Lawmakers grapple with tight budgets

March 1, 2017

Despite a delay in public hearings on the fiscal 2018 state budget bill that was filed by Gov. Charlie Baker in January, legislators have been busy taking stock of the governor’s proposal and working on their own priorities.
 
The MMA has weighed in with House and Senate leaders on municipal budget priorities based on the budget and finance resolution approved by local leaders at the MMA Annual Business Meeting on Jan. 21. The priorities include the increase in general municipal aid under the governor’s revenue-sharing plan and higher levels of education aid than recommended by the governor.
 
The MMA asked the Legislature to move more quickly than the governor did on the recommendations of the Foundation Budget Review Commission to update the Chapter 70 school finance law, to fully fund the account to mitigate the fiscal impact of charter schools on local public schools, and to improve funding for other accounts.
 
The House Ways and Means Committee’s budget recommendation is expected in mid-April, as has been the practice for the past decade. The Senate budget committee’s recommendation is expected in mid-May.
 
While the governor and legislative leaders had reached agreement on a tax collections forecast for next year, the governor’s budget is balanced using other tax and non-tax revenues that the House and Senate will have to take a look at.
 
The governor included $300 million in non-tax revenue from an assessment on employers that do not offer health insurance or have low participation in the company program. The funds would be used to help fund the MassHealth program.
 
The governor also budgeted new revenue from improving sales tax collections from out-of-state online retailers and from extending the state’s room occupancy tax to non-traditional renters such as Airbnb.
 
Work on the fiscal 2018 revenue and spending plan is underway even as worries continue about the fiscal 2017 budget. After a disappointing start to the year that led to a reduction in the revenue forecast and Section 9C spending cuts by the governor, the budget may be a concern right through to the end of the year.
 
Tax collections through January grew by only 2.7 percent and fell slightly below the new lower target. Budget watchers await results from April and June, the largest months for tax collections each year.
 
On Feb. 17, the governor filed a $259 million supplemental budget to cover mainly unavoidable shortfalls, including $20 million for unbudgeted state snow and ice costs and $62 million for representation of indigent defendants.
 

Written by 

MMA Legislative Director John Robertson

posted by Jeff Bennett

DEPARTMENT OF REVENUE                                           DIVISION OF LOCAL SERVICES

TECHNICAL ASSISTANCE SECTION

Revenue and Appropriation Deficits:
 Field visits with municipal finance officials have revealed several misconceptions about what constitutes a budget “deficit.” Oftentimes, the term is used when projected revenues fail to meet anticipated expenditures at the start of the budget process. However, because municipal budgets must be in balance, this shortfall or gap should be closed before the start of the fiscal year. Once the tax rate is set, appropriation and revenue deficits arise through the course of the fiscal year and must be addressed before the following year’s tax rate can be approved. An “appropriation deficit” is described as: The excess of expenditures at any point during a fiscal year over the legally authorized amount approved by the local appropriating authority for the same period. With three spending exceptions (i.e., for court judgments, snow and ice costs and overlay), or in case of an emergency that threatens public health or safety, a city or town department may not over expend its appropriation under M.G.L. c. 44, §31. Unless corrected, or covered, prior to year-end through the transfer or appropriation of unexpended reserves, all appropriation deficits must be raised on the Tax Rate Recapitulation Sheet (Recap Sheet) for the ensuing fiscal year. Illegal appropriation deficits are also a negative hit to free cash, which creates a double penalty. A “revenue deficit” is defined as: The amount by which actual revenues at year-end fall short of projected revenues and are insufficient to cover actual expenditures (not including appropriation deficits). A revenue deficit must also be raised on the Recap Sheet for the following year, but unlike an appropriation deficit, it will not affect a community’s free cash calculation. It is useful to remember that in determining revenue deficits, municipalities are allowed to regard the current year’s net real and personal property taxes as 100 percent collectible. This effectively narrows the source of a revenue deficit to the state aid or local receipts categories. For more information including common questions, answers and examples, see the DLS online publication Revenue Deficits. In the instance of both deficit types, monitoring expenditure and revenue trends during the year can help identify potential problems. Oftentimes, an appropriation deficit can be corrected during the fiscal year. To address an anticipated revenue deficit usually requires a corresponding mid-year spending reduction. However, a revenue deficit is not fully quantified until after the fiscal year is closed and a balance sheet is prepared.

There are methods of avoiding and/or remedying deficits
• Town accountants and city auditors should monitor revenues and departmental expenditures throughout the course of the fiscal year. Trends in actual revenue compared to projections and actual expenditures compared to appropriations should foreshadow the threat of a deficit.
• Under M.G.L. c. 41, §56, the accountant or auditor should disallow any payment request from a department when the appropriation balance in the line-item to be charged is insufficient to cover the invoice amount. This method is exercised through the warrant process and will prevent appropriations deficits if performed timely.
• A town meeting or the city council may approve mid-year line-item transfers, or appropriate from reserve balances. In each case, the request would originate with the executive branch.
• Under M.G.L. c. 44, §33B, a city council, or a board of selectmen with concurrence from the finance committee, may transfer appropriations between line items provided that:

Appropriations are not taken from the school department or municipal light plant;

The transaction is approved during the last 2 months of the fiscal year or the first 15 days of the ensuing fiscal year.

 Under M.G.L. c. 40, §5A & M.G.L. c. 40, §6, the city council or town finance committee may vote to transfer from the reserve fund an amount to fund extraordinary or unforeseen expenses.

posted by Jeff Bennett

Deficit spending for snow and ice:

Section 31D: Snow and ice removal; emergency expenditures; reporting requirements

[ First paragraph effective until November 7, 2016. For text effective November 7, 2016, see below.]

  Section 31D. Any city or town may incur liability and make expenditures in any fiscal year in excess of available appropriations for snow and ice removal, provided that such expenditures are approved by the town manager and the finance or advisory committee in a town having a town manager, by the selectmen and the finance or advisory committee in any other town, by the city manager and the city council in a city having a city manager or by the mayor and city council in any other city; provided, however, that the appropriation for such purposes in said fiscal year equaled or exceeded the appropriation for said purposes in the prior fiscal year. Expenditures made under authority of this section shall be certified to the board of assessors and included in the next annual tax rate.

[ First paragraph as amended by 2016, 218, Sec. 74 effective November 7, 2016. For text effective until November 7, 2016, see above.]

  Any city or town may incur liability and make expenditures in any fiscal year in excess of available appropriations for snow and ice removal, provided that such expenditures are approved by chief administrative officer; provided, however, that the appropriation for such purposes in said fiscal year equaled or exceeded the appropriation for said purposes in the prior fiscal year. Expenditures made under authority of this section shall be certified to the board of assessors and included in the next annual tax rate.

  Every city or town shall annually, not later than September fifteenth, report to the division of local services of the department of revenue the total amounts appropriated and expended, including any funding or reimbursements received from the commonwealth, for snow and ice removal in the fiscal year ending on the preceding June thirtieth.

posted by Jeff Bennett

The best and the brightest? or who is on first?  A PILOT or no PILOT?

david smartFebruary 26, 2017 at 10:37 AM

To top it all off the light and water pay no PILOT to Templeton and board after board have little power to due anything about it.
WHY?

Wasn't it your board JEFFY that was the first time we were shorted the PILOT payments?
Good job there also!
With now power to do anything about it i might add.
Or maybe no desire to confront and get it back would be a fit.
You see i get the feeling your Buddy DANA another plow contractor would get upset about any involvement and cooperation or lack of you would have had back then.
It all adds up and i think we as in others minus you would have had a lot better results if it was without your help and involvement.
So which team are you on this time Jeffy?
One only has to think back and ask why didn't Jeffy ever go to any light and water meetings and help out the cause?
It's clear now!

pretty much says all that needs to be said!

posted by Jeff Bennett

Templeton Town by-laws -

Article IV - Advisory Committee

section 1. There shall be an Advisory Committee (not a board) consisting of seven legal voters of the town who shall be appointed by the Moderator as herein provided. No elective or appointive town officer or town employee shall be elgible to serve on said committee, except that a representative from the Advisory Committee shall be entitled to serve on Capital Planning and the insurance advisory committee. (That last one is in correct according to state law)

Section 5. In the discharge of it's duty, said committee shall have free access to all books of record and accounts, bills and vouchers on which money has been or may be paid from the town treasury. Officers, boards and committees of the town, shall, upon request, furnish said committee with facts, figures and any other information pertaining to their several activities.

Section 6. It shall be the duty of the Advisory Committee to make an annual report of its doings, with recommendations relative to financial matters and the conduct of town business, to be contained in the annual town report.

Labor contracts are town business, adding to debt in any way is town business. This current board of selectmen who signed off on contracts, have been so far unable to get a fire chief and now a town administrator. The board of selectmen I served on had no such problem and now the question (s) should be, why? What keeps getting in the way of getting these vital positions filled?

Why did the purchase of a truck not go through capital planning? Why would a board or department head go the deficit spending route? It seems the go around town meeting is the preferred route for some and that should be taken seriously and as an insult to the voters/taxpayers, in my opinion.

posted by Jeff Bennett

No one is fooled, not when the Town Administrator sends documents to the Advisory Committee stating things such as;
"Snow & Ice - Failure to plan for expenses of making sand." Who is in charge of planning a department expense such as "making sand" for winter time? Unplanned purchase of used truck for the fleet. Who is responsible for asking selectmen to buy a truck on credit, as in use the deficit spending law to get around capital planning and town meeting to buy a truck? Unplanned repair to machine that rescreens sand at the highway garage. Why is the sand rescreened? Was it not done properly the first time? Again, why is this repair being done on credit rather than from the maintenance expense account? Again, this action results in having to find more money to pay this bill which will become due. The town either has to find the money from existing funds, remember the last time when money was taken from fire/EMS salary to pay for snow & ice deficit then had to put some back because that caused a shortage in that account! So now highway department head, again goes to the credit card, the selectmen allow it and now that money will have to be found and again, it takes away from other departments. This is not new and is no surprise to this resident nor the Advisory Committee. We can read and we get financial updates.

The town administrator also included this:
"The issue that concerns me is to preserve as much of the reserve fund as possible until we approach year's end. An over transfer from the reserve fund is effectively trapped in the account into which it is transferred until May 1 of each year. Preserving as much of the reserve fund as long as possible provides us with maximum flexibility to manage the budget." Jeffy was not fooled again little Davey, but you may have been.

Notes on the expense ledger indicate that the fire/EMS account may again be targeted for transfer, as the note reads Firefighter/EMS salaries, with a balance of $118,733.56, as of February 2, 2017 has the note (May 1 source of $'s).

posted by Jeff Bennett

Lets overthink something:

According to the Templeton highway department shop steward, there are 7 guys on the highway team.
The labor contract for the highway union contains items such as a $250.00 boot allowance for each employee and according to the union steward, that could add up to $1750.00 per year. The other items are one free insulated jacket or one free pair of insulated coveralls, five tee shirts for each employee per year and the town will also purchase and provide free water-proof boots, gloves, rain gear and safety equipment to each of those seven employees each year. In 2018, the free boot allowance will increase to $300.00 per employee which will be, well $2100.00.
I made a point of suggesting that this labor contract, along with the other contracts the selectmen have agreed to contribute to further debt of the town. I also made a point of questioning whether these promises made to the highway union could be a reason why inspection services was short of funds again this year. Seems this happens alot in Templeton, many items end up being short of funds to make it through a fiscal year. As in these contracts and promises that have to have money set aside to cover them can take funds away that could have been used to cover other items such as inspection services. Question is/was; do these items in the contract equate to a reason (s) why there is not enough money to go around for ALL departments and expenses? There was a need or request to transfer $2500.00 from the town reserve fund to inspection services. Since if you add up all of the potential costs for all of the above items and not just the boots, you probably come up with more than $2500.00. Since the union steward only used the boot item and the figure of $1750.00, it appears that either the steward cannot read, cannot do 4th grade math or just chose to use one item in an attempt to muddy the waters, so to speak on a particular subject. That subject being the fact that I chose the highway contract to make a point on town finance and the actions of the selectmen. Apparently it is okay for the union steward to complain and pick on the light & water commissioners but no one is allowed to point out items on Templeton highway. By only using the boot allowance and the figure of $1750.00 to try and make someone look like they do not know how to add or that they do not under stand things, shows, in my opinion, that it just may be the shop steward who does not understand things. The shop steward is of course little Davey.

posted by Jeff Bennett