| Joanne Cole |
In meetings last week Budget Committee members found themselves largely in agreement with the Select Board regarding a budget for 2023-24. Earlier, the Select Board had reduced the Manager’s proposed budget by some $300,000, to $12,447,563. When it was the Budget Committee’s turn, they set their preliminary budget at $12,508,963. That figure is $61,400 more than the Select Board’s total but $240,519 less than the manager and departments requested.
Now the draft goes to a March 8 public hearing and meeting, starting at 6:30 p.m. in the Meetinghouse and live-streamed at this link. Find the manager’s budget request and current board and committee recommendations side-by-side-by-side at this link. The budgets’ bottom lines are all provisional, pending final numbers from Cumberland County and MSAD 15.
Overall, the Budget Committee differed from the Select Board over funding the Cemetery Association’s $160,000 cemetery expansion project, how much should be set aside for capital needs including for repairs to town buildings, the Library’s budget request, and other items. The committee’s budget also predicts $30,000 more in revenues than does the board budget.
Among key points of agreement, however, the committee concurred with the board on a 4.5 percent cost-of-living increase for town employees, with higher exceptions for Fire Rescue personnel. A new Assistant Director position for Parks & Rec also got a green light, albeit with a change in its funding source from what had been proposed.
Within the Budget Committee itself, members disagreed over whether to use the town’s fund balance to meet departments’ requests for staffing, compensation and other items, apparently a reflection of differing views on the town’s financial health and the committee’s role. They also differed over some capital requests, including the expansion project from the Cemetery Association.
With apologies for length, an overview and highlights from the Budget Committee’s recent meetings follow.
The town’s financial health. In the background during discussion of budget specifics is the question of the town’s overall financial health – that is, what can the town afford? This budget cycle, that question has been addressed explicitly and repeatedly, especially at the Budget Committee. Along with it, another question has emerged this year: Can the town afford not to spend more, given staff already stretched thin, open positions and employee departures, and a highly competitive labor market?
As the Budget Committee met, ads were up for town staff—openings for existing positions, not new ones—Fire Rescue Chief, Town Planner, paramedics/EMTs, Public Works crew member, Deputy Clerk in the town office. Earlier, during Q&A sessions with the committee and board, department heads had spoken of being stretched thin and short-handed while facing a tight labor market with rapidly escalating wages.
Accordingly, several departments had requested added staff positions, more hours and/or increased wages, much of which the board ultimately reduced. Hence a question for the Budget Committee over whether the town would be spending enough to attract new hires, retain current town staff, and simply carry out the work of the town.
At the Budget Committee’s first meeting, on February 27, Finance Director Lori-Anne Wilson shed light on the first question–What can the town afford?–with a recap of the town’s Undesignated Fund Balance.
In general terms, because municipal revenues inevitably fluctuate from month to month–property taxes are due twice yearly, for example–a fund balance serves as a cushion to ensure that expenditures and obligations—county, schools, debt, payroll, everything—can be covered without resort to short-term borrowing. But how much fund balance is enough? And is there such a thing as holding on to too much?
Wilson explained that a fund balance is for cash flow and that towns differ widely over how much fund balance is appropriate. Some set aside as little as 10 percent of their budget, she told the committee. New Gloucester thinks in terms of three to four months’ worth of expenditures, or 25 to 33.3 percent, she explained.
The town’s new charter, which takes effect this July, doesn’t specify a range or a limit. It says only that the fund balance must be a minimum of 25 percent of operating expenses. Twenty-five percent this year would be $3.1 million, assuming revenues aren’t considered; it would be $2.1 million if they are. The current balance is $4.7 million, Wilson has said.
Should it be three to four months of expenses after revenues are taken into account, or three to four months’ expenses as if no revenues whatsoever are coming in? Towns apparently differ on that, too. Wilson had sketched it out both ways for the board and committee in a handout, with an approach that uses both formulas and meets them in the middle, Goldilocks-style.
Wilson’s handout showed that if you take into account spending going out but also budgeted revenues coming in, then covering three to four months this year would call for a $2.1 million to $2.8 million kitty. (For reference, New Gloucester’s kitty was $4.7 million as of June 30, 2022.) Alternatively, covering three to four months and no revenues coming in yields a $3.1 million to $4.1 million kitty. Taking the midpoints of the two approaches—the one with revenue and the one without—results in a recommended fund balance of $2.5 million to $3.6 million.
Wilson had provided that $2.5 million to $3.6 million ‘hybrid’ calculation along with the town’s traditional no-revenues $3.1 to $4.1 million range, both based on three to four months. Also in members’ budget books was a ten-year lookback at the town’s actual year-end fund balances: $4.7 million, $4.6 million, $4 million, $4 million and $3.9 million in the last five years, and never going below $2.6 million in 10 years.
Turning to the current year, Wilson told the committee that even after taking $572,000 from the Undesignated Fund Balance for an ‘extra’ batch of paving, the fund balance will likely end above $4.1 million in June. If anything, she seemed to imply that the ending balance would be well above the $4.1 million, already higher than the ‘hybrid’ $2.5 to $3.6 million recommended range and potentially beyond even the top of the most conservative end of the no-revenues range.
Returning to the purpose of the fund balance, cash flow, Wilson noted that the town has not had any issues with cash flow, because the town has “over four million dollars at any given time in our checking and savings account.” Apparently, that has been the case for several years. Looking toward next year, she told the committee that state revenue-sharing again “looks promising” based on information from the governor’s office.
In short, the answer to how much can we afford appeared to be “more.”
As for whether a fund balance can be “too big,” other communities say yes, although New Gloucester has not. Some limit how big a fund balance they can hold and also specify that any excess must be applied, for example, to long-term capital projects, retiring debt, making deposits in capital reserve accounts, replacing aging equipment or reducing taxation the following year.
Gray’s policy, for example, calls for holding a one-twelfth “crisis fund” and in addition sets a two-twelfths limit on its Undesignated Fund Balance. Any excess above the two-twelfths in expenditures must be applied toward items in Gray’s capital plan or capital reserve accounts for bridges, paving, vehicles, technology and the like, all lightening the load on taxpayers.
State law requires something similar for Maine’s school districts. Balances beyond a specified modest percentage—maybe five percent has been the standard—must be spent down for the benefit of taxpayers before districts can ask for more. The idea is to ask for what you need and no more.
The reasons towns limit the fund balance seem clear. To collect taxes but set aside the money and ask for more is over-taxation, arguably especially unjust for those who are struggling. To stockpile cash and not use it to take care of deteriorating roads, knock down long-term debt or speed up capital projects, which could in turn free up funds for right-sizing staffing or compensation, or simply to lighten the tax burden, is arguably not only not fiscally responsible, it is short-sighted.
Holding an excessive fund balance in a time of lean staffing, vacancies, tight labor and competitive wages may be even more questionable than usual – hence, this year’s added question, Can the town afford not to spend more?
Buildings & Grounds, Public Works, Fire Rescue budget requests. Abstract questions of whether the town can and should spend from its savings became practical and concrete as the Budget Committee began considering specific accounts and requests. Member Nick Planson repeatedly urged fellow members to meet departments’ needs and not cut their requests, as the Select Board had. Others disagreed.
Department heads “are not asking for superfluous requests,” Planson said, as the committee discussed reducing staffing requests from Buildings & Grounds and Public Works. “Why aren’t we trusting them and trying to meet their needs?” The fund balance they had just heard about could easily cover the entire $300,000 the board proposed to cut from the manager’s budget and would meet all department requests, he said. “Staff is essentially pleading for additional help and very slight wage increases.”
The town’s bank account was front and center again when the committee considered reducing Fire Rescue’s budget request. The Select Board had cut $23,300, and committee members were proposing a further $5,000 cut, zeroing out a line to equip the new ambulance with shelving, bins and supplies, apparently not included when voters approved the ambulance purchase.
Planson said that with “very well-funded accounts in the town,” the committee should not be making cuts in line items “arrived at by the experts we trust to keep ourselves and their staff safe.” Committee member Jen Bragdon acknowledged Planson’s point but said the committee’s job is to consider the numbers in front of them, not the money in the bank. “We’re not here to say, ‘Oh, we have a lot of money and our departments need all this and this and this,’” Bragdon said. “Even if you have a lot of money in the bank, you don’t know what’s going to happen next year,” she said.
Planson pointed to the upbeat financial overview and look-ahead at the meeting’s outset and what he called the consultants’ information last year that the town’s undesignated fund balance “is quite significantly above their recommended amount.” Summing up, he said, “We consistently cut corners and that makes it hard for people who do the work in this town to do their jobs properly” and called for “investments in the town.” The vote on the further-reduced Fire Rescue budget went 7-1, with Planson opposed.
Budget discussions, cont’d. The committee’s second meeting, on March 1, had Penny Hilton now present, Nick Planson absent, and Joe Bean taking on the mantle of dissenter, over capital requests and projects. Bean thought the requests were worthy and that what matters is solid planning and conversation, not what source of funding—he spoke of “moving the cups around”—is ultimately used.
The Library. The Budget Committee’s discussion of the Library opened with member Karen Gilles asking Town Manager Bill Kerbin for a list of the books purchased by the Library last year and so far this year. Gilles said she was curious about the books and thought she had emailed Kerbin to request the list. “Obviously we’re going to be moving past it,” she said, referring to the books budget line item, “but I would still like it [the list] for the future.” The Budget Committee had not voted to request a list of books, and apparently Manager Bill Kerbin hadn’t seen an email request for it from Gilles.
An additional $2,500 for book purchases, for a total of $10,000, was part of the Library’s original budget request, along with a $2 per hour raise to reflect the professional credentials and experience of the Assistant Librarian, from $18 per hour to $20.
The Select Board supported the added $2,500 for books but not the full raise for the Assistant, only the 4.5 percent standard increase, 81 cents an hour. The committee went the other way and cut the books request. They used it to ‘find the money,’ breaking a 4-4 deadlock over the Assistant’s $2 per hour raise and adding $1.19 to the standard 4.5 percent to reach $20 an hour: 7-1, Joe Bean opposed.
As for added staff, neither the Select Board nor the Budget Committee supported adding a new position, as the Library had requested last year and residents supported again this year. Library Director Jay Campbell had wanted to include the position this year, too, but Manager Bill Kerbin told the board that he had decided to leave it up to the board and committee. A Catch-22 resulted: Campbell couldn’t submit the request, and without a formal request, the board and committee declined to act.
Parks & Recreation. In the manager’s budget, Parks & Recreation had requested a new Assistant Director position and proposed to fund half the wages from Parks & Rec’s dedicated revenue account and the other half and associated benefits through the budget. The Select Board instead wanted all the salary to come from the Parks & Rec account. The committee agreed, after extended discussion of programming, especially the Kids Club before-and-after-school program and its revenues, fees, and enrollment.
Paving. The committee concurred with the board’s reducing Public Works’ original paving request by $100,000 and adding funds for ledge removal and other work. Members offered opinions about chip seal versus traditional asphalt paving, but all agreed to the bottom line: $377,899, same as the board.
Capital items. Departments’ capital requests follow a circuitous path from the manager to the Select Board, which can change them, and on to the Capital Improvement Committee (the CIP) where they are vetted. CIP members each assign a score to each request according to detailed criteria (e.g., importance to health and safety, urgency, cost/benefit). The resulting overall scores and ranking go back to the board and from there on to the Budget Committee.
This year, the Select Board had increased and decreased the amounts in several items before sending them to the Budget Committee, rankling Jean Libby, chair of the Budget Committee and chair of CIP, who said she felt the CIP process had not been respected this year.
Budget Committee member Steve Libby, who serves on CIP as Budget Committee representative, questioned Select Board members Peter Bragdon and Tammy Donovan about the reasoning behind the board’s increases and decreases of particular items. In the end, the committee went along with nearly all the board’s numbers, with Joe Bean voting against six of the seven requests. “I’m opposed to this page,” he said to laughter, while gesturing at the sheet listing capital reserve requests.
On capital projects, the committee agreed with the board to put $100,000 toward a recently-dusted-off plan from 2006 to upgrade Town Hall (elevator to now-unused second floor, reconfigured interior spaces), replace the Community Building and expand parking. The committee quickly approved funding a command vehicle for Fire Rescue at $60,000. Paint and stain for Town Hall Complex buildings went through at $75,000, less than the Select Board wanted.
A cemetery expansion request from the Cemetery Association took longer. Lot sales have increased in recent years, and the Association is concerned available burial spaces could be down to about 50 by 2028. Their $160,000 request to do surveys and layouts, do clearing and associated road-building was trimmed by the Select Board to $50,000.
As board member Peter Bragdon explained to the committee, the board saw it as a multi-year project, given planned construction as far out as 2026. The $50,000 the board was approving would cover surveys and preliminary work, he said, and enable the Cemetery Association to return next year with more detailed plans.
Steve Libby, a director of the Cemetery Association, said it was a single project and that delays would jeopardize securing a contractor and moving forward. Budget Committee member Jeff Hamilton agreed. “Let’s do the whole project,” Hamilton said, “Doing this piecemeal is not going to help us.”
Hamilton’s motion for the full $160,000 passed 6-2, with Joe Bean and Brian Shedlarski opposed. Steve Libby and Jean Libby voted in favor; both had also rated the project as members of CIP. Both had abstained from an earlier cemetery operations budget vote, given their leadership roles as director and officer in the Cemetery Association.
Revenues, fund balance draw, and wrap-up. A review of anticipated revenues with Finance Director Lori-Anne Wilson resulted in the committee adding $30,000 to the revenue column. They did not reconsider any proposed reductions as a result.
As members prepared to wrap up, Karen Gilles asked whether the committee was sticking with using $500,000 from the Undesignated Fund Balance to reduce taxation, as the Select Board proposed, or perhaps less. Steve Libby computed that they could instead take $400,000 and still have a tax decrease.
No vote was taken regarding either the $400,000 or $500,000 amount. Instead, the meeting quickly concluded with thanks all around. But the committee’s budget work and conversations are not done. Finalizing the budget awaits the March 8 public hearing and more decisions.
To view videos of the Budget Committee’s February 27 and March 1, 2023 meetings, click here. For background on the Select Board’s budget discussions, click here.
