Justifying A Tax Increase To Keep Services

The Board of Finance (BOF) has forwarded a $78,797,169 Total FY2013 Budget to the Representative Town Meeting (RTM) for final approval on May 7 through 9, 2012. After a month of detailed hearings on individual department budgets, the BOF reduced the Board of Selectmen’s presented budget by only $31,947.

During the review of the FY2012 budget the BOF learned that it did not have the power to reduce the personnel cost budget series due to contract requirements (except for some overtime hours).  This limits the amount of the budget that may be reduced by the BOF.

Salaries are 47.9 percent of General Government budget and 60.4 percent of Board of Education (BOE) budget. For individual departments, the salary percentage is 96.2 percent of planning and zoning (not fair since it includes personnel costs for conservation, zoning board of appeals, and economic development – if those departments included the percentage is 90.9 percent), 95.6 percent of the building department, 90.8 percent of the assessor, 90.3 percent of human resources, 87.19 percent of the police department, 86.9 percent of the library, 84.3 percent of the registrar of voters, 81.9 percent of the Town Clerk, 78.5 percent of the selectman's office, 78.1 percent of the tax collector, 78 percent of youth services, 70 percent of recreation and parks, 70 percent of senior services, 66.7 percent of emergency management, 60.8 percent of the finance department, 55.7 percent of fire services and 44.9 percent of public works.

are 19.2 percent of the BOE budget and 28.46 percent of the general government budget.  It is obvious from the large percentage of personnel costs in the Town budget, the BOF and RTM only have about 24 percent of the total budget to consider for reductions in the general government.

Although the overall budget is a 6 percent increase from FY2012, salaries for general government employees are down $6,385 or .05 percent from FY2012 despite negotiated contract wage increases. BOE salaries are up $385,030 or 1.47 percent from FY2012.

The three service departments in town search for grants and collect fees to keep their budget costs down.  Youth Service Bureau (YSB) programs cost the town $2,602 while the YSB is supported by $168,550 in grants and $2,955 in Fees.  Senior citizen programs cost $38,510 while collecting $25,500 in Fees and $4,555 in grants and donations (actual cost to town is $8,455 or 21.95 percent).  Recreation and parks programs cost $93,275 while collecting $80,074 in fees (actual cost to town $13,201 or 14.15 percent).

The largest significant budget increases are 66.65 percent for debt service (because of the increase in bonding for school construction); 35.3 percent for the Registrar of Voters  (because of increased ballot printing costs combined with expected primary contests); 27.39 percent for fire services (because of combining all the fire departments in one budget, the actual fire service increase is really 3.32 percent from FY2012); emergency management is up 23.67 percent;  insurance is up 21.23 percent because of health care cost increases and a 152.71 percent increase in the Transfer to Capital and Non-Recurring Expenditure fund (because of funding of necessary infrastructure projects such as the Repair to Jordan Cove Bridge and Demolition of ). 

Ten department budgets decreased.  The library budget is $1,043,558, down $5,145 or 0.49 percent from FY2012. The recreation and parks budget is $1,301,714, down $27,254 or 2.05 percent from FY2012.  The legal department budget of $280,718 is down $25,282 or 8.26 percent. The public health nursing budget of $46,840 is down $7,510 or 13.82 percent.  The budget for is $3,710,652, down from $201,497 or 5.15 percent. The public works budget of $4,649,722 is down $2,600 or 0.06 percent.  The senior services budget of $514,577 is down $402 or .008 percent.  The Conservation Commission's budget of $16,350 is down $3,500 or 17.63 percent.  The remaining departmental decreases are in budgets that are less than $10,000.

The Bottom Line

It takes a large reduction in the budget to make a significant decrease in the Mill Rate.  For FY2013, the Net Collectible Grand list is 3,680,365,711.62, making one mill $3,680,365.71 and one tenth of a mill $368,037, or for calculations purpose $368,000. Outside revenue other than taxes are currently estimated to be $5,869,552. Collection rate is 99.1 percent. One tenth of a mill is also 0.5 percent of the total mill rate. The FY2012 Mill Rate is 18.79.  Using the assumptions just noted, the new Mill Rate is 19.82 or a 5.46 percent increase.  The current average assessed value of a home is $188,000.  Such a home paid $3,533 in property taxes in FY2012.  The FY2013 tax would be $3,726, an increase of $194.  A budget reduction of $368,000 would reduce the mill rate by one tenth and reduce the tax on the average assessed value home by $18.80. 

The Question for the RTM is whether it is willing to significantly impact services provided to town residents in order to provide a significant reduction in the tax rate.  What services should be eliminated or curtailed to achieve this goal?  The BOF determined that it was not feasible to make such cuts. Should the RTM agree?