FY12 Revenue Budget – Overview
West Boylston has enjoyed somewhat limited revenue growth over the past several years. Unfortunately, the trend over the past few years shows that the Town’s revenue increases have slowed considerably, and this year is expected to be just as bad across the Commonwealth of Massachusetts.
The Town’s revenue for appropriation is divided into four main categories: property taxes, state aid, available funds and miscellaneous receipts. For FY12, the Town’s revenue looks as follows:
Property taxes are the largest single revenue source for the Town and historically provide approximately 60% of total operating revenues. Typically, year to year variations of 1 or 2% are the result of external factors beyond the Town’s control which affect some of the significant components on non-tax revenues; examples include the amount of state funding received, the general level of building activity and the movement, up or down, of interest rates.
Property taxes are levied on real property (land and buildings) and personal property (equipment) used by West Boylston’s non-manufacturing business firms. In accordance with State Law, the Town’s Board of Assessors determines the fair market value of all taxable real property.
Under the provisions of Proposition 2 ½, property taxes, in the aggregate, may not exceed 2 ½% of their ‘full and fair cash value.’ This limit is known as the ‘levy ceiling.’ Annual levy increases may not exceed 2.5% more than the previous year’s levy plus the taxes added from any new properties added to the tax rolls. Any Proposition 2 ½ override or debt exclusion amounts voted are added to the levy limit.
For a more detailed view of the Town’s taxation, please refer to the chart in the Appendix D entitled Town of West Boylston Taxation Analysis. The Town is heavily reliant upon residential taxes as a main source of the Town’s revenues (from 79.09% in FY01, peaking at 85.9% in FY06, and now at 79.11%). This highlights the need for addition commercial and industrial ventures in the community.
As the Town’s primary revenue source, the property tax levy limit is expected to increase in FY12 by approximately $393,582 to $13,621,341. This increase includes the allowable 2.5% increase plus new growth of $75,000 in taxes from new growth properties projected to come on line (estimated by the Board of Assessors).
Miscellaneous Local Receipts
This category of revenues includes a variety of fees, permits, fines, and license related monies that the town receives, as well as interest that is earned on investment or paid by late taxpayers. The single largest source of funds within this category is Motor Vehicle Excise Taxes, which is a state tax collected by the municipality for its own use and is much lower than in recent years due to the declining economy. The level of miscellaneous receipts is greatly affected by outside economic conditions. Hence, the current recessionary period results in fewer buildings and fewer new licensed establishments and businesses being started. The general economic slowdown also affected the amount of money earned through interest on investments and on the level of delinquent taxes being paid with interest.
In FY2009, the Town saw a little more than $1,907,000 in local receipts. In FY10, that number rose slightly to $1,995,000. For the current fiscal year (FY11), we used the estimate of $1,961,000 which the Department of Revenue has concurred with. The Department of Revenue generally will not allow communities to estimate more local revenue than we got in the year before. That being said, we acknowledge the improving economy and have built in a 2% increase which we will hope to meet.
Another source of funds for the Town is monies in various Special Revenue Funds, certified free cash from prior years, unexpended bond proceeds, and funds remaining from completed projects. Let me be clear that these sources of funds may not always be consistent and should not be counted on for developing our annual revenue numbers. A prudent approach to these funds would be to use these funds to appropriate for warrant articles and to add to our stabilization fund and/or capital investment fund. Indeed, last year the Town voted at Town Meeting to use three quarters of a million dollars to help balance the budget that is not available for appropriation this year.
Other sources of available funds in FY11 are projected to include our stabilization fund, our Capital Fund, transfers from ambulance receipts, transfers from the Wachusett EMS Fund, any overlay surpluses, and other sources. One area of good news, our ambulance receipts are an area of growth for the Town. I anticipate being able to use roughly $421,250 from the Ambulance Receipts and $25,000 from the Wachusett Fund. In addition, using the newly adopted Reserve Policy, I expect to utilize $210,000 of free cash totaling $656,250. We also should be aware that we estimate CPA funds but do not include those in our operating revenues.
This year, the Town has about $210,000 of Certified Free Cash at the close of FY10 that is available for expenditure. These funds were derived from aggressive tax collections, revenues in excess of initial projections, and budgetary surpluses.
Some good news, in FY10, the Town utilized nearly no non-recurring available funds to balance the Town’s budget, essentially eliminating our structural deficit. The bad news is that our usage of nearly $750,000 of non-recurring funds in 2009 was one factor that contributed to the downgrade of our bond rating this past year. Also, this year’s municipal budget did include more than $130,000 in one-time revenues to support the school department on Town Meeting floor which will contribute to a deficit for FY12.
State aid – West Boylston’s second largest revenue source – is expected to be reduced by 4% according to legislative estimates. According to the Governor’s preliminary numbers, the Town is in line to receive another cut in local aid revenues as well as higher assessment charges. This will result in a net income from the state totaling $3,786,473 which includes $638,459 in school building assistance money to help offset our payments for the school renovation project.
I would be remiss if I did not also point out that the Commonwealth of Massachusetts also makes an annual payment to the Town for West Boylston’s hosting of the Wachusett Reservoir and the state owned lands herein. Under the law, the payment can never be decreased as other PILOT (Payment In Lieu of Taxes) can be. This year the Town is expected to receive over $602,000 in such payments and is included in our local receipts.