Committee to consider transfer
of undesignated
funds to School Department
12/10/08
Manager outlines budget challenges, goals for next fiscal year
A 2010 town budget that will overcome a half-million dollar funding challenge, with no property tax increase for town services, no new fees, and continued services that the town already does a good job in providing.
Those were among budgetary goals outlined by Town Manager Michael McGovern at the Dec. 8, 2008 town council meeting, where councilors reviewed the status of the current municipal budget and looked forward to preparing one for next year.
The council will meet as the finance committee, a committee of the whole council, in its first workshop on Tuesday, Jan. 6, at 7:30 p.m. at the Town Hall.
"Our outlook for 2010 is not great," McGovern said, but there were few surprises in the news of anticipated decline in revenue from excise tax from automobile registrations, and state revenue sharing. In fiscal year 2010, non-property tax revenues are estimated to fall $361,000. "That's about 10 percent from revenues other than property tax," McGovern said. Excise taxes are projected to be $170,000 less than the current year's, and state revenue sharing is expected to be $58,000 less than the budgeted level for 2009.
At the same time, the town will be facing approximately $200,000 in budget-increase pressures, including increases for employee contracts and benefits, and unbudgeted funding for the town's fitness center.
Plans to privatize the center failed last spring, leaving the town with the $68,000 cost of continuing to provide the service.
New property valuations are expected to offset the anticipated decline in revenue, leaving the town with a projected $517,000 "budget challenge," McGovern said.
McGovern recommended the finance committee come to early decisions as to how to meet the challenge. His goals, he said, are to:
- Prepare a municipal budget with clearly definable, achievable budget savings.
- Prepare a budget with no tax increase and no new fees areas, other than slight fee adjustments where appropriate.
- Review opportunities for significant structural changes in how services are delivered
- Continue to provide the services that the town provides well.
"I don't want to nickel-and-dime the different services we are going to provide," McGovern said, explaining his final goal. "If we're going to do something, we should not do it half-baked," he said.
McGovern said he would provide a broad outline of suggested restructuring measures to the finance committee by their Jan. 6 meeting.
Anne Swift-Kayatta, who will head the finance committee this year, also suggested that the council hold a public budget forum some time after the first finance committee workshop. The forum, she said, would be a chance for the public to comment on their priorities and offer their suggestions to address the fiscal year 2010 budget challenges.
Swift-Kayatta, also the council's representative on the Maine Municipal Association's Legislative Policy Committee, warned of pending citizen initiatives seeking to change excise taxes. "It would cut 40 percent of our excise tax revenue, and that's a big source of revenue for us," she said.
Cape Elizabeth's representatives in the state House and Senate have been invited to the Jan. 6 finance committee workshop, which is, as are all workshops, open to the public.
Committee to consider transfer
of undesignated
funds to School Department
In a related matter, the council will consider a recommendation from the town manager to transfer $200,000 from the town' undesignated fund balance to the School Department's undesignated fund balance.
The transfer is intended to provide a funding bridge for the School Department as it faces an anticipated $421,000 curtailment in state general purpose aid to education, the result of shortfalls in state revenue.
"This amount would not increase the school budget at all," McGovern said. The budget is set at $19.8 million, an amount validated by voters in September. "What it would do is be a part of the overall plan of addressing how they're going to deal with a $421,000 shortfall."
To date the schools have put a hard freeze on spending for supplies, equipment and professional development, have considered using their $70,000 budgeted contingency fund, and put off doing some roof repair work, McGovern said. "Even with all those measures it's really difficult to adjust the budget during the (fiscal) year," he said.
The transfer would leave $1.95 million in the town's undesignated fund balance, 7.5 percent of the total general fund for municipal, school and county services. The percentage recommended by the town's auditors is 8.3 percent, McGovern said in a telephone interview.
Undesignated surplus funds are used typically to aid with things like cash flow between tax due dates, provide property tax abatements, and "if things come along unexpectedly," McGovern said. Undesignated fund balance is also taken into consideration when determining bond ratings.
The chairmen of the council and council finance committee have scheduled a meeting with their counterparts on the School Board for 8 a.m. Friday, Dec. 19, in the William H. Jordan Conference Room at Town Hall. The finance committee is slated to make a recommendation on McGovern's proposal to the town council at its meeting Jan. 12, 2009.
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