Town Council - Ways & Means Committee

MEMBERS Braintree Town Council Thomas Bowes, Chairman Committee of Ways & Means Shannon Hume, Vice-Chair One JFK Memorial Drive Stephen C. O’Brien, Member Braintree, Massachusetts 02184 Timothy Carey, Member Thomas Whalen, Member MINUTES June 19, 2018 A meeting of the Committee of Ways & Means was held in the Johnson Chambers, Braintree Town Hall, on Tuesday, June 19, 2018 at 6:30p.m. Councilor Bowes was in the Chair. The Clerk of the Council conducted the roll call. Present: Thomas Bowes, Chairman Shannon Hume, Vice-Chairman Stephen O’Brien, Member Timothy Carey, Member Thomas Whalen, Member Also Present: Shawn McGoldrick, Town Auditor The meeting was opened with the pledge of allegiance to the flag followed by a moment of silence for all those serving in our armed services, past and present. Approval of Minutes • None New Business • 022 18 Councilor O’Brien: Fiscal Year Budget Analysis and Review or take up any action relative thereto Shawn McGoldrick, Town Auditor submitted a memo to Chairman Bowes at the meeting in reference to Highlights and analysis of the Committee of Ways and Means fiscal year 2019 operating budget hearings. Mr. McGoldrick stated I would like to provide you with the following information based on our review of the fiscal year 2019 proposed operating budget as well as hopefully address some of the concerns that were brought up by members of the Committee of Ways and Means during the proceedings: 1. The proposed fiscal year 2019 general fund operating budget of $133,883,370 is balanced with $133,883,370 of revenues and other financing sources. 2. The fiscal year 2019 budget increased approximately $7,251,000 (5.73%) from fiscal year 2018. The School Department increased approximately $2,534,000 (3.92%), mainly to due to contractual salaries; Police Department increased June 19, 2018 Ways & Means Committee 1 of 5  approximately $1,020,000 (11.06%), mainly due to the additional hiring and funding of additional police officers; transfer to the Braintree School Building Authority increased $1,020,000 (100%) and employee benefits for pension and health insurance increased approximately $1,156,000 (5.93%). The majority of all other 2019 appropriations of the Town remained relatively the same as in fiscal year 2018. 3. Consistent with prior years, the Town did not use general fund free cash or stabilization funds to balance the fiscal year 2019 operating budget. 4. As part of the 2019 general fund estimated revenues and other financing sources summary, various local receipts and other finance source (town own land) estimates increased as follows: a. Local receipts: i. Rentals; $370K – New billboard ii. Investment income; $271K – Rise in interest rates iii. Miscellaneous recurring; $125K – Federal school grant pension reimbursement estimate iv. Miscellaneous non-recurring; $250K – Insurance proceeds from MIIA for evidence room claim b. Town owned land increased approximately $1,296,000. Town is selling Allen street property (former BELD property located down in the landing). 5. A new enterprise fund was established, the storm water enterprise fund. This fund was established due to new EPA regulations and increasing compliance costs. A $6.25 quarterly base fee per single family home with an increasing business fee will be charged in order to support the costs of this fund. 6. The current balance of general fund free cash is $11,202,231 which represents 8.57% of the fiscal year 2018 general fund operating budget. The Town’s policy is to maintain free cash at 10% of the most current general fund operating budget. Typically the Town will generate a moderate increase in free cash at the end of each year. For the past three years free cash was certified at $12,928,000, $14,504,000 and $15,029,000 for fiscal years 2015, 2016, and 2017, respectively. Each year, subsequent to the certification by the DOR, the Town appropriates free cash for capital outlay and stabilization reserves in amounts to adjust the free cash down to the 10% target rate. 7. The following is an analysis of the Town’s excess levy capacity for fiscal years 2015 through 2018 and the projected amount for fiscal year 2019. In fiscal years 2015 and 2016 the Town maintained little excess levy capacity. That is because local receipts were underestimated. In fiscal year 2017 the excess levy capacity increased to $1,727,000 because the Town adjusted its estimated local receipts to more accurately reflect actual performance. Local receipts for fiscal years 2017 and 2018 are not underestimated which means any reduction to local receipts has a June 19, 2018 Ways & Means Committee 2 of 5  direct impact increasing the tax levy. In fiscal year 2018, the excess levy capacity decreased by approximately $600,000 because of the funding of the school building projects. Per Discussion with Ed Spellman, Director of Finance, the excess levy capacity will continue to decrease in fiscal year 2019 as a result of increased funding of the school building projects. The debt service for the current school building projects (East Middle School and South Middle School) are not excluded from proposition 2 ½. Because of the combined effect of the increase in nonexempt debt service and local receipts being accurately estimated, the Town will most likely have little excess levy capacity for the foreseeable future. It is expected that in 2020 little to no excess capacity will exist. 8. General Fund debt service for fiscal year 2019 is appropriated at $4,335,000 (3% of total appropriations). This percent is consistent with the prior year and is relatively low percent in comparison with similar size communities. 9. The Town has the following fund balance related reserves (deficits) as of June 2018: June 19, 2018 Ways & Means Committee 3 of 5  General fund free cash is $1,869,191 short of its targeted 10% of current year appropriations. When fiscal year 2018 closes, it is predicted that free cash will be certified at an amount that equals or exceeds the 10% target rate. The stabilization fund, with a fund balance of $138,897, is approximately $6,397,000 short of its targeted 5% of current year appropriations. The stabilization fund continues to add funds during the year, appropriated from free cash, and then subsequently, the majority is transferred out via supplemental appropriations for capital purchases. The Water/Sewer Fund’s free cash represents approximately 20% of its fiscal year 2018 appropriation. The Community Preservation Fund has approximately $4,892,000 in uncommitted reserves and unreserved fund balance. Councilor O’Brien stated he would like to see a report like this each year from the Town Auditor as it is stated in their job description. Councilor O’Brien made a motion to encumber the remaining FY2018 Town Auditor funds to continue the 3-year town wide forecast and the fraud risk assessment (COSO). Motion: by Councilor O’Brien Second: by Councilor Hume Vote: For (1 – O’Brien), Against (4- Bowes, Carey, Hume, Whalen), Absent (0), Abstain (0) MOTION failed. Councilor Hume made a motion to encumber the remaining FY2018 Town Auditor unexpended funds to continue the fraud risk assessment (COSO). Motion: by Councilor Hume Second: by Councilor Carey Vote: For (4- Bowes, Carey, Hume, Whalen), Against (1 – O’Brien), Absent (0), Abstain (0) • 18 035 Mayor: FY18 Supplemental Appropriations #5 or take up any action relative thereto (WITHDRAWN) No action needed. Old Business • None It was unanimously voted to adjourn the meeting at 6:37p.m. June 19, 2018 Ways & Means Committee 4 of 5 Respectfully submitted, Susan M. Cimino, Clerk of the Council Documents provided for Meeting • 022 18 Councilor O’Brien: Fiscal Year Budget Analysis and Review or take up any action relative thereto • Memo from Town Auditor RE: Highlights and analysis of the Committee of Ways & Means fiscal year 2019 operating budget hearings June 19, 2018 Ways & Means Committee 5 of 5