510)
16,500
17,000
17,500
18,000
18,500
19,000
19,500
FY10 FY11 FY12 FY13 FY14 FY15
Thousands
RECOVERY BUDGET
LEVEL SVCS BUDGET
REVENUES (DEFAULT BUDGET)
SCENARIO 4: Combination of $450 in increases with use of $300,000 in
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