Town of West Boylston, MA - February 5, 2008: West Boylston Revenue Projections and Budget Discussions

Last evening, the Board of Selectmen met with the Finance Committee, the School Committee, our Finance Director Michael Daley and I to go over the revenue projections for FY09. This officially begins formal budget discussions in West Boylston in anticipation of the Spring Town Meeting.

Below, you will find my presentation to the Town officials last evening on revenue. You should know that I will be conducting informal ‘budget hearings’ over the next month and a half to meet with Departments, Boards and Committee and average taxpayers on budget needs, budget concerns and setting of budget priorities for not only next year but for years to come.

The public hearings will be held February 26^th from 5:30 p.m. to 7:00 p.m. and March 13^th from 5:30 p.m. to 7:00 p.m. at the new municipal offices at 127 Hartwell Street, Door 1. In addition, I would like to remind people of another opportunity to hear budget presentations. The School Committee will be having their annual budget meeting on February 13^th.

These meetings will be everyone’s opportunity to hear about the municipal budget and provide input. Please feel free to attend one or more of these discussions. If you cannot attend but would still like to provide testimony about the Town’s budget, please feel free to email me at lgaumond@westboylston.com.

West Boylston has enjoyed somewhat modest revenue growth over the past several years raging from roughly 3% to 6%. Unfortunately, the trend over the past few years shows that the Town’s revenue increases have slowed considerably, none worse than the past couple of years.

The Town’s revenue for appropriation is divided into four main categories: property taxes, state aid, available funds and miscellaneous receipts. For FY09, the Town’s revenue looks as follows:

State Aid: $4,592,036 (using Governor’s numbers)

Available Funds: $941,377 (using current estimates)

Local Receipts: $2,100,000

Tax Levy: $11,960,927 (including $157,000 for new growth)

Total Revenues projected for FY08: $19,594,340

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 Analysis, please refer to the chart in the Appendix D entitled Town of West Boylston Taxation Analysis. As you can see, the Town is becoming more and more reliant upon residential taxes as a main source of the Town’s revenues (from 79.09% in FY01, peaking at 85.73% in FY07, and now at 85.73%). This is increasingly unhealthy for our Town to maintain and continues to move in the wrong direction.

As the Town’s primary revenue source, the property tax levy limit is expected to increase in FY09 by approximately $456,805 to $11,960,927. This increase includes the allowable 2.5% increase plus new growth of roughly $157,000 in taxes from new growth properties projected to come on line (estimated). This number does NOT include any additional resources from the National Grid project which, per Town policy, would go to the stabilization funds or the capital fund.

State aid – West Boylston’s second largest revenue source – is estimated to be level funded at this time. This would put the Town in line to receive a approximately $4,592,036 when you back out the assessment charges. We also receive $700,4720. in school building assistance money to help offset our payments for the school renovation project.

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. 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 general, the Town’s Financial Officials are projecting the Town’s Miscellaneous Receipts are expected to be slightly less than last year and we will estimate this at $2,100,000. We continue to monitor how we are doing on our local receipts for FY08 and we do not expect these numbers to be improving much over the next few months.

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 more 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.

This year, the Town realized Certified Free Cash of approximately $736,377 at the close of FY08. These funds were derived from aggressive tax collections, revenues in excess of initial projections, and budgetary surpluses (particularly in health insurance). In FY08, Town Meeting used all ($366,464) of the Town’s free cash to help balance the budget.

Other sources of available funds in FY08 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.

In FY07, the Town utilized roughly $1 million in available funds to balance the Town’s budget. As one would imagine, this is a very difficult position for the Town to find itself in on a yearly basis, however that is exactly where the Town finds itself.