Budget and Finance Subcommittee

RECEIVED By Ellie at 11:18 am, 4/28/21 AMESBURY CITY HALL 62 Friend Street Amesbury, MA 01913 City Council Finance Committee Meeting Minutes Tuesday, March 23, 2021 at 7:00 PM Virtual Meeting Finance Committee Chair Stanganelli called the meeting to order at 7:04 PM. Roll Call was taken and present were: Councilor Mandeville, Councilor Rinaldi, Councilor Stanganelli, Councilor Wheeler, Councilor Hogg, and Councilor Einson. There were 8 present and 1 absent, respectively (Councilor Gilday). Minutes for Approval: January 26, 2021, June 23, 2020, July 28, 2020, August 11, 2020, August 25, 2020, September 9, 2020, September 14, 2020, October 27, 2020.  Councilor Stanganelli corrected the titles of some minutes: o August 11, 2020  special meeting o September 9, 2020  September 3, 2020 is the correct date of the month’s meeting. o September 14, 2020  budget meeting  There were some typographical errors that were brought to the attention of the Clerk’s office. Councilor Wheeler moved to approve the minutes for the eight various meetings as presented. Councilor Rinaldi seconded this motion. Roll call was not taken. Councilor Wheeler moved to approve the minutes for the eight various meetings as amended for typographical corrections. Councilor Rinaldi seconded this motion. Roll call was taken. 8 out of 8 members present voted yes. Motion passed. Communications & Updates  CFO, Angel Wills gave her communication and updates: o There is no update on free cash because there has not been any of it spent, hopefully it is being saved for yearend appropriations transfers. She said she has been tracking them all year and will submit to the Council within the next month or two. The free cash is at $267,788.00. o The expenditure reports have been distributed through February. Everything is more or less trending on target with the exceptions:  Appropriations for the Fire Department salaries and overtime wages  other smaller items o The City has spent $489,000.00 on snow and ice so far, possibly $5,000.00 more.  The 3-year average has been $635,000.00 o Revenue is trending on target and looks hopeful that there will be an increase for next year’s budget due to new cannabis excise and a hopeful upward trend in hotels and meals tax. o This year the admin and finance team worked hard on cleaning up recommendations that were on the prior year’s audit report. The prior year’s audit report had 7  management items from prior fiscal years. The team was able to resolve 4 of those. One unresolved problem is outstanding due to the auditors recommending that the City get new capital asset software. This is now put in the five year capital plan. o The City is in the process of hiring the first HR Coordinator shared between the City and the schools. o In regards to the financial part of the audit, what they do is take all of the financial statements the admin and finance team creates and put them into a more corporate format. In the City’s records there are not listings for capital assets, depreciations or OPEB liability. Because of this the City has a negative net position on the audit. This is typical of almost every city and town. It does not affect the rating, but it has been encouraged to be proactive towards making changes; the OPEB trust and paying into it which is established and has the intent to incorporating it into a long term plan.  Councilor Stanganelli asked, in terms of the audit, specifically page 9 referring to stabilization funds and the unencumbered amount listed there, what has the position changed from that audit, which was last fiscal year to now, and what should our target be? o Angel answered by saying the recommended target is between 5% and 7% of the general fund operating budget. She said she believes the City is at 1%.  Councilor Stanganelli asked, if Angel could explain the miscellaneous revenue mentioned on page 13. o Angel replied that the auditors take the City’s reports and “squish” them together. She said she has reached out to the auditors to get a true description of what makes up the $400,000.00 micellaneous revenue. She said she believes it is mostly the micellaneous revenue in the general fund as well as Medicare reimbursement, fees and cable fund. She said she will get that information for the committee.  Councilor Stanganelli posed a question from a constituent in regards to school choice. He said in his understanding the school department does not pay if someone is going out of district, the City pays. He questioned whether or not the City may gain some money by spending less by confirming whether or not somebody is an Amesbury resident attending another school and having the City pay for it. He said because of the tough fiscal year finding ways to save money would be beneficial. o Angel replied by saying the way that is charged to the City is through the cherry sheet. She said it does not come out of the school budget, it comes out of the City’s cherry sheet revenue. o Councilor Stanganelli said we might want to have this conversation in Joint Education committee and circle back to Finance Committee. Public Comment: none at this time. 2021-044  Councilor introduced the City of Amesbury’s Chief Assessor, Todd Laramie, who will be discussing the order.  Councilor Stanganelli said the biggest question probably is, what would the impact on the tax bill and the tax rate be? o Todd said how he approached this was he reached out to the Assessor in Reading and Wakefield, MA who began this program with success in the towns. o There is the fact that with the circuit breaker tax and the exemption program there would be a shift in the percentages between commercial and residential because residential would have to fill in the gap left form the tax program. o Todd recommended shifting the weight to the commercial and industrial class to offset the residential taking the burden.   Councilor Stanganelli regarding the spreadsheet in box E-28, where it says, “cost at 1.02 shift… the average commercial evaluation is $256.39…” is that shift per the entire class or each parcel within that tax bracket? o Todd explained it is for each property. He said in Reading, MA and Wakefield, MA there are a lot more commercial properties in comparison to Amesbury. In Amesbury, he said, there are a lot of ‘Mom and Pop’ places and that is where he sees an issue in the taxing. He thinks it will be a lot for those smaller businesses to take on a higher tax to cover the shift. He went on to say, in a hopeful sense, these senior citizens who get this tax break will be the ones going into these small businesses and supporting them.  Councilor Stanganelli asked if the tax is just real estate or personal property as well. o Todd replied by saying it is personal property as well.  Councilor Rinaldi stated, this program would apply to anyone who qualified for the Senior Circuit Breaker Tax Credit. He asked, what percentage of the people who qualify are the spreadsheet numbers based on? o Councilor Stanganelli replied, in the proposal it states the numbers are based on if 30% of Circuit Breaker filers because that seems to be the average number in other communities. o Councilor Rinaldi stated, the highest number of applicants based on the Circuit Breaker filers would be 376.  Councilor Einson asked if the residential category in the spreadsheet encompassed, single family and multifamily homes, condos, apartments, etc. o Todd replied yes.  Councilor Einson shared his concern about the proposal getting “messy” with the different forms of taxation. He said he wants to see the benefits for the senior citizens.  Councilor Mandeville asked if there is an option where the tax rate raises for both commercial and residential so there would not be a split tax rate between the two. Councilor Einson motioned to send order 2021-044 back to city council with no recommendation pending further investigation. Councilor Kisieleski seconded this motion. Roll call was not taken. Councilor Einson motioned to continue order 2021-044 to the next regularly scheduled City Council Finance Committee meeting. Councilor Kisieleski seconded this motion. Roll call was taken. 7 out of 7 members present voted yes. Motion passed. 2021-045  CFO, Paul Fahey, explained the budget for FY 21 did not include money for additional staffing. The reason for this transfer is because there is an internal employee that can assist in the IT department with their work. She is dividing her time, 50/50 between the Library and IT. The Library budget will pay for her time at the Library, and this transfer of money to the IT budget will cover her time with IT for the remainder of FY21. Councilor Rinaldi motioned to send order 2021-045 back to City Council with a positive recommendation. Councilor Lennon seconded this motion. Roll call was taken. 8 out of 8 members present voted yes. Motion passed. 2021-047   Robert Desmarais stated the summary just about sums it up, the DPW is reconfiguring the intersection of Friend Street and Highland Street, adding some crosswalks at those three locations on Merrimack Street.  Councilor Einson asked if the grant will totally cover the project and if there is excess can the City use it. o Robert answered by saying there might be a couple thousand left over. If there is any excess it will go back to the state, the City cannot keep it. Councilor Wheeler motioned to send order 2021-047 back to City Council with a positive recommendation. Councilor Hogg seconded this motion. Roll call was taken. 8 out of 8 members present voted yes. Motion passed. 2021-049  Fire Chief Kenneth Berkenbush explained the invoices accrued were sent to the wrong department where the person in that department thought the Fire Department was getting the invoices as well. Councilor Einson motioned to send order 2021-049 back to City Council with a positive recommendation. Councilor Wheeler seconded this motion. Roll call was taken. 8 out of 8 members present voted yes. Motion passed. 2021-50  Director of Facilities of the School Department, Matt Bennett, explained the repairs needed within the schools of Amesbury.  Angel explained the full amount in the title of the order will be allocated to multiple different departments including the School department. Councilor Wheeler motioned to send order 2021-050 back to City Council with a positive recommendation. Councilor Mandeville seconded this motion. Roll call was taken. 7 out of 8 members present voted yes (Lennon – no). Motion passed. Councilor Lennon motioned to adjourn. This motion was seconded by Councilor Mandeville. Roll call was taken. 8 out of 8 members present voted yes. Motion Passed. Adjourn at 8:39pm. Respectfully Submitted by, Eleanor Andersen, April 23, 2021 SENIOR DISCOUNT TAX RELIEF Created and implemented in Reading and Wakefield, this form of tax relief is easy for seniors to understand and simple to administer locally. It is based on the Senior Circuit Breaker Income Tax Credit offered for many years by the state. We used FY 2021 numbers to project the costs of this tax relief. It is funded by a shift within the residential class of property. Because we are a single tax rate community, a shift like this will create a higher residential tax rate. Reading had the same issue and decided for a CIP shift of 1.02 onto their commercial, industrial and personal classes of properties to have a slightly higher CIP (Commercial) tax rate. Contemplating a CIP shift would actually shift the cost of this program onto the commercial classes of properties for a 100% match. A CIP shift of 1.02 would share the cost of the program between the residential and commercial classes of properties at a 150% reimbursement. With help from the folks that created this, we used 4 years of Reading Data for our assumptions. Available state data on Circuit Breaker usage had 372 people in Amesbury receiving the discount. But, because the data is not broken down by owner vs renter, we used an estimate of about 1/3 or 120 applicants. At 120 applicants, the cost of the program would be about $136,000 at the 100% reimbursement and about $200,000 at 150% reimbursement