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HOPKINTON:
Tell us your choices
WHAT WE ARE ASKING YOU TO
DO: Complete
the mock budget exercise to learn about the process and share your
ideas
with us. Then,
join us at a community forum March
30 to explore the issues.
WHAT WILL BE DONE WITH IT:
Our Committee will learn about your
thoughts from reviewing this mock budget exercise.
This will help shape issues for discussion
at a public forum co-hosted by the
Appropriation Committee and Civic Engagement
Committee. Your
input will be shared with our
elected officials to help shape
decisions and guide us through the budget processes this year and beyond.
THE MOCK BUDGET EXERCISE:
The form is modeled on similar initiatives
in Menlo Park
CA, and
Eugene OR, which were prepared by professional consultants.
It is divided into three main parts.
- Section
1: Information on the sources of revenue
the Town uses to fund the budget.
- Section
2: A budget exercise where you are asked
how you would fund the major Town operations.
- Section
3: A request for feedback on specific
suggestions and ideas to improve
the fiscal situation or the process.
REVENUE: How the Town Raises Money
Each year, the Town depends
on a few primary revenue sources to fund the operational
budget. These are briefly introduced here for the current budget year from
7/1/05 to 6/31/06 (FY06):
Property
Taxes provide
about 64% of FY06 available funds.
Ø
This is a tax levied on property
owners. In 1980, Proposition 2 ½ became
State law. In any given year, property taxes cannot
be raised more than 2.5% over the previous year.
If the Town needs more money for
operational needs, voters must vote to override
the restriction. This is a general override. In the
last three years, Hopkinton voters have twice
voted for this type of override. General overrides
contribute directly and permanently to the tax
basis.
State
Aid provides
about 16.5% of available funds for
FY06.
Ø
Chapter 70 Aid - direct and
dedicated funding for public schools.
Ø
Mass.
State
Lottery Aid -
(currently capped by the Legislature).
Ø
“Additional Assistance”,
intended to provide support for general government
services, it has been steadily reduced over the
past 15 years.
Enterprise
Funds & Miscellaneous Transfers provide
about 11%
of available funds for FY06.
Ø
Monies from other town
funds such as the predominately self sustaining
Water and Sewer Enterprise Funds, Community
Preservation Act funds, line transfers and
Stabilization Fund.
FY06 transfers included approximately
$1M of non recurring monies from Stabilization
as approved at town meeting to make up
shortfall. It also included CPA funds for a
number of articles.
Fees
and Receipts provide
about 6.5% of available funds for
FY06.
Ø
Excise taxes, and fees directly
charged for services provided, etc.
Revenue
Carried Forward (Free Cash) provides
about 2% of available funds for FY06.
Ø
Funds carried forward from
previous budgets, generally because they were
unspent in the budget year they were appropriated.
Ø
This source of revenue can vary
significantly from year to year and cannot be
depended on as a permanent source of revenue for
future years.
BUDGET EXERCISE
The following activity is a
budget exercise. This activity asks you to create
an operational
budget for the Town based on how you want your
money spent for general services that the Town
provides. The Current Amounts shown are from the
$52.2M budget for Fiscal Year 2006 (7/01/05 to
6/30/06). Preliminary
projections suggest the Town will have about
$2.2M for next year. This
leaves $54.4M to spend next year, FY07 (7/01/06 to
6/30/07), unless the Town increases
taxes above the 2½ limit.
Please provide your budget recommendation
for each major department line, sub total by
grouping and total for all. At the end, subtract
Your Budget Total from $54.4M and enter the
difference.
If Your Budget is less
than 54.4M, you have a surplus
and are presented with some choices. Identify
if you would like to use the surplus to cut taxes,
replenish the Town’s “savings” account
(Stabilization Fund), or fund large capital
projects.
If Your Budget Total is
greater than 54.4M, the difference is a deficit
that will most likely have to be funded by a tax
increase through a town wide General Override
vote. Based
on projections of next year property valuations,
each $1M of increase will add approximately .33 to
the tax rate.
This equates to $165 on a home valued at
$500K for each $1M of increase.
We included FY07 budget requests from
major departments. These
have yet to be vetted or recommended by the
Appropriation Committee and simply represent what each department is seeking.
To help create Your
Budget, we prepared a summary of
department requests.
In general, increases related
to contractual salary obligations to employees,
legal mandates for special education, medical
insurance premiums and utility costs are projected
to exceed the additional available funds.
Thus, when making your choices, please keep
in mind:
If you elect to Decrease
a budget line item, you clearly expect there will
be a service reduction and a personnel reduction.
If you elect No Change
to a budget line item, you clearly expect there
may be a service reduction and, in certain
departments, a probable personnel reduction.
Even if you elect to Increase
a budget line item, it does not necessarily mean
that there will be sufficient resources to avoid erosion of services. Certain departments are
indicating that increases of more than 10% are
necessary to avoid an erosion of service.
For certain departments, you
will notice that an amount is shown; so
you do not have to make a recommendation. These
are for budgets like Debt & Interest and
Employee Benefits and Regional
Schools
that are essentially committed.
Also, the Water and Sewer Enterprise Funds
are essentially self-sustaining so changes
will have little effect on the operational budget.
Capital Expenditures
In this exercise we are
limiting our focus to the operational budget.
However, you should be aware that every
year the town is faced with a number of requests
to fund capital equipment purchases or building
projects that are above and beyond the operating
budgets. These requests come in the form of new
DPW equipment, fire trucks, school additions,
fields or new municipal buildings like fire and
police stations, schools, senior center etc. All
are usually financed by debt exclusion, which
means that the tax increase related to the cost to
purchase and finance such items/projects is not
capped by the Proposition 2-1/2 tax increase
limitation. While
this is also an override, it differs from a
general override in that the tax increase is
limited to the term of the borrowing and then it
goes away.
GO
TO THE EXERCISE
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