The Finance Committee has directed each town body that has budget responsibility to prepare two budgets―one at the same spending level as this year, and one at five percent less than this year—for fiscal year 2011.
At the behest of the committee, Town Administrator Tim Bragan will issue shortly the Fiscal 2011 Budget Memorandum, which emphasizes that budgets are not to be prepared at “level service” (keeping the same services budgeted at next year’s cost), but at “level funding.” If there are unavoidable cost increases―for example, contractual salary increases―they must be offset by savings, either by reducing expenses elsewhere or by reducing personnel, or by finding new revenue sources. Further, increases in employee benefits costs (estimated to be seven percent higher than last year) for each town body must be covered, without budget increase, by that body’s budget—even though such expenses are not budgeted at the individual department or board level.
Each town body is expected to provide the Finance Committee a detailed report explaining what services would be funded and what would be reduced or eliminated, along with the impact of reduced budgets over the last two years, and the anticipated effect of further reductions in fiscal years 2011 and 2012.
It is expected that some savings will result from efficiencies—for example, energy improvements and pooling resources with other departments or other communities. Boards and departments are also asked to identify new revenue sources or grant funding that could provide budget relief without cutting services.
At the Finance Committee’s Nov. 18 meeting, Finance Director Lorraine Leonard reviewed the current-year budget and next year’s revenue forecast as background for establishing guidelines for next year’s budget. Due mostly to end-of-fiscal-year adjustments to the state’s “cherry sheet” receipts and charges, the current year budget is running at a $65,571 deficit. Leonard said this is not a major problem because there is more than $400,000 in the reserve fund, and free cash has been certified at an additional $422,845.
The state’s worsening financial condition, recently pegged at a $600-million deficit this fiscal year, is the biggest concern. Governor Patrick’s Oct. 29 cuts did not significantly affect aid to cities and towns, but there is no guarantee that there won’t be a second, larger round of cuts in a few months, as happened last year. Finance Committee member George McKenna expressed optimism that, thanks to decisions made last year to cut more than was necessary to offset mid-year cuts from the state, the balances available in free cash and the reserve fund should be sufficient to offset any mid-year local aid cuts this year. He warned, however, that the funding crisis isn’t over, and it is important to continue to budget within available recurring funding, and not to be tempted to use free cash or stabilization money to fund ongoing operations.
Leonard anticipates 15 percent less local aid from the state in fiscal 2011, and forecasts expenses based on level funding. Applying those assumptions yields a budget with a deficit of $300,000. In recent Finance Committee discussions, members have indicated they may want to fund some budgets more fully than others when they can understand and compare the impacts, and evaluate them against overall town needs and priorities.
Budgets are due in early January.
The full text of the Fiscal 2011 Budget Memorandum is available online at www.harvardpress.com, About Harvard, Harvard Wiki, Harvard by the Number$.
