1 00:00:00,399 --> 00:00:06,720 good all right well good evening everybody I I want to thank you all for 2 00:00:04,600 --> 00:00:12,440 coming just to introduce myself my name is Ben butrick and I am currently the 3 00:00:10,160 --> 00:00:19,640 chair of the Essex finance committee I've been on the finance committee for 4 00:00:15,080 --> 00:00:26,439 7even years uh it's starting to sink in this is a little uh uh it Municipal 5 00:00:23,680 --> 00:00:32,439 Finance is a murky area to dip your toes in and so um I want to thank you all for 6 00:00:29,400 --> 00:00:38,640 coming tonight because I know Municipal Finance is not necessarily at the top of 7 00:00:35,239 --> 00:00:45,160 everybody's excitement list but hey it's January right 8 00:00:40,399 --> 00:00:50,680 so um so thanks for coming out um we have about an hours worth maybe less of 9 00:00:49,480 --> 00:00:56,320 prepared material um and then we have time for 10 00:00:54,320 --> 00:01:02,719 discussion and question and answer and really want to make this interactive so 11 00:01:00,000 --> 00:01:05,880 I'll try and be sequential just in terms of questions that come up in any 12 00:01:04,600 --> 00:01:10,799 discussion but I'm going to be a little bit relaxed in terms of Robert's rules 13 00:01:08,840 --> 00:01:16,000 because I really want this to be participative uh so 14 00:01:14,280 --> 00:01:20,600 um uh a little bit of background in terms 15 00:01:18,880 --> 00:01:25,799 of how this came about oh sorry oh we should go into 16 00:01:22,960 --> 00:01:31,000 session yeah 603 I will call the board of Select my meeting to 17 00:01:27,840 --> 00:01:36,439 order go ahead call you better call us all right and we should also uh call the 18 00:01:32,880 --> 00:01:41,280 finance committee into session uh we may have four of us which would be a quorum 19 00:01:39,560 --> 00:01:49,799 so I'll make a motion to go into session of the Essex finance committee so moved 20 00:01:44,479 --> 00:01:55,479 all in favor I thank you all right so um the purpose of tonight is to go over 21 00:01:51,799 --> 00:02:00,439 some of the basic concepts around Municipal Finance in terms of how the 22 00:01:58,280 --> 00:02:06,360 town operates uh focusing on things like proposition 2 23 00:02:03,039 --> 00:02:13,360 and A2 what is the levy limit how do assessments work why are my taxes what 24 00:02:09,360 --> 00:02:16,959 they are what role do my taxes our taxes play in terms of the functioning of the 25 00:02:15,280 --> 00:02:24,200 town and what are the various constraints that the town operates under 26 00:02:19,680 --> 00:02:30,959 with respect to taxation um I got my January tax bill uh I think 27 00:02:28,720 --> 00:02:36,840 most residents have received their tax bill and it's kind of an interesting 28 00:02:33,319 --> 00:02:46,400 year because um a lot of the assessment numbers have gone up uh and the um the 29 00:02:43,560 --> 00:02:52,080 tax rate has gone down and that's sort of a curiosity that people have I mean 30 00:02:49,000 --> 00:03:00,280 in my particular situation my tax my my assessment went up by 5 and a 31 00:02:54,239 --> 00:03:06,920 half% my tax bill is going up by 1.2 2% uh because of that mill rate 32 00:03:03,760 --> 00:03:11,440 interplay with valuation so how does that work why is that and that's sort of 33 00:03:09,319 --> 00:03:16,239 what we're going to talk about tonight we're also going to cover things like 34 00:03:13,159 --> 00:03:20,879 free cash what is free cash uh what is the difference between operating and 35 00:03:18,280 --> 00:03:27,680 capital expenses and we'll try and make it exciting right so the extent to which 36 00:03:23,159 --> 00:03:31,680 we can do that I think is successful so um those are the objectives the thing I 37 00:03:30,120 --> 00:03:37,840 was going to mention is that this is really designed for Essex residents 38 00:03:33,840 --> 00:03:43,640 because as part of our objectives uh for tonight um let me just uh try and 39 00:03:41,319 --> 00:03:51,439 Advance my slides um so we'll kind of lay out the 40 00:03:48,519 --> 00:03:56,040 the laws of the land so basically how M municipalities work in 41 00:03:53,799 --> 00:04:01,879 Massachusetts and then talk about what's unique about Essex structurally we're 42 00:03:59,319 --> 00:04:08,519 really small town relative to other municipalities in the state so that 43 00:04:04,599 --> 00:04:14,720 creates some quirks and some uh challenges so we'll talk about that um 44 00:04:13,079 --> 00:04:20,280 and then it's just you know we'll open it up for 45 00:04:15,840 --> 00:04:25,280 questions so uh this is basically a list of all the material that we're going to 46 00:04:22,360 --> 00:04:31,240 cover tonight and I actually wanted to kick off this session by just playing a 47 00:04:27,440 --> 00:04:37,720 a video uh it's 88es long it's a little bit hokey it's the division of local 48 00:04:34,560 --> 00:04:44,479 Services basically local Finance in Massachusetts is 49 00:04:39,600 --> 00:04:49,400 overseen by the the um Massachusetts uh division of local services so things 50 00:04:47,400 --> 00:04:58,199 like the management of proposition 2 and a half and uh the assessment process and 51 00:04:54,960 --> 00:05:04,080 how tax rates are calculated reporting Etc all is overseen by the department of 52 00:05:01,520 --> 00:05:10,080 local Services they have a whole series of materials and primers and and that 53 00:05:07,280 --> 00:05:17,039 that is sort of the the core of a lot of what is being used uh tonight um so I 54 00:05:17,240 --> 00:05:21,240 will attempt 55 00:05:21,319 --> 00:05:26,280 to play the video hopefully it'll 56 00:05:28,479 --> 00:05:31,479 work 57 00:05:49,639 --> 00:05:57,039 you click the link up there what's that uh wait I think it's just 58 00:05:54,280 --> 00:06:02,670 delayed there we go all right hopefully this isn't too 59 00:05:59,639 --> 00:06:09,560 loud when it comes through [Music] 60 00:06:06,319 --> 00:06:14,039 but like most households and businesses local governments must manage a stream 61 00:06:11,440 --> 00:06:17,639 of Revenue and expenses to ensure that services are delivered to its 62 00:06:17,960 --> 00:06:26,000 constituents Municipal expenses vary by type and by community and include 63 00:06:22,720 --> 00:06:28,319 education Public Safety Public Works and other 64 00:06:28,400 --> 00:06:33,960 costs to budget for and fund these expenses 65 00:06:32,479 --> 00:06:38,759 cities and towns rely on different revenue streams including property taxes 66 00:06:36,800 --> 00:06:44,160 and local receipts such as meal and motor vehicle excise municipalities also 67 00:06:41,759 --> 00:06:49,000 receive local aid from the state and may use their own Financial reserves for 68 00:06:46,280 --> 00:06:49,000 these costs as 69 00:06:50,400 --> 00:06:56,479 well property taxes are the most significant Revenue source for 70 00:06:54,120 --> 00:07:01,520 Massachusetts municipalities as they are the primary revenue source for all 71 00:06:58,080 --> 00:07:01,520 cities and towns across the the 72 00:07:05,720 --> 00:07:15,400 Commonwealth on average property taxes account for over 70% of local 73 00:07:12,800 --> 00:07:20,479 budgets therefore understanding proposition 2 and A2 a Statewide law 74 00:07:18,120 --> 00:07:26,360 that governs property tax assessment is a key part of Municipal budgeting and 75 00:07:24,199 --> 00:07:31,759 management approved by Massachusetts voters in 1980 proposition 2 and A2 sets 76 00:07:29,720 --> 00:07:36,919 limits on the amount of property tax that can be collected or levied by a 77 00:07:34,000 --> 00:07:41,000 city or town annually it outlines how new growth in the tax base can be 78 00:07:38,599 --> 00:07:45,560 identified and sets guidelines for Levy limit overrides under rdes and 79 00:07:47,199 --> 00:07:53,680 exclusions a detailed walkthrough of proposition 2 and A2 can be found on 80 00:07:51,280 --> 00:07:56,960 dls's Municipal Finance training and Resource 81 00:07:54,599 --> 00:08:00,319 Center since property taxes are the primary source of revenue for 82 00:07:58,360 --> 00:08:04,639 Massachusetts minnes IP alties the assessor serves as a key 83 00:08:02,960 --> 00:08:10,319 member of a community's financial management team among their other duties 84 00:08:07,720 --> 00:08:15,319 the assessor prepares and maintains an accurate Property database and 85 00:08:12,360 --> 00:08:20,840 classifies real estate into four classes residential commercial industrial and 86 00:08:18,479 --> 00:08:25,400 open space they also determine the valuation of property as of the January 87 00:08:23,080 --> 00:08:31,240 1 assessment date which requires knowledge of various appraisal 88 00:08:28,240 --> 00:08:31,240 methodologies 89 00:08:31,400 --> 00:08:38,080 once the municipality's tax rate and property valuations are approved the 90 00:08:35,680 --> 00:08:43,200 assessors also prepare a tax list and warrant and commit taxes to The 91 00:08:40,719 --> 00:08:47,560 Collector they also Grant abatements and exemptions to taxpayers who must file 92 00:08:45,440 --> 00:08:51,880 timely applications with the assessors and administer motor vehicle and other 93 00:08:49,399 --> 00:08:51,880 excise 94 00:08:54,570 --> 00:08:57,820 [Music] 95 00:08:58,200 --> 00:09:03,079 bills [Music] 96 00:09:01,480 --> 00:09:07,959 the assessor Works closely with the collector as well as other members of 97 00:09:05,120 --> 00:09:12,240 the financial management team as we will see teamwork amongst local officials is 98 00:09:10,720 --> 00:09:16,000 essential to effective financial management in every 99 00:09:13,839 --> 00:09:21,880 Community let's look at just a few of the responsibilities of other local 100 00:09:19,800 --> 00:09:26,480 officials the tax collector is responsible for billing and collecting 101 00:09:23,760 --> 00:09:31,200 all taxes committed by the assessor as mentioned the collector receives the tax 102 00:09:28,600 --> 00:09:36,600 commitment from the assessor sends bills to taxpayers and collects corresponding 103 00:09:34,240 --> 00:09:41,240 payments in some communities The Collector collects not just taxes but 104 00:09:38,920 --> 00:09:44,600 all accounts due to the municipality such as water and sewer 105 00:09:45,000 --> 00:09:50,680 bills once collected funds are turned over to the 106 00:09:50,920 --> 00:09:57,079 treasurer who is the custodian of all Municipal 107 00:09:54,560 --> 00:10:01,480 funds the treasurer is responsible for the deposit investment and dis 108 00:09:59,079 --> 00:10:05,399 dispersement of Municipal funds they work with the community's financial 109 00:10:02,959 --> 00:10:09,360 adviser and bond councel and supervise the debt issuance 110 00:10:06,800 --> 00:10:13,880 process the treasurer also manages the tax title process once the collector has 111 00:10:11,519 --> 00:10:16,360 made a tax taking as the result of an unpaid 112 00:10:16,480 --> 00:10:24,519 Bill the accountant or auditor records all of the financial transactions of the 113 00:10:22,440 --> 00:10:28,800 municipality they use this information to prepare financial reports like the 114 00:10:26,440 --> 00:10:33,200 balance sheet submission in schedule a for review by the division of local 115 00:10:30,880 --> 00:10:36,600 Services the accountant auditor also prepares interim reports for the 116 00:10:34,720 --> 00:10:41,839 community to consider during the fiscal year to assist in budgeting and also 117 00:10:39,240 --> 00:10:46,639 notifies departments monthly of unspent and unencumbered appropriation balances 118 00:10:44,839 --> 00:10:50,279 all bills for payment are approved by the accountant auditor who monitors 119 00:10:48,600 --> 00:10:54,279 spending to assure that Goods have been delivered and services have been 120 00:10:54,720 --> 00:11:01,120 rendered these and other members of the financial management team worked 121 00:10:59,240 --> 00:11:05,480 together with other appointed or elected officials Who oversee and manage local 122 00:11:03,519 --> 00:11:08,519 government but who are these other elected or appointed 123 00:11:10,880 --> 00:11:18,800 officials this depends on whether the community is a city or a 124 00:11:15,680 --> 00:11:22,519 town in most towns an elected select board serves as the chief executive 125 00:11:20,519 --> 00:11:26,639 branch with responsibility for developing overall policy and 126 00:11:24,680 --> 00:11:29,880 coordinating the general operations of town 127 00:11:27,600 --> 00:11:34,120 government the select board appoints certain officials in the town whether it 128 00:11:31,920 --> 00:11:38,360 be in accordance with State Statute a charter provision or local bylaw the 129 00:11:36,720 --> 00:11:41,839 select board issues town meeting warrants and negotiates collective 130 00:11:40,399 --> 00:11:46,600 bargaining agreements for all departments except schools and approves 131 00:11:44,480 --> 00:11:48,880 vendor and payroll warrants for payment by the 132 00:11:49,399 --> 00:11:56,360 treasurer the select board also prepares or reviews budget proposals for town 133 00:11:54,120 --> 00:12:00,440 meeting approval these budget responsibilities are usually shared with 134 00:11:58,320 --> 00:12:05,839 the finance Comm committee a body that advises town meeting on financial 135 00:12:03,360 --> 00:12:10,560 matters the board also plays a role in tax policy by voting to place a 136 00:12:08,079 --> 00:12:14,440 proposition 2 and a half override debt exclusion or Capital outlay exclusion 137 00:12:13,120 --> 00:12:18,240 question on the ballot the legislative body of a town is 138 00:12:17,440 --> 00:12:23,440 town meeting as the appropriating authority 139 00:12:20,639 --> 00:12:28,000 of a town town meeting adopts the budget and authorizes debt 140 00:12:25,519 --> 00:12:30,959 issuances town meeting also has local lawmaking Authority through the 141 00:12:29,480 --> 00:12:35,519 enactment of bylaws most towns have a chief 142 00:12:33,120 --> 00:12:39,560 administrative officer that oversees its day-to-day operations this person is 143 00:12:38,160 --> 00:12:43,760 usually referred to as the Town Administrator or town 144 00:12:41,320 --> 00:12:48,000 manager as with other roles the responsibilities of this individual vary 145 00:12:45,680 --> 00:12:52,560 by Community but will typically involve the coordination of the financial 146 00:12:49,440 --> 00:12:56,839 operations of the Town other Duties are likely to be assigned by the select 147 00:12:54,360 --> 00:12:56,839 board as 148 00:12:57,120 --> 00:13:04,760 needed in a city the mayor or city manager is the chief executive officer 149 00:13:02,880 --> 00:13:09,000 the mayor or city manager has all the duties of the select board in towns 150 00:13:07,240 --> 00:13:14,639 including a pointing Authority and oversight of administration and 151 00:13:11,920 --> 00:13:18,600 finances in a city however this individual prepares and submits the 152 00:13:16,480 --> 00:13:24,399 budget to the city council which can then only approve reduce or reject the 153 00:13:21,800 --> 00:13:29,199 mayor's budget proposal the city council is the 154 00:13:26,560 --> 00:13:34,639 legislative branch in a city and is the municipality's appropriating authority 155 00:13:31,360 --> 00:13:39,120 which adopts a budget and authorizes debt it also has law making Authority 156 00:13:37,399 --> 00:13:43,959 through the enactment of ordinances city council plays a role at 157 00:13:41,480 --> 00:13:47,160 tax policy by placing proposition 2 and a half questions on the ballot with the 158 00:13:45,720 --> 00:13:51,680 mayor's approval we've reviewed just some of the 159 00:13:49,560 --> 00:13:54,920 responsibilities of local officials who play an important role in the financial 160 00:13:53,360 --> 00:13:59,399 management of their communities which requires collaboration 161 00:13:57,480 --> 00:14:04,720 amongst a financial management team for more information visit the 162 00:14:02,320 --> 00:14:09,399 division of local services website at mass.gov 163 00:14:07,120 --> 00:14:13,279 DLS there you can find the municipal Finance training and resource center and 164 00:14:11,759 --> 00:14:18,399 find more information about roles and responsibilities of local officials and 165 00:14:15,560 --> 00:14:22,399 best practices for municipal financial management you can also visit dls's 166 00:14:20,839 --> 00:14:27,320 YouTube page all right promise that's the only 167 00:14:25,440 --> 00:14:33,000 video we're going to watch tonight but I just thought it it 168 00:14:29,839 --> 00:14:38,279 introduces a lot of the concepts just uh in a pretty efficient 169 00:14:36,079 --> 00:14:43,800 way I mean actually a lot of what was stated in there does in terms of how 170 00:14:40,360 --> 00:14:50,759 towns operate you know it does apply to Essex in terms of how all the different 171 00:14:46,279 --> 00:14:56,880 parties work together and um as well as the various Concepts revenues 172 00:14:53,800 --> 00:15:01,480 expenses uh reserves proposition 2 and A2 the assessor the the role of the 173 00:14:59,240 --> 00:15:09,120 assessor tax rates and that's pretty much all what we're going to discuss 174 00:15:06,480 --> 00:15:13,720 um I wanted to just start this is actually from the finance committee 175 00:15:11,440 --> 00:15:21,880 report that gets generated before town meeting I wanted to start with revenues 176 00:15:17,519 --> 00:15:27,160 um they said in the video that typically property taxes account for 70% or more 177 00:15:25,959 --> 00:15:33,440 of a municipality's uh income coming revenues 178 00:15:30,040 --> 00:15:40,279 that's certainly true in Essex in fact taxation accounts for More than 179 00:15:37,040 --> 00:15:47,839 70% uh you know as you can see here it's 74% but that's actually just property 180 00:15:43,959 --> 00:15:56,000 and personal tax if you factor in excise tax Motor Vehicles excise tax you factor 181 00:15:51,000 --> 00:16:03,079 in meals tax Hotel taxes Etc which show up in the green slice then we're looking 182 00:15:59,079 --> 00:16:10,440 in excess of 80% in terms of Reliance on taxes uh as a source of Revenue um what 183 00:16:08,319 --> 00:16:18,399 what I did here was I separated out water and sewer water and sewer is its 184 00:16:13,920 --> 00:16:23,800 own Enterprise in terms of money coming in and money going out in terms of their 185 00:16:21,199 --> 00:16:29,480 expense structure so if you want to look at the two together our annual budget is 186 00:16:26,480 --> 00:16:36,759 $23 million if you separate out the water and sewer um we're just under 20 187 00:16:32,639 --> 00:16:41,560 million as you can see here um the the tax levy and I'm going to talk about 188 00:16:38,800 --> 00:16:48,319 that in a moment uh and try and Define some of the terminology that you hear 189 00:16:43,639 --> 00:16:55,800 get used but our tax levy as you can see in terms of uh in terms of property 190 00:16:51,160 --> 00:17:01,800 taxes runs about 3/4 of our Revenue so in fact if you look at our our tax levy 191 00:16:58,160 --> 00:17:07,240 number it's under it's between 14 and 15 million right now so it sort of fits in 192 00:17:04,720 --> 00:17:09,400 with looking at the revenue picture for the 193 00:17:10,360 --> 00:17:18,559 town all right so now I'm not going to play the video but I I do want to just 194 00:17:15,559 --> 00:17:25,839 delve into proposition two and a half I think most people understand 195 00:17:22,839 --> 00:17:31,480 that when we refer to the tax levy that's basically the money that's coming 196 00:17:28,079 --> 00:17:38,960 in through taxation through property tax taxation that is a that is a um you know 197 00:17:35,840 --> 00:17:43,600 a a single number uh it's in the you know 14 to 15 million range right now 198 00:17:41,919 --> 00:17:50,120 and I'll go specifically through the exact numbers for 199 00:17:45,960 --> 00:17:56,080 Essex um proposition 2 and A2 at its core and it was set up in 1980 as the 200 00:17:53,400 --> 00:18:00,039 video said because there was Massachusetts had the nickname of 201 00:17:57,600 --> 00:18:05,000 taxachusetts and we had sort of a runaway taxation problem and part of 202 00:18:02,360 --> 00:18:10,520 that was at the property tax level because there was really no uh there was 203 00:18:07,880 --> 00:18:17,440 really no check or sealing in terms of the ability for municipalities to uh to 204 00:18:14,559 --> 00:18:22,840 tax residents basically what it did was it put into place a limit saying you can 205 00:18:20,039 --> 00:18:28,919 only increase your tax levy that dollar amount by 22% per year and that's why 206 00:18:26,600 --> 00:18:33,840 it's called proposition 2 and A2 so I think what's confusing is most 207 00:18:31,039 --> 00:18:38,880 people think well my tax bill shouldn't be going up by 208 00:18:35,799 --> 00:18:42,840 25% and there are some quirks about proposition 2 and a half and that's what 209 00:18:41,039 --> 00:18:50,400 I wanted to talk about are what are the quirks that cause that so the tax levy 210 00:18:46,240 --> 00:18:57,159 that we've defined the tax limit is basically the um that the amount that 211 00:18:54,039 --> 00:19:02,480 the municipality has the ability to tax up to and it's a function of proposition 212 00:19:00,400 --> 00:19:09,559 2 and A2 I'll Define it on the right there which basically you have the levy 213 00:19:05,600 --> 00:19:15,960 the tax levy and the tax and if you take the prior years limit or the the you 214 00:19:12,880 --> 00:19:19,400 know amount up to which you can tax proposition 2 and A2 says well you can 215 00:19:18,159 --> 00:19:24,159 grow it by 22% as a 216 00:19:21,280 --> 00:19:29,039 Baseline and then you are allowed something called New Growth which I'll 217 00:19:27,120 --> 00:19:35,679 Define on the next slide but it's basically new building new developments 218 00:19:32,679 --> 00:19:40,840 anything that hasn't been assessed or part of the tax levy that's 219 00:19:38,120 --> 00:19:45,679 introduced then that's considered New Growth that's part of the role of the 220 00:19:42,520 --> 00:19:51,200 assessor is to Define what that new growth is 221 00:19:48,280 --> 00:19:56,760 um the the other thing the other sort of Quirk about proposition 2 and A2 is you 222 00:19:53,679 --> 00:20:01,360 can go up by more than 22% plus New Growth if you think about that sort of 223 00:19:58,480 --> 00:20:05,840 as the Baseline by doing something called an override and I think we all 224 00:20:03,159 --> 00:20:12,640 hear these terms we we you know we we had our own override experience last 225 00:20:08,679 --> 00:20:18,120 spring so the override basically requires voter approval as an exception 226 00:20:16,159 --> 00:20:23,640 to the proposition 2 and a half rules the 227 00:20:18,840 --> 00:20:31,400 22% plus new growth and so that's basically how proposition 2 and a half 228 00:20:25,679 --> 00:20:38,000 works we operate under a 25% model um part of the issue is when we plan our 229 00:20:35,640 --> 00:20:42,720 budgets each year and there's a seasonality to our budget process we 230 00:20:41,000 --> 00:20:49,400 typically plan our annual operating budget for each 231 00:20:45,799 --> 00:20:55,679 fiscal year starting now and basically running through the spring and coming up 232 00:20:52,520 --> 00:21:03,880 we have fiscal 25 so right now we are in fiscal 24 fiscal 24 actually starts July 233 00:20:58,960 --> 00:21:08,679 1st of the prior year and um we don't actually know what that new growth is 234 00:21:05,600 --> 00:21:14,080 going to be when we're planning for that next year so that's one of the quirks 235 00:21:11,840 --> 00:21:18,520 about proposition 2 and a half is you can sort of guess at what you think your 236 00:21:16,039 --> 00:21:22,840 new growth is going to be based on what it is but you don't actually have those 237 00:21:20,799 --> 00:21:30,720 numbers when you're doing the budget work from year to year so um new growth 238 00:21:28,240 --> 00:21:35,480 overrides we've talked about that and then here's the really sort of tricky 239 00:21:33,279 --> 00:21:42,120 part there's this term called excess capacity or Levy capacity 240 00:21:39,480 --> 00:21:49,000 so what happens is a municipality doesn't have to tax up to 241 00:21:45,279 --> 00:21:54,039 what that Levy limit is and a lot of times 242 00:21:50,480 --> 00:21:59,520 municipalities um in the desire to be conservative will uh will tax up to a 243 00:21:57,279 --> 00:22:04,000 certain level and leave a little bit of that of excess capacity and also you 244 00:22:02,600 --> 00:22:09,520 don't know what the new growth is going to be in advance right so you find out 245 00:22:06,600 --> 00:22:17,960 about that after the fact the extent to which you don't tax up to the the full 246 00:22:14,000 --> 00:22:24,159 Levy limit you can actually carry that forward to the next year and then you 247 00:22:22,039 --> 00:22:29,679 can do that again the next year and carry it forward to the following year 248 00:22:27,360 --> 00:22:34,400 and we've gone for a whole string of years in 249 00:22:31,279 --> 00:22:41,880 Essex carrying forward our excess capacity so when we had the override for 250 00:22:38,520 --> 00:22:46,440 the district last spring and it didn't pass we were able to use that excess 251 00:22:45,360 --> 00:22:53,320 Levy capacity and so what happens is that 252 00:22:50,360 --> 00:22:57,960 means that our taxes have gone up by more than 253 00:22:54,480 --> 00:23:03,080 25% plus New Growth our taxes have gone G up 254 00:22:59,080 --> 00:23:07,960 25% plus New Growth plus the override did pass for the tech it did not pass 255 00:23:05,919 --> 00:23:15,600 for the district so there was a small override that did pass and then we had 256 00:23:11,440 --> 00:23:24,600 this this excess Levy capacity so the average taxpayer in Essex likely saw 257 00:23:19,960 --> 00:23:28,400 about 7% of an increase and that's been triggering questions because people were 258 00:23:26,720 --> 00:23:32,720 like well how can that be didn't past the override and we operate under 259 00:23:30,760 --> 00:23:39,440 proposition 2 and A2 because we had a whole string of years with which we had 260 00:23:34,960 --> 00:23:46,840 that carry forward Levy capacity and so that's one of the factors at play 261 00:23:43,360 --> 00:23:52,400 um uh I also took the definition of New Growth this is from the DLS I it's 262 00:23:49,760 --> 00:23:58,440 pretty much what I said it's new development that um uh it could be condo 263 00:23:56,159 --> 00:24:04,240 conversions or something that is is basically either wasn't subject to tax 264 00:24:01,200 --> 00:24:08,679 during the prior assessment or was taxed in a different sort of way and it gets 265 00:24:06,720 --> 00:24:14,360 kind of technical but I think for our purposes tonight that's basically all we 266 00:24:10,880 --> 00:24:21,799 need to to know um what I wanted to do is to lay out the numbers uh for Essex 267 00:24:19,600 --> 00:24:29,919 so our Levy limit uh was our for fiscal 23 remember 268 00:24:26,600 --> 00:24:33,919 we're now in fiscal 24 so this was last year's Levy limit we were at 269 00:24:32,320 --> 00:24:39,640 14.02 million you get the 25% growth so it 270 00:24:37,600 --> 00:24:45,600 grows by 350,000 we have the override for Essex 271 00:24:42,120 --> 00:24:51,640 Tech which was passed which is another 56,000 and then we assumed new growth of 272 00:24:49,080 --> 00:24:59,960 100K again at the time we didn't know actually what that new growth would be 273 00:24:54,520 --> 00:25:05,559 so our Levy limit went from 14 14 up to 14520 so if you do if you just take a 274 00:25:03,000 --> 00:25:11,039 percentage increase from 14 14.02 million to 275 00:25:11,520 --> 00:25:23,120 14.531 then that's an increase of 3.62 but then we had the 276 00:25:18,840 --> 00:25:28,320 435,000 of excess capacity which was also applied and that brings us up to 277 00:25:26,440 --> 00:25:33,480 closer to a 7% number for the town and so I'm and I'm 278 00:25:32,000 --> 00:25:37,600 going to talk about the assessment process because all we're talking about 279 00:25:36,360 --> 00:25:42,600 is the whole bucket all the properties in the town 280 00:25:40,360 --> 00:25:47,000 basically this is the levy this is what's collected from all the different 281 00:25:44,399 --> 00:25:52,640 properties in the town everyone's individual experience is going to be 282 00:25:49,919 --> 00:25:57,320 different and I'll explain that but I should probably pause cuz this is pretty 283 00:25:54,799 --> 00:26:02,440 Technical and uh even though we have time for for Q&A I just want to see if 284 00:26:00,520 --> 00:26:08,240 anybody has any questions about any of these definitions or how proposition 2 285 00:26:05,320 --> 00:26:08,240 and a half actually 286 00:26:10,520 --> 00:26:19,679 works Brian Bri so oh sorry up um so you said it but 287 00:26:17,760 --> 00:26:25,559 you Brian wrestler 30 Jo you said it but you didn't quite say it that so I think 288 00:26:22,080 --> 00:26:29,880 my question to you is two and a half is is a arbitrary number would you agree 289 00:26:28,440 --> 00:26:33,880 with the statement is an arbitrary number that allows that that creates a 290 00:26:32,200 --> 00:26:38,520 line of the stand against which a voter check occurs and is not tied to any real 291 00:26:36,520 --> 00:26:42,080 world metric or like inflation or anything like that so it's just a it has 292 00:26:40,240 --> 00:26:46,399 nothing to do with with with with actual finance and how much things cost it only 293 00:26:44,720 --> 00:26:51,360 has to do with we had to pick a number somewhere where we say before this you 294 00:26:49,559 --> 00:26:56,640 we don't need voter input after this we don't we need vo input yes I agree with 295 00:26:53,880 --> 00:27:01,799 that it is a hardcoded number which is a little bit curious because uh I mean 296 00:26:59,799 --> 00:27:07,640 this law was enacted at a time when inflation rates were really high in the 297 00:27:04,799 --> 00:27:11,720 early 1980s and we've been in a period of 298 00:27:09,159 --> 00:27:17,120 disinflation since then looking on a long-term multi-decade macro basis we've 299 00:27:14,600 --> 00:27:24,919 been in a period of disinflation you know up until 2021 late 21 into 22 when 300 00:27:22,159 --> 00:27:31,080 we saw the spike in inflation so it's a little bit of a it's a tricky time 301 00:27:27,640 --> 00:27:36,320 period right now in terms of operating under this constraint so it'll be it'll 302 00:27:34,080 --> 00:27:39,799 be interesting Sorry's keep going that would explain why you'd been able to car 303 00:27:37,919 --> 00:27:43,120 some excess capacity for years until you you hit a point where where some of your 304 00:27:41,679 --> 00:27:46,000 other costs might have gone up relative to inflation and now and now you're 305 00:27:44,399 --> 00:27:50,519 reading into that that's right and I would also say and we'll kind of get 306 00:27:48,120 --> 00:27:54,760 into the town expenses too we we've been pretty conservative in terms of our 307 00:27:52,320 --> 00:28:00,600 budget assumptions around uh Town expenses which I'll I'll talk about but 308 00:27:57,240 --> 00:28:06,480 it has allowed the flexibility you know which actually was helpful uh this past 309 00:28:03,679 --> 00:28:13,320 spring I think I think the takeaway from this is that you should always assume 2 310 00:28:10,720 --> 00:28:19,200 and a half% is sort of the framework that we're operating under 311 00:28:16,440 --> 00:28:24,320 plus anywhere from a half to a percentage point on top of that so you 312 00:28:22,000 --> 00:28:29,880 know if we have new growth it could be we're looking at 3 and a 313 00:28:26,039 --> 00:28:33,480 half% as uh it's you know we just we don't know that in advance of that 314 00:28:31,519 --> 00:28:37,760 happening so from a budget planning standpoint we usually don't factor in 315 00:28:35,320 --> 00:28:42,960 New Growth because at the time of the planning it's an unknown so uh and then 316 00:28:40,919 --> 00:28:46,840 you all know about overrides and heard about you like you understand the idea 317 00:28:44,760 --> 00:28:53,519 of overrides in concept uh overrides can be for both 318 00:28:50,320 --> 00:28:58,919 operating purposes and then debt overrides which um are another type of 319 00:28:56,559 --> 00:29:02,600 exclusion to prop two and a half uh but I I'm not going to get into debt right 320 00:29:00,799 --> 00:29:08,679 now but there's just different types of overrides uh but I think the excess Levy 321 00:29:06,279 --> 00:29:15,799 capacity is probably the most heads scratching concept for most people so I 322 00:29:11,320 --> 00:29:22,960 just wanted to uh be clear about that um all right 323 00:29:19,399 --> 00:29:31,120 so the board of assessors is responsible for uh for doing valuation assessments 324 00:29:27,080 --> 00:29:35,600 on property each year that valuation is published it was just published uh and 325 00:29:33,399 --> 00:29:41,399 you can look it up by address and that there's a whole 326 00:29:38,840 --> 00:29:46,880 framework with which assessments get done and there's a whole sort of uh 327 00:29:44,039 --> 00:29:52,159 playbook for how you actually handle assessments and uh it's it's not across 328 00:29:50,640 --> 00:29:57,480 the board obviously it depends on the type of property um one of the things 329 00:29:54,760 --> 00:30:03,960 that can impact assessments are things like additions to a house um anything 330 00:30:00,760 --> 00:30:11,080 that's going to uh you know require a homeowner investment uh to add value to 331 00:30:07,679 --> 00:30:19,120 the property um theoretically would be subject to uh to you know increasing the 332 00:30:15,519 --> 00:30:24,559 assessment um so I don't want to get into the intricacies of how assessments 333 00:30:21,320 --> 00:30:30,600 are done other than just knowing that it's it varies by individual 334 00:30:28,320 --> 00:30:39,000 uh individual property owner um and then this sort of gets into 335 00:30:36,559 --> 00:30:46,519 defining what the tax rate is or What's called the mill rate uh this is another 336 00:30:42,399 --> 00:30:52,399 area of real confusion for people uh when people see their tax bills going up 337 00:30:49,279 --> 00:30:58,519 but then they see the mill rate going down it doesn't mean that the town's tax 338 00:30:55,440 --> 00:31:05,840 levy is going down with a lower mill rate it's a mathematical quirk in terms 339 00:31:02,519 --> 00:31:11,799 of how the the tax rate the mill rate actually gets defined so what happens is 340 00:31:09,120 --> 00:31:19,120 you have the tax levy that you know the whole bucket which is under the the 341 00:31:15,919 --> 00:31:24,880 control of the rules around proposition 2 and a half in terms of how that Levy 342 00:31:21,360 --> 00:31:31,000 can grow so if if you assume no new growth no overrides no exess capacity 343 00:31:29,000 --> 00:31:35,679 you know the levy Grows by 2 and 1.5% right but property values 344 00:31:33,679 --> 00:31:41,120 particularly in the last few years like in some cases property values have been 345 00:31:37,360 --> 00:31:50,480 going up 10 15 20% over the last few years so how does that get reconciled 346 00:31:45,480 --> 00:31:56,159 the what happens is the tax levy can go can can go up by 2 and a half% but 347 00:31:52,799 --> 00:32:00,720 assessments could go up by 15% and what that means is that your tax 348 00:31:59,159 --> 00:32:07,440 rate is going to be lower because the tax rate is simply mathematically taking 349 00:32:03,760 --> 00:32:13,399 the tax levy and dividing by the total assessment of the 350 00:32:09,440 --> 00:32:18,200 town uh and the the tax rate basically is the the total assessment divided by a 351 00:32:15,760 --> 00:32:23,320 th000 because it's calculated as the amount of tax per 352 00:32:20,519 --> 00:32:28,440 $1,000 so this is tricky I'm not expecting you to understand that just in 353 00:32:25,279 --> 00:32:36,000 terms of giving a definition so I did a little um illustration here this is a 354 00:32:31,880 --> 00:32:41,159 pretend town with three houses and you can see the three houses are stacked up 355 00:32:38,480 --> 00:32:50,399 there if you add up the the assessment of those three houses you get a million 356 00:32:46,320 --> 00:32:54,039 875 you have a tax levy and don't read into the interplay between these numbers 357 00:32:51,960 --> 00:32:57,799 this is just our starting point the tax levy is 358 00:32:55,279 --> 00:33:05,960 225 so if you take take $22,500 and you divide it by the total 359 00:33:01,760 --> 00:33:12,440 valuation divided by a th000 so you take 225 and you divide it by 360 00:33:10,159 --> 00:33:21,080 1,875 you're going to get $12 that's the mill rate so if we go to 361 00:33:17,240 --> 00:33:26,360 year two tax levy goes up by 25% and just to keep this illustration 362 00:33:24,519 --> 00:33:31,840 simple subject to the rules of proposition 2 and A2 we now have those 363 00:33:29,320 --> 00:33:37,639 three houses the house at the top went up by 10% worth 364 00:33:34,600 --> 00:33:44,519 550 the house in the middle went up by less than 10% went up by 365 00:33:40,840 --> 00:33:50,000 25,000 in the bottom house went up by 25,000 you total all of those up you get 366 00:33:49,159 --> 00:33:57,840 a m975 so the total has gone up by 367 00:33:53,799 --> 00:34:02,360 100,000 if you take the tax levy and you divide by the total valuation of 368 00:34:00,320 --> 00:34:07,880 those houses divided by a th of the total 369 00:34:05,480 --> 00:34:10,240 valuation divided by th000 you get a tax rate of 370 00:34:10,399 --> 00:34:19,119 11.78 oh sorry 11.68 so does everybody understand that math basically it's the 371 00:34:17,240 --> 00:34:24,399 the tax levy is kind of separately managed the whole bucket and then the 372 00:34:22,200 --> 00:34:31,280 assessments are done through a whole methodology to assess values 373 00:34:27,440 --> 00:34:36,800 the tax rate is just a mathematical the result of a mathematical equation and 374 00:34:34,919 --> 00:34:43,720 so um year two is kind of simple year three 375 00:34:41,359 --> 00:34:50,919 we've introduced some new growth we've added a house to our town so that brings 376 00:34:47,679 --> 00:34:55,320 the total valuation you know it jumps it jumps way up by 377 00:34:55,560 --> 00:35:05,200 450,000 the tax levy went up by 22% plus some new growth which was 378 00:35:02,760 --> 00:35:10,480 allowed under the rules around the assessment or um under the rules around 379 00:35:07,880 --> 00:35:15,240 proposition 2 and a half as a result of the assessment 380 00:35:11,920 --> 00:35:23,040 process the tax levy spiked up but the tax rate went down even 381 00:35:19,000 --> 00:35:29,760 though the community was growing so um and it's the same math all the way 382 00:35:25,280 --> 00:35:36,960 through so literally um jod had sent me the Essex uh the page that you know has 383 00:35:33,680 --> 00:35:40,839 the total valuations of the town and the tax 384 00:35:37,800 --> 00:35:48,280 levy and I did the same calculation divided it got our new tax rate which is 385 00:35:44,200 --> 00:35:52,760 1332 so it's just it's just math basically that determines the TA tax 386 00:35:50,359 --> 00:35:58,960 rate if the tax if the mill ratees going up or down doesn't make any difference 387 00:35:56,520 --> 00:36:02,839 really really because every individual taxpayer based on their assessment 388 00:36:01,079 --> 00:36:09,960 experience and their home value is going to have a slightly different 389 00:36:06,400 --> 00:36:17,440 experience um I think that is confusing to a lot of people 390 00:36:13,400 --> 00:36:17,440 so yeah 391 00:36:20,319 --> 00:36:29,960 questions oh my gosh this is great I feel like I've crack that nut 392 00:36:28,280 --> 00:36:38,359 hopefully this won't take an hour to get through um all right so I just wanted to 393 00:36:33,240 --> 00:36:44,040 get on to expenditures of the Town um so we have that we have that money coming 394 00:36:41,119 --> 00:36:50,680 in um that money coming in is largely through taxation as we just talked about 395 00:36:47,000 --> 00:36:56,920 and then local receipts that slice of the pie we also have money coming in 396 00:36:53,680 --> 00:37:00,839 from other sources uh state aid ALS Al if we do a bond issue there'll be some 397 00:36:59,200 --> 00:37:07,480 money coming in although that that's usually for uh Capital 398 00:37:04,560 --> 00:37:15,079 expenditures um but we have to pay the debt service and that shows up on the 399 00:37:10,599 --> 00:37:19,599 slice here but I don't think Essex is all that different from many towns in 400 00:37:17,720 --> 00:37:26,040 Massachusetts if you look at the breakdown of where money gets spent uh 401 00:37:23,319 --> 00:37:33,119 Far and Away education is the top expenditure for the town um biggest 402 00:37:30,119 --> 00:37:42,640 slice there and then Public Safety which rolls up fire police um uh emergency 403 00:37:37,800 --> 00:37:47,680 response Etc uh and then um Debt Service is is showing up as 11% that's actually 404 00:37:46,119 --> 00:37:53,160 coming down because I'm going to show you the debt schedule shortly as debt 405 00:37:50,359 --> 00:37:59,920 rolls off The Debt Service until you have a new bond issue Debt Service will 406 00:37:55,720 --> 00:38:03,160 typically come come down over time um and then you can sort of see the rest of 407 00:38:01,440 --> 00:38:07,960 the expenses one of the things that I was just going to mention that is the 408 00:38:04,760 --> 00:38:15,319 role of the finance committee is this looks very simple in terms of the the 409 00:38:11,200 --> 00:38:20,839 rollups but we look at um literally hundreds of line items so all of the 410 00:38:17,920 --> 00:38:25,680 different departments have individual line items that are typically either 411 00:38:23,319 --> 00:38:30,520 Personnel related or their expense related 412 00:38:27,040 --> 00:38:36,079 uh meaning you know supplies non sort of human costs so um that's our town you 413 00:38:34,960 --> 00:38:40,680 can see the expenditures basically we're 414 00:38:37,960 --> 00:38:46,240 municipality right so the expenditures generally have to match up with our 415 00:38:44,599 --> 00:38:53,240 revenues um uh but the extent to which they don't 416 00:38:50,480 --> 00:39:02,720 is uh is free cash and I'll talk about that in a moment um 417 00:38:57,079 --> 00:39:08,240 so uh just a quick delve into operating versus Capital 418 00:39:04,640 --> 00:39:13,040 expense um I had referenced before sort of the seasonality the annual budget 419 00:39:11,880 --> 00:39:21,560 that we go through in planning for each year is 420 00:39:17,920 --> 00:39:28,760 those are recurring expenses to the town so those just those those recur over 421 00:39:24,960 --> 00:39:35,839 time Capital expenses are items that are uh sort of one-time expenses 422 00:39:33,440 --> 00:39:41,280 even though the debt service will require you know ongoing that will that 423 00:39:38,800 --> 00:39:48,680 will be part of our annual expenses uh onetime generally speaking 424 00:39:44,680 --> 00:39:54,520 one-time expenses are capital and typically invol involve borrowing or 425 00:39:51,839 --> 00:40:01,680 could be funded through use of reserves um versus operating which is 426 00:39:58,960 --> 00:40:07,960 generally recurring again these are DLS definitions up here so um I just thought 427 00:40:05,000 --> 00:40:13,920 it would be helpful to to reference that uh free 428 00:40:11,480 --> 00:40:21,680 cash so when our uh when our expenditures at 429 00:40:18,560 --> 00:40:26,200 the end of on June 30th of each at the end of each fiscal year when we go 430 00:40:23,839 --> 00:40:31,319 through what are the expenditures What would the outlays for the Town versus 431 00:40:29,640 --> 00:40:37,960 the money that came in uh whatever that difference is gets 432 00:40:35,560 --> 00:40:42,079 qualified and has to be certified by the is it the Department of Revenue uh that 433 00:40:40,200 --> 00:40:47,880 does this yeah that has to be sort of certified free 434 00:40:43,640 --> 00:40:55,960 cash um our free cash has been running fairly High uh and 435 00:40:51,839 --> 00:41:00,280 one the it gets back to conservatively managed managing budgets but a lot of 436 00:40:58,079 --> 00:41:05,839 that also is we don't always know what the revenue is going to be coming in 437 00:41:03,520 --> 00:41:15,920 again until after the fact so things like meals tax hotel tax we um we we 438 00:41:13,240 --> 00:41:20,480 can't assume we have to be very conservative in terms of our assumptions 439 00:41:18,319 --> 00:41:26,880 for Revenue coming in and then we can also manage our budgets and so that in 440 00:41:23,880 --> 00:41:31,880 recent years has resulted in a fairly uh sizable amount of free cash but free 441 00:41:29,079 --> 00:41:37,680 cash is basically just the differential 442 00:41:34,400 --> 00:41:43,079 um freecash is basically like the savings right at the you know the the 443 00:41:40,280 --> 00:41:48,440 amount that you've uh accumulated during the course of the year that free cash 444 00:41:45,440 --> 00:41:53,000 can be deployed and that is typically typically we do that in the fall because 445 00:41:50,920 --> 00:41:57,079 we know what that free cash number is it gets certified in either 446 00:41:55,040 --> 00:42:00,839 October sometimes times it gets kind of close to town meeting and we just sort 447 00:41:58,800 --> 00:42:06,200 of we're guessing what we think our free cash is and then that money gets 448 00:42:03,760 --> 00:42:11,800 deployed typically that get money gets deployed for 449 00:42:08,240 --> 00:42:18,760 things like for example a new fir Tru as was the case uh this um this past 450 00:42:15,319 --> 00:42:26,760 November um we also put it we make annual contributions into something 451 00:42:21,720 --> 00:42:33,880 called OPB which is uh it's other post-employment benefits I.E healthc 452 00:42:29,400 --> 00:42:39,920 care for retired workers uh retired Town workers and basically we have to fund 453 00:42:36,920 --> 00:42:46,640 that liability from the town so we put money away and that money is to cover 454 00:42:44,280 --> 00:42:53,800 that future liability we have some discretion in terms of what we can put 455 00:42:48,760 --> 00:43:00,119 in each year our OPB fund is actually very well-funded in terms of relative to 456 00:42:57,640 --> 00:43:04,280 other municipalities which is great because if it's not then it's a little 457 00:43:02,160 --> 00:43:08,440 bit of a ticking Time Bomb because once that liability has to be paid out you 458 00:43:06,119 --> 00:43:13,960 need to have the money there it's also one of the few parts of our budget that 459 00:43:11,000 --> 00:43:18,839 can actually be invested in stocks and bonds generally speaking Municipal 460 00:43:16,319 --> 00:43:23,520 budgets are very limited in terms of where the money can be invested it has 461 00:43:20,400 --> 00:43:28,839 to be in conservative cash uh cash equivalent instruments uh maybe some 462 00:43:26,520 --> 00:43:34,720 short-term treasuries but you know we can't be speculating with Municipal 463 00:43:31,160 --> 00:43:39,960 dollars uh and so most of our funds and I'm going to talk about reserves in a 464 00:43:36,160 --> 00:43:44,480 moment sit in just interest bearing uh interest bearing accounts uh so they've 465 00:43:42,839 --> 00:43:53,280 started to learn earn a little bit more interest recently as interest rates have 466 00:43:46,720 --> 00:43:57,680 gone up um but uh so you know one of the question I know this came up in terms of 467 00:43:55,200 --> 00:44:03,240 wanting to use free fre cash for operating 468 00:43:59,000 --> 00:44:10,920 expenses and uh it's not prohibited it's not considered a best practice and 469 00:44:07,119 --> 00:44:19,000 um I'm I put a little illustration together here because annual 470 00:44:14,280 --> 00:44:24,240 budgets grow they're recurring costs and so they're always going to go up over 471 00:44:21,119 --> 00:44:31,000 time if you fund that from a source of savings either you through any of our 472 00:44:26,920 --> 00:44:37,920 Reserve funds including free cash then you have to fund it each year so um the 473 00:44:36,200 --> 00:44:41,839 only time that it's really appropriate to do that is if you imminently know 474 00:44:40,559 --> 00:44:47,119 that you're going to have a source of new Revenue coming online and so 475 00:44:44,480 --> 00:44:52,440 therefore you're kind of you using it in kind of a uh an interim or sort of a 476 00:44:50,319 --> 00:44:59,119 one-off basis to cover that future recurring expense but um uh generally 477 00:44:56,520 --> 00:45:05,800 speaking the budget gets covered through taxation which is allowed to grow pretty 478 00:45:02,160 --> 00:45:08,520 much with as expenses grow uh although sometimes you get some 479 00:45:09,839 --> 00:45:20,359 mismatches all right reserves our town is kind kind of unique um a lot of towns 480 00:45:18,119 --> 00:45:27,240 might have three or four different Reserve funds we have like a dozen or 481 00:45:23,720 --> 00:45:31,520 more um Jo referred to it as what is it called the envelope the envelope method 482 00:45:29,160 --> 00:45:36,119 the envelope method of you know you you're stuffing an envelope in terms of 483 00:45:34,000 --> 00:45:42,000 putting putting money away for different purposes and so what I did was I took 484 00:45:39,880 --> 00:45:48,760 all of our Reserve balances it may be kind of hard to see what those numbers 485 00:45:44,920 --> 00:45:55,880 are but they this shows the the balance of our 486 00:45:49,839 --> 00:46:00,400 reserves um the bar chart is as of SE September 487 00:45:56,800 --> 00:46:05,599 30th but the data labels are actually after town meeting because we 488 00:46:03,319 --> 00:46:09,680 appropriated funds in town meetings so for example you can look at the bar 489 00:46:07,559 --> 00:46:17,400 chart for free cash which is the fifth one from the left and you can see it was 490 00:46:12,800 --> 00:46:21,319 you know 2.4 million the data label says 7 almost 491 00:46:19,000 --> 00:46:27,359 750,000 which is the green part of the bar so the the orange part is basically 492 00:46:24,160 --> 00:46:33,119 money that we that we allocated from free cash and so we make these moves at 493 00:46:31,200 --> 00:46:39,200 town meeting you can see you know such and such as being funded you know from 494 00:46:35,520 --> 00:46:44,480 from free cash or going from one fund to a certain 495 00:46:40,400 --> 00:46:48,880 expense uh the OPB trust fund I think we funded at 496 00:46:46,319 --> 00:46:55,599 175,000 so that's actually negative the little orange bar because it went uh 497 00:46:51,559 --> 00:47:00,400 money went in uh but these are the these are of the balances all the way down to 498 00:46:57,760 --> 00:47:06,040 you know weeded a climate change fund they're just little buckets for 499 00:47:01,839 --> 00:47:12,160 different purposes basically and um Brendan uh some of these 500 00:47:08,319 --> 00:47:18,960 require 2third vote to use some require simple majority is that right is there a 501 00:47:14,160 --> 00:47:26,040 determinant in terms of what it um the it was just a change in rules that allow 502 00:47:23,240 --> 00:47:31,200 it used to be majority vote to put and 2/3 vote to take out it was just a 503 00:47:29,040 --> 00:47:37,800 change where some of the funds can now be voted on majority to take 504 00:47:34,920 --> 00:47:43,559 out and um that's new we haven't dealt with that yet because it'll be for an 505 00:47:39,040 --> 00:47:49,040 upcoming cycle um but it has been uh harder to take the money out and spend 506 00:47:45,480 --> 00:47:57,000 it than it is to put it in that'll help because um but uh so this still taking 507 00:47:54,960 --> 00:48:01,720 money out of the these Reserve funds requires a vote like in that video it 508 00:47:59,480 --> 00:48:05,920 talks about town the town residents as the legislative body for the town we 509 00:48:04,359 --> 00:48:13,800 still need to vote to actually pull money out of these funds so 510 00:48:10,680 --> 00:48:18,920 um and and I know it's easy to say well you know Essex has 10 million Essex is 511 00:48:16,640 --> 00:48:25,680 sitting on 10 million worth of reserves or whatever that number is if you go 512 00:48:21,800 --> 00:48:31,200 down it um but you know things like the bigger ones like OPB were restricted it 513 00:48:28,000 --> 00:48:35,800 can only be used for uh healthc care benefits of 514 00:48:32,400 --> 00:48:41,920 retirees um the sale of real estate is specific to real estate related 515 00:48:39,359 --> 00:48:48,440 expenses uh sewer free cash is part of the Enterprise there stabilization fund 516 00:48:44,800 --> 00:48:56,640 really is kind of a rainy day fund uh so I mean it is more kind of General use um 517 00:48:52,119 --> 00:49:00,839 there's also uh in here uh uh let's see this this thing called Reserve fund 518 00:48:58,359 --> 00:49:05,640 which has a little over a 100,000 that the finance committee has discretion of 519 00:49:03,000 --> 00:49:10,160 using that Reserve fund for like we need a new pump or something down at the you 520 00:49:07,960 --> 00:49:15,160 know water plant and kind of like money needs is needed in a pinch the fincom 521 00:49:12,880 --> 00:49:20,960 can appropriate funds to be used from that Reserve fund we just replenish that 522 00:49:17,520 --> 00:49:26,400 each year um but these are all sort of pretty specific purposes I don't know if 523 00:49:24,119 --> 00:49:30,760 anybody has any questions or want to make any comments on any of 524 00:49:31,119 --> 00:49:35,160 this okay 525 00:49:36,720 --> 00:49:42,240 oh Brank r with 30 CH I just wanted you said it right but I wanted to repeat it 526 00:49:41,240 --> 00:49:46,160 because it's one of those things that get said wrong a lot and I think it's 527 00:49:44,359 --> 00:49:49,920 worth saying again that often times you hear people say you can't use reserves 528 00:49:47,760 --> 00:49:55,799 for operating funds and and the answer is you that you it's just not a good 529 00:49:52,480 --> 00:50:01,280 idea right and and and I and you even as recently as FY 23 Brandon we were using 530 00:49:58,040 --> 00:50:05,319 it for healthcare cost um and and we've been weaning ourselves off of that yeah 531 00:50:03,040 --> 00:50:09,760 in the past we actually used it to a greater extent we got it down to zero 532 00:50:07,520 --> 00:50:14,640 then it came back in a in a in a small amount and what that's known as is a 533 00:50:12,240 --> 00:50:17,720 structural deficit right you've got something in your budget that you have 534 00:50:16,079 --> 00:50:22,839 no real Revenue source for and you're using one-time money for a recurring 535 00:50:19,920 --> 00:50:26,319 cost no no yeah yes it can be done but it is not good practice totally agree 536 00:50:25,319 --> 00:50:29,559 and totally agree that it's not good practice I just think people sometimes 537 00:50:27,640 --> 00:50:32,760 get into a they you hear out loud that somebody repeats through the game of 538 00:50:31,079 --> 00:50:37,440 telephone that you can't and I just want to make sure we said that again so that 539 00:50:34,400 --> 00:50:41,480 people were one of those no thank you for saying that I mean it's like there's 540 00:50:39,160 --> 00:50:45,920 no absolutes in this world of Municipal Finance like there's asterisks 541 00:50:43,720 --> 00:50:49,880 everywhere and so I think a lot of times people just want you know like 542 00:50:47,839 --> 00:50:56,119 definitives like you either use free cash or you don't and it is uh it's a 543 00:50:52,599 --> 00:51:02,079 little bit more nuanced than that so um that's right uh all right we have a 544 00:50:59,839 --> 00:51:07,720 slide here just I we talked about the players involved or at least that was 545 00:51:04,359 --> 00:51:16,960 introduced in the video in terms of the uh uh the various boards the structure 546 00:51:11,160 --> 00:51:24,720 um this is the Essex structure uh and um most of the financial operations and 547 00:51:21,520 --> 00:51:30,400 decisions do roll up to the board of Selectmen in terms of approval of 548 00:51:27,240 --> 00:51:35,400 budgets but also overseeing Brendan who then is managing 549 00:51:33,599 --> 00:51:41,240 some of the financial functions that show up on this chart so in terms of the 550 00:51:37,960 --> 00:51:44,720 org chart this is basically uh these are all the different people that are 551 00:51:42,599 --> 00:51:53,920 involved in the financial decision making for the town um you know 552 00:51:49,079 --> 00:52:00,280 notably uh the tax collection function as part of the um Town's staff on the 553 00:51:57,480 --> 00:52:05,000 left finance committee Board of assessors rolling up to the board of 554 00:52:03,079 --> 00:52:09,839 Selectmen um the uh this is kind of interesting 555 00:52:08,280 --> 00:52:17,520 and sort of Bren and I were sort of going back and forth in terms of the 556 00:52:12,359 --> 00:52:23,920 town uh there's 32 full-time employees uh working um in the town of 557 00:52:22,160 --> 00:52:30,960 Essex um a lot lot of those are actually so a 558 00:52:28,520 --> 00:52:38,920 lot of the so there's 32 full-time employees there's actually about 125 559 00:52:34,400 --> 00:52:44,520 total employees because so many of the employees are 560 00:52:41,119 --> 00:52:52,760 part-time and so a lot of the functions of the Town actually are covered 561 00:52:48,040 --> 00:52:57,520 by a fraction of a full-time equivalent basically right and you and you also 562 00:52:54,640 --> 00:53:01,520 need to consider that there's about 50 um called firefighters in the fire 563 00:52:59,240 --> 00:53:07,720 department who may not work at all in a given week um so that's a large part of 564 00:53:04,880 --> 00:53:11,640 that 125 right there that's about 50 right yeah about 50 and then you take 565 00:53:09,079 --> 00:53:17,280 out the 32 full-time and there's various and Sundry um part-time employees that 566 00:53:15,680 --> 00:53:23,440 cover different things and then one of the things that 567 00:53:20,160 --> 00:53:29,400 uh um I'll say this about Brendan is that he owns a lot of the functions that 568 00:53:27,319 --> 00:53:38,599 in other towns would typically be full-time employees like HR 569 00:53:33,880 --> 00:53:46,240 it uh grants and uh what am I missing facilities purchasing so he wears 570 00:53:41,799 --> 00:53:52,640 multiple hats um and so if you take him as an FTE it would probably add up to 571 00:53:48,640 --> 00:53:57,839 three realistically but it's uh you know that on on a chart like this it shows up 572 00:53:55,400 --> 00:54:04,200 as you know that you would break out his role as sort of functionally 573 00:53:59,599 --> 00:54:08,880 encompassing a number of things so um I mean that's one of the challenges in our 574 00:54:06,000 --> 00:54:13,720 town right I mean and we see this with the police department there's a heavy 575 00:54:10,559 --> 00:54:17,240 Reliance on part-time officers versus full-time officers you know you take a 576 00:54:15,720 --> 00:54:22,760 community like Beverly where they're going to have a whole slew of full-time 577 00:54:19,440 --> 00:54:28,799 officers and um we just don't have a lot of flexibility being a small town 578 00:54:25,640 --> 00:54:35,160 in terms of our Personnel so basically the flexibility comes through a 579 00:54:32,160 --> 00:54:39,240 part-time employee structure to a great for many of the different roles needed 580 00:54:38,160 --> 00:54:43,799 to run the town so I don't know if anybody wants to 581 00:54:41,559 --> 00:54:43,799 add 582 00:54:44,640 --> 00:54:52,640 anything and I'll I'll mention um that that change on the 583 00:54:49,440 --> 00:54:58,880 um stabilization fund where it's now a majority vote to take out that was just 584 00:54:55,240 --> 00:55:03,040 passed on December 4th so even the fall town meeting that we held on November 585 00:55:00,480 --> 00:55:09,520 13th will still beholden to a two-thirds vote on a stabilization fund um it is 586 00:55:06,599 --> 00:55:14,079 still a two-thirds vote to create a stabilization fund but then it's 587 00:55:11,799 --> 00:55:18,520 majority vote to put money in and it used to be 2third to take money out but 588 00:55:16,079 --> 00:55:24,480 it is now majority to take money out again brand new so that would be 589 00:55:21,240 --> 00:55:29,760 extenuating circumstances basically with which we would 590 00:55:25,839 --> 00:55:33,760 pull from that the I don't recall taking money out of it in the last no well all 591 00:55:31,880 --> 00:55:38,400 of these are but all of these Min funds are forms of stabilization fund oh I see 592 00:55:36,319 --> 00:55:42,559 and that that talking about the no no well that new law does apply to the 593 00:55:40,559 --> 00:55:47,280 general stabilization fund but also all those small funds okay whereas in just a 594 00:55:45,480 --> 00:55:54,000 few months ago it would have been a two-thirds vote to take any money out of 595 00:55:49,119 --> 00:55:57,000 any of those funds got it thank you 596 00:55:57,799 --> 00:56:08,200 all right I wanted to quickly cover the town's debt schedule um this is this is 597 00:56:04,520 --> 00:56:16,319 The Debt Service the annual Debt Service of the town over time going out to 2050 598 00:56:12,200 --> 00:56:22,640 and you can see the different uh the different um uses of debt for the town 599 00:56:20,760 --> 00:56:27,200 in the different colors so I don't know if you can read this but the lighter 600 00:56:25,119 --> 00:56:34,480 blue is the town hall re Renovations that actually drops off in 601 00:56:30,480 --> 00:56:40,240 fiscal 23 so we have a bit of a drop uh that uh in starting in fiscal 602 00:56:37,559 --> 00:56:47,599 34 uh we also have a drop that's going to be happening um as the sewer project 603 00:56:44,480 --> 00:56:53,720 rolls off uh and that is going to be happening in fiscal 604 00:56:49,480 --> 00:56:59,240 27 um and then the uh Memorial Elementary which is looking out a 605 00:56:55,920 --> 00:57:05,280 distance is you know 2050 so there are kind of three key dates in which we see 606 00:57:03,079 --> 00:57:09,880 a drop but you can see the general I mean we pay the debt service we're 607 00:57:07,480 --> 00:57:13,880 paying off principal and interest each year it's a little bit like your 608 00:57:11,000 --> 00:57:20,400 mortgage where your overall indebtedness goes down over time and that's what you 609 00:57:17,200 --> 00:57:25,839 see in this debt schedule so I think when we're making decisions particularly 610 00:57:23,039 --> 00:57:32,599 Capital decisions about spending it's helpful to be aware of this uh and sort 611 00:57:30,079 --> 00:57:38,680 of is there optimal timing to actually start projects uh and what's the impact 612 00:57:36,119 --> 00:57:43,200 going to be um so uh I just thought I wanted to 613 00:57:41,400 --> 00:57:49,480 illustrate that I also wanted to illustrate how does Essex compare to 614 00:57:45,920 --> 00:57:55,880 other towns in terms of our debt service and um there's a lot of numbers in here 615 00:57:53,160 --> 00:58:00,240 but it's quite interesting we we are in terms of our indebtedness we're 616 00:57:57,680 --> 00:58:07,000 basically in the bottom third of uh the county of Essex County 617 00:58:04,760 --> 00:58:11,920 if you look at all the different municipalities um I wouldn't read a 618 00:58:09,920 --> 00:58:15,839 whole lot into this I mean I I do think we are pretty conservative in terms of 619 00:58:14,119 --> 00:58:20,680 our use of debt we've had some flexibility through the sale of real 620 00:58:17,640 --> 00:58:26,039 estate fund and we've utilized that for things like offsetting the public safety 621 00:58:22,839 --> 00:58:30,480 building which you know was a way to limit the amount of debt that had to be 622 00:58:27,880 --> 00:58:36,599 issued for that different towns are at different points on their cycle in terms 623 00:58:32,760 --> 00:58:43,440 of having to make Capital uh you know Capital Improvements to their physical 624 00:58:39,559 --> 00:58:49,200 assets I mean our you know our uh public safety building dated from the 1950s so 625 00:58:46,559 --> 00:58:54,440 that was you know that was long overdue other towns uh you know you look at some 626 00:58:52,599 --> 00:59:00,960 you look at IP switch where their their debt actually just spiked up um other 627 00:58:57,799 --> 00:59:06,440 towns uh like Marblehead you know you you typically don't see a town don't you 628 00:59:03,400 --> 00:59:11,280 you don't generally exceed 15% in terms of your debt service relative to your 629 00:59:08,440 --> 00:59:18,880 budget because that just sort of spirals you toward uh a difficult situation but 630 00:59:15,160 --> 00:59:25,760 you can see kind of Essex is not really unusual um there you know Manchester is 631 00:59:22,440 --> 00:59:30,160 lower Hamilton and wenam are lower I think Manchester has some capital 632 00:59:27,640 --> 00:59:34,799 projects that they need to embark on so that number will probably go up in the 633 00:59:32,359 --> 00:59:39,079 next few years I think one of the good things is that a lot of our projects are 634 00:59:37,240 --> 00:59:42,079 actually in the rearview mirror in terms of the upgrades not to say we aren't 635 00:59:40,720 --> 00:59:45,599 going to need to spend money we are going to need to spend money I think we 636 00:59:43,480 --> 00:59:52,319 all know the next big outlay is going to be um Essex 637 00:59:48,000 --> 00:59:58,319 Elementary uh so um but I think this is just a helpful I I think it's always 638 00:59:55,160 --> 01:00:02,960 helpful to compare where a town stands relative to other 639 01:00:01,440 --> 01:00:08,839 towns um and that's it so that's that's the 640 01:00:06,440 --> 01:00:15,720 prepared material happy to kind of engage and talk about any aspect of town 641 01:00:13,079 --> 01:00:22,359 finance um hopefully this was helpful can um we don't have I don't think we 642 01:00:18,680 --> 01:00:25,440 have many people on uh online there's a question what what are the pros of 643 01:00:24,200 --> 01:00:32,440 having so many Reserve accounts I think Reserve 644 01:00:28,599 --> 01:00:38,520 funds Frozen cons Frozen cons see in the chat yep I see it um that's that's a 645 01:00:35,599 --> 01:00:43,440 good question I think that question sorry the question is what are the pros 646 01:00:40,920 --> 01:00:53,119 and cons of having so many different funds um and I think that uh it's a form 647 01:00:50,359 --> 01:00:57,359 of instilling discipline I think that's the pro so that you 648 01:00:55,079 --> 01:01:03,280 have you're you're earmarking specific funds for specific purposes and we know 649 01:01:00,599 --> 01:01:08,359 particularly like um uh things that go through a cycle like Vehicles emergency 650 01:01:05,799 --> 01:01:14,720 vehicles you know we we fund our own ambulance we have an ambulance fund 651 01:01:10,160 --> 01:01:20,280 which is one of those that um it it it's a reminder each year that we have to 652 01:01:17,559 --> 01:01:25,240 acrw for that liability that's periodically going to come up our 653 01:01:22,359 --> 01:01:29,400 preference would be to not have to issue debt in order to be able to fund that 654 01:01:27,480 --> 01:01:34,400 purchase and I I mean I think it's great that we were able to pay for a firet Tru 655 01:01:31,599 --> 01:01:40,839 without having to pay for any you know financing costs because at this point in 656 01:01:37,240 --> 01:01:46,160 time you have you know with interest rates higher you'd end up paying a 657 01:01:42,839 --> 01:01:51,240 pretty hefty premium to the cost of that outlay 658 01:01:47,920 --> 01:01:57,119 but um you know it makes it more confusing I think that's I think I can 659 01:01:53,240 --> 01:02:03,000 add to it as well in the past we've seen Town buildings before we uh renovated 660 01:01:59,720 --> 01:02:06,119 this building and built a new uh public safety 661 01:02:04,240 --> 01:02:10,680 building there would be a lot of deferred maintenance because the town 662 01:02:08,520 --> 01:02:15,520 okay well we built it but we really can't afford to to do that right now and 663 01:02:12,799 --> 01:02:20,599 moved on from the beginning of the either the renovation of a building or 664 01:02:18,000 --> 01:02:24,079 the um building of the the construction of the new public safety building for 665 01:02:22,359 --> 01:02:29,920 example we've tried to get these funds in place and periodically put money in 666 01:02:27,079 --> 01:02:33,839 so that when that next thing comes um there's money there and it's not it's 667 01:02:31,520 --> 01:02:39,440 not a shock it came out of some previous year and it's waiting to to address the 668 01:02:36,640 --> 01:02:44,240 need as opposed to just deferred maintenance that just keeps going and 669 01:02:41,000 --> 01:02:47,880 and actually becomes a larger cost because you did deal with a with an 670 01:02:45,720 --> 01:02:53,520 issue when it would have been easier and and more cost effective to do 671 01:02:50,640 --> 01:02:57,960 so yep thank you and I will also say it's sort of precedes my time it's just 672 01:02:56,279 --> 01:03:01,119 it's one of those things about essics we always have we've always had all of 673 01:02:59,520 --> 01:03:07,559 these funds I don't know when that it actually started but 674 01:03:03,440 --> 01:03:13,559 uh um yeah Brian sorry Brian gressler 30 CH I've got a couple of questions so um 675 01:03:10,440 --> 01:03:16,559 in a lot of these overall Town budget discussions we've talked about 676 01:03:15,240 --> 01:03:21,000 distressed communities and trying to protect distressed communities so uh I 677 01:03:19,000 --> 01:03:25,000 think one of my first questions is a purely technical one so we have an 678 01:03:22,400 --> 01:03:28,839 annual Town survey and we know we know what properties get taxed so have we 679 01:03:26,400 --> 01:03:33,720 ever done a a legitimate analysis or an understanding of where even within how 680 01:03:31,559 --> 01:03:39,720 demographically our tax income or tax revenue breaks out amongst um certain 681 01:03:37,160 --> 01:03:45,200 demographic groups and that's a lead in to a question about uh tax deferral and 682 01:03:43,599 --> 01:03:47,960 abatement programs and ways to help those distressed communities but first 683 01:03:46,559 --> 01:03:52,200 we need to understand what they actually are and how many there actually are no 684 01:03:50,520 --> 01:03:56,200 we've never done a formal study of that nature okay so I mean I think think that 685 01:03:54,520 --> 01:04:00,839 would be useful because we often we talk about helping these groups but then we 686 01:03:57,520 --> 01:04:05,000 had one thing on annual town meeting um and we we tabled it uh there are other 687 01:04:03,400 --> 01:04:08,359 programs there are deferral programs and other things like that that aren't 688 01:04:06,359 --> 01:04:13,119 necessarily funded by the state and require seed funding internally uh 689 01:04:10,960 --> 01:04:16,559 within you know but are are worth looking at and I think as part of an 690 01:04:14,760 --> 01:04:20,720 overall discussion about the whole of the budget and where expenses are I 691 01:04:18,920 --> 01:04:25,119 think this is equally kind of important to make sure that if we think this is a 692 01:04:23,279 --> 01:04:28,000 problem then let's Act L look at ways to at least address it and then bring that 693 01:04:26,440 --> 01:04:34,079 to the town and see if we're willing to to to cover the cost of that um so I 694 01:04:31,960 --> 01:04:40,119 think if you then roll that back into uh override discussions right so 695 01:04:38,359 --> 01:04:43,480 Ben we were at the a public hearing and the the Town Administrator from 696 01:04:41,319 --> 01:04:48,279 Manchester talked about kind of setting up 697 01:04:44,440 --> 01:04:52,319 a uh a more steady understand you know planned override series of small 698 01:04:50,160 --> 01:04:57,119 overrides right getting to a point and then and then knowing that you know 699 01:04:53,920 --> 01:05:01,200 every X to X to Y years 3 to 5 or whatever it was you're going to do a 700 01:04:58,960 --> 01:05:04,799 series of smaller overrides in order to better manage kind of the fluctuations 701 01:05:03,079 --> 01:05:09,720 of budgets uh we haven't done an operational override since 2003 or a 702 01:05:06,839 --> 01:05:13,680 school one since 2006 right so I think of that I'm kind of curious at the time 703 01:05:11,599 --> 01:05:17,440 you kind of you you nodded your head and and and had a discussion with him you 704 01:05:15,200 --> 01:05:21,279 know that you that wasn't a horrible idea so I'm kind of curious what we 705 01:05:19,520 --> 01:05:25,839 think about that approach versus the approach we've been taking yeah he he's 706 01:05:24,200 --> 01:05:32,319 mentioned that actually a number of times in you know different forums 707 01:05:29,160 --> 01:05:37,559 collaboration uh I think it might be easier to implement that in a town like 708 01:05:35,119 --> 01:05:43,279 Manchester than in Essex because to your as you just stated we don't have a great 709 01:05:39,240 --> 01:05:48,520 track record around override so uh so that could be difficult but I also think 710 01:05:45,680 --> 01:05:54,599 from an expectations management you know there's probably an upside there uh you 711 01:05:52,599 --> 01:06:01,400 know to doing it that way but I would invite others on that uh question if if 712 01:05:58,240 --> 01:06:04,880 people want to opine because this is a discussion and it's not overly 713 01:06:08,880 --> 01:06:15,920 formal we Canna start you want to say something R well I think Brian when you 714 01:06:14,200 --> 01:06:20,319 talk about a series of small overrides that was mentioned by Town Administrator 715 01:06:17,440 --> 01:06:25,480 fetish B and Manchester that's very specific to the school in 716 01:06:23,559 --> 01:06:29,400 the oper ating budget of the school and I think tonight from the town's 717 01:06:27,960 --> 01:06:34,520 perspective we're talking about the town of Essex and how we manage our funds I 718 01:06:32,279 --> 01:06:39,559 think in doing a lot of research about our town in general we've found that 719 01:06:38,000 --> 01:06:42,960 some of our departments aren't keeping Pace with the wage and salary scale of 720 01:06:41,319 --> 01:06:46,799 other communities if we were going to be looking at an operational override I 721 01:06:44,640 --> 01:06:51,440 think we need to look with within our own departments first I think I could 722 01:06:49,440 --> 01:06:54,760 very comfortably tell you that we have a board of health administrator that's 723 01:06:53,039 --> 01:07:00,240 probably underpaid we have a police department where you 724 01:06:57,559 --> 01:07:05,039 know many of them may be underpaid we have a clerk and a treasure collector 725 01:07:02,680 --> 01:07:10,200 that are far below where they need to be so I think that we want to make sure 726 01:07:07,680 --> 01:07:14,079 that we're talking about everything as a whole and not just specifically about 727 01:07:11,920 --> 01:07:16,279 little overrides to fund our school that's not what I'm talking about I'm 728 01:07:15,039 --> 01:07:18,839 talking about everything as a whole because I did say that we hadn't done it 729 01:07:17,599 --> 01:07:25,000 on operational override for the town since 2003 so so I do think that my 730 01:07:21,680 --> 01:07:30,200 question was meant as a general thought about that philosophy be it 731 01:07:28,079 --> 01:07:34,720 school town operating expenses or otherwise is that uh you know because we 732 01:07:32,839 --> 01:07:39,119 are currently using an the opposite model what are the thoughts of of this 733 01:07:36,839 --> 01:07:42,839 group of of that operation operational model since it's come up in discussion 734 01:07:40,559 --> 01:07:46,400 oh I apologize I thought you were Greg's comment was specifically for the school 735 01:07:44,799 --> 01:07:49,880 no in general right because it's been just as long and I think there are 736 01:07:47,880 --> 01:07:52,839 internal problems and I think you could theoretically I'm not sure if you can do 737 01:07:51,559 --> 01:07:56,240 it with the regional district but I know that that towns with that a regional 738 01:07:54,039 --> 01:08:01,480 District have have lumped overrides that combine operations and schools into one 739 01:07:58,559 --> 01:08:06,119 override too so so I would also comment that naturally overrides are done 740 01:08:03,480 --> 01:08:09,480 through town meeting and when overrides are brought forward it's the town's 741 01:08:07,920 --> 01:08:13,480 people that have the opportunity to vote on that and when we brought them forward 742 01:08:11,799 --> 01:08:17,679 you know they either pass or fail so that's not any of your elected officials 743 01:08:16,000 --> 01:08:20,960 that make that decision ultimately we can bring it forward but it's your 744 01:08:19,239 --> 01:08:23,640 Town's people that vote but we we haven't I I don't think we' brought an 745 01:08:22,199 --> 01:08:29,279 oper a town operational one forward since the last one passed in 746 01:08:25,719 --> 01:08:32,199 2003 I think it was 2005 somewhere around there I think it was 20 I'm I 747 01:08:30,480 --> 01:08:36,400 look the DLS I think it's it's been quite a few years correct so so we're we 748 01:08:34,719 --> 01:08:39,560 are making a conscious decision to not bring them forward I guess is my point 749 01:08:37,960 --> 01:08:43,799 that that was my philosophy question that's fine 750 01:08:41,239 --> 01:08:49,880 um I think my last one was there there is a there's a risk that that we get to 751 01:08:48,199 --> 01:08:53,920 a and this one is specific to the schools that we get to a super town 752 01:08:51,839 --> 01:08:57,640 meeting uh that occurs after after Spring Town meeting here and when funds 753 01:08:55,400 --> 01:09:04,480 are already allocated and that results in an expense to an unplanned expense to 754 01:09:00,880 --> 01:09:07,520 the town what are we doing to plan for and mitigate that risk where would the 755 01:09:05,759 --> 01:09:12,600 funds come from if that were the if that if that if a if all of a sudden there 756 01:09:09,520 --> 01:09:15,159 was a in August an unexpected bill after Springtown meeting where would the funds 757 01:09:13,920 --> 01:09:19,319 come from and what are we doing now to mitigate the risk of having those funds 758 01:09:17,359 --> 01:09:24,359 available should that risk be realized yeah that I can actually speak to 759 01:09:21,040 --> 01:09:31,279 because at our last Finance committee we talked about the need to have a 760 01:09:25,960 --> 01:09:38,799 bifurcated budget in terms of uh as we it as we embark on our liaison R roles 761 01:09:36,640 --> 01:09:42,799 in terms of talking to different town departments we basically have to figure 762 01:09:40,679 --> 01:09:49,839 out how to make a budget work that is going to uh could be under sort of a 763 01:09:46,920 --> 01:09:55,800 normal circumstance or you know where we're looking at a a school budget that 764 01:09:52,839 --> 01:10:00,560 would be you know along the lines of what's been proposed in the preliminary 765 01:09:57,880 --> 01:10:04,960 budget or I realize that those are still fluid right now but if this ends up 766 01:10:02,600 --> 01:10:10,400 going to a super town meeting and we end up having to pay for something it's our 767 01:10:08,480 --> 01:10:16,880 responsibility as a finance committee to make sure that we know how we're going 768 01:10:12,719 --> 01:10:23,159 to actually be able to address that that liability or that cost and it's going to 769 01:10:19,400 --> 01:10:27,199 mean making tough decisions and so we need to we're going to need to agree on 770 01:10:25,080 --> 01:10:34,760 like where do those tough decisions need to be and I think so the lens with which 771 01:10:29,840 --> 01:10:40,760 we look at each department needs to be under the under that scenario that you 772 01:10:38,360 --> 01:10:44,199 of the super town meeting I mean but can I guess you know so is it even possible 773 01:10:42,600 --> 01:10:47,480 to pull out of stabilization if we were in that if we were at that point and 774 01:10:45,600 --> 01:10:51,199 things like that I you know well yeah yeah and that may actually bring back 775 01:10:49,199 --> 01:10:57,440 the question of the override because the unintended consequence is if you end up 776 01:10:54,120 --> 01:11:02,239 you know squeezing the sponge so tightly that you know we can't attract and 777 01:10:59,280 --> 01:11:07,719 retain employees at the town because you know we can't pay people because of you 778 01:11:05,159 --> 01:11:14,719 know like as we just talked about we may need to have a broader override just to 779 01:11:10,080 --> 01:11:22,159 kind of keep the town uh competitive uh as an as an entity so um you know I 780 01:11:19,560 --> 01:11:28,199 think we we it would have to be a combination of stock Gap and behavior 781 01:11:24,880 --> 01:11:37,320 change in terms of what we actually see uh but so the the short answer to your 782 01:11:32,600 --> 01:11:41,480 question is yes and that is um that adds a different complexion to this year's 783 01:11:38,960 --> 01:11:44,040 budget season than past years all right I think I'm good I think I think just in 784 01:11:42,880 --> 01:11:49,400 in summary right I think what I was trying to get to as a in that in that 785 01:11:45,800 --> 01:11:53,360 whole Arc was you know I'd like to kind of dig deeper into 786 01:11:52,000 --> 01:11:56,840 you know that we dig deeper into some of those ways to help the distress 787 01:11:54,600 --> 01:12:01,159 communities we keep talking about uh and Beyond just the one thing that was on on 788 01:11:58,679 --> 01:12:04,400 annual town meeting um and there are potential implication for that that that 789 01:12:02,800 --> 01:12:08,440 other parts of the you know of the tax base might have to cover the cost of 790 01:12:05,840 --> 01:12:13,400 that uh and you know and that's I think that's a question for the taxpayers but 791 01:12:11,159 --> 01:12:19,120 um I think though you know it's hard to talk about about you 792 01:12:16,719 --> 01:12:22,000 know all of these things without you know individually right they go together 793 01:12:20,760 --> 01:12:25,280 if we care about those distress communities but we also care about 794 01:12:23,120 --> 01:12:28,120 paying the fair wage to the police officers then I think both of those 795 01:12:26,719 --> 01:12:31,800 conversations have to go on no understood understood thank you thank 796 01:12:32,480 --> 01:12:40,440 you Jake Jake Foster uh School Street want to follow up on a couple of Brian's 797 01:12:38,080 --> 01:12:45,520 uh questions about uh proposition two and a half and kind of the uh philosophy 798 01:12:43,000 --> 01:12:49,880 of how we operationalize that I think one of the challenges that we have is 799 01:12:47,960 --> 01:12:54,040 that we often talk it about as as a kind of a hard limit and we use that limit 800 01:12:52,400 --> 01:12:58,719 language a lot and particularly given the history of 801 01:12:56,480 --> 01:13:04,600 not having BR overrides right people kind of view it in that frame of mind as 802 01:13:01,760 --> 01:13:10,080 an extraordinary thing to pass another way of looking at operation 803 01:13:07,239 --> 01:13:15,239 of two proposition two and a half is to view it as a way to manage 804 01:13:13,000 --> 01:13:19,080 inflation particularly as we get into years you know like we're experiencing 805 01:13:17,080 --> 01:13:25,120 now where inflation all around us is going up well over 2 and a 806 01:13:21,800 --> 01:13:30,679 half and I was wondering how you all as a board and a committee think about 807 01:13:29,159 --> 01:13:36,159 proposition two and half do you think of it more as a limit or is a process to 808 01:13:33,320 --> 01:13:39,239 manage inflation or when might you apply one thinking versus 809 01:13:39,920 --> 01:13:49,520 another I think I think of proposition two and a half actually as a framework 810 01:13:45,320 --> 01:13:55,760 or a discipline that um allows for uh coordination among different 811 01:13:53,400 --> 01:14:00,360 different players as far as expectations around how the budget actually gets 812 01:13:57,960 --> 01:14:05,800 managed so it creates sort of a universal 813 01:14:01,880 --> 01:14:10,560 language um uh and it is a way to particularly as people are feeling 814 01:14:07,880 --> 01:14:18,719 squeezed because of inflation it's a it's a way to um you know have have keep 815 01:14:16,480 --> 01:14:23,600 that somewhat in check in terms of at least the tax part of it but it's an 816 01:14:21,120 --> 01:14:28,480 interesting question just in terms of thinking about it I just think about it 817 01:14:25,199 --> 01:14:31,719 as a framework and you know operating within that 818 01:14:32,960 --> 01:14:41,199 framework but I invite others I my short answer is I think of 819 01:14:39,040 --> 01:14:46,360 it as a guardrail I think of it as a Target that we shoot for we try to 820 01:14:43,440 --> 01:14:52,480 operate within it and it helps us if we can fall below it great if we have to 821 01:14:49,560 --> 01:14:57,239 exceed it we bring it to town meeting so I'm not opposed to overrides or small 822 01:14:54,600 --> 01:15:00,280 overrides on a regular basis I just don't want to make that the Habit 823 01:14:58,480 --> 01:15:05,239 because I think overrides traditionally have been difficult to pass and it's the 824 01:15:02,280 --> 01:15:10,239 same thing is trying to it's it's like trying to assume the number for free 825 01:15:07,360 --> 01:15:15,440 cash or for what excess capacity is or New Growth it's a guess so I don't want 826 01:15:12,679 --> 01:15:20,000 to budget based on in unknown I would rather base it on Prop two and a half 827 01:15:18,360 --> 01:15:23,880 and then if we have to look forward we're not destabilizing our community by 828 01:15:22,080 --> 01:15:28,480 using stabilization so back to another point that I didn't answer um using 829 01:15:26,840 --> 01:15:33,320 stabilization is certainly something we can do if we end up at a supertown 830 01:15:30,159 --> 01:15:37,120 meeting and we are forced into that situation of having to fund something 831 01:15:35,239 --> 01:15:41,800 that we didn't vote for in an override situation we would have to look at 832 01:15:38,920 --> 01:15:46,639 stabilization accounts realizing that those are savings accounts they are not 833 01:15:43,960 --> 01:15:50,400 refunded automatically so it's the same thing as using free cash and you are 834 01:15:48,639 --> 01:15:53,639 going to deplete it in the next year you are going to need that money plus 835 01:15:52,360 --> 01:16:00,000 whatever the growth of of the school budget is essentially destabilizing the 836 01:15:56,800 --> 01:16:03,960 econ your own local economy so I think of prop two and a half is guardrails and 837 01:16:02,040 --> 01:16:07,440 it's a Target to shoot for in my opinion it's kind of the short the short long 838 01:16:05,560 --> 01:16:10,800 answer and I also think it's an opportunity too because if you think 839 01:16:09,199 --> 01:16:14,520 about that formula and you think about the new growth and I think and and jod 840 01:16:13,080 --> 01:16:18,679 may have actually have something to say about this just based on her experience 841 01:16:16,360 --> 01:16:24,480 from the economic development committee is like what do we need to do in Essex 842 01:16:21,719 --> 01:16:29,800 to actually you know to to get our our new growth number higher I mean we know 843 01:16:27,120 --> 01:16:34,159 we have limitations just we have a lot of conservation land we don't have a lot 844 01:16:32,480 --> 01:16:41,120 of you know buildable land uh like other towns do so 845 01:16:39,239 --> 01:16:46,360 you know are there are there things we could be doing that you know to to bump 846 01:16:43,600 --> 01:16:51,280 up the growth equation so that's the opportunity part of it I think the two 847 01:16:48,040 --> 01:16:56,880 and a half percent and then our historic struggle around overrides that may be 848 01:16:54,960 --> 01:17:03,600 the more limiting or constraining part of the equation so I think I start with 849 01:16:59,719 --> 01:17:08,040 2 and half% and then plus opportunities and 850 01:17:04,719 --> 01:17:12,880 limits well I I I also think though that last year I think the town demonstrated 851 01:17:10,120 --> 01:17:18,040 you know we were all in with our uh all of our excess capacity I think we left 852 01:17:15,560 --> 01:17:23,120 20,000 on the table um before we got to the override scenario so that was seven 853 01:17:21,400 --> 01:17:27,719 I think seven or eight years worth of excess capacity that again you know the 854 01:17:25,840 --> 01:17:32,920 taxpayers weren't taxed on that over those seven or eight years but in order 855 01:17:29,760 --> 01:17:39,480 to bridge that Gap we were willing to use the the whole kitten Kaboodle for 856 01:17:36,719 --> 01:17:45,000 one year where I think when I joined fincom Ben was actually looking at that 857 01:17:42,080 --> 01:17:50,719 excess capacity to hopefully get us to this you know 858 01:17:47,239 --> 01:17:58,199 structural uh you know override or a smoothing of you know this structural 859 01:17:53,920 --> 01:18:03,440 issue uh that you know we use the entire thing in one year I also think about 860 01:18:00,199 --> 01:18:07,840 inflation you know not just from uh Town departments but I look at it from the 861 01:18:05,360 --> 01:18:13,800 taxpayers they're all suffering from inflation as well so it's really hard to 862 01:18:11,239 --> 01:18:18,679 squeeze you know both ends especially when you have um used your excess 863 01:18:16,320 --> 01:18:25,159 capacity as far as new revenue for the town part of uh what we're waiting for 864 01:18:21,480 --> 01:18:32,840 is the zoning project Pro to to progress uh Essex has a lot of capacity issues we 865 01:18:28,920 --> 01:18:37,199 have a um call fire department that a lot of people in who live in this town 866 01:18:35,080 --> 01:18:41,719 who have moved here in the last 10 years are shocked to learn that they think we 867 01:18:39,840 --> 01:18:45,639 have a full-time Fire Department in fact Manchester fincom members were shocked 868 01:18:44,120 --> 01:18:53,280 to hear that we didn't have a full-time fire department we have limited sewer 869 01:18:48,560 --> 01:18:59,320 capacity we live on the marsh we um have a lot of Green Space which you know in a 870 01:18:56,360 --> 01:19:06,120 conversation in the um assessor uh Department I was told when I was doing 871 01:19:01,760 --> 01:19:11,159 my tour uh for EDC that green space could literally bankrupt our town as you 872 01:19:08,560 --> 01:19:16,199 take more and more of that those um Parcels off the tax rolls we're 873 01:19:13,560 --> 01:19:21,520 shrinking that that tax base so it's going up for the rest of us we're in a 874 01:19:18,080 --> 01:19:27,239 very unique situation with a very tiny town government um so it we have I think 875 01:19:25,199 --> 01:19:32,360 we have extraordinary challenges and we're old Yankees so we like to pay for 876 01:19:29,719 --> 01:19:37,920 things right we like to pay cash for that that fire Tru we own our equipment 877 01:19:35,440 --> 01:19:42,920 we do not lease things we buy things we do not borrow if we do not have to we 878 01:19:40,760 --> 01:19:47,280 tuck away year over-year until we can actually afford things and I don't think 879 01:19:44,880 --> 01:19:52,880 I think it's been a great model for Essex and Jake you mentioned the 2 and a 880 01:19:49,840 --> 01:19:55,960 half% as an inflationary Point Mike because we're live and recording you 881 01:19:54,239 --> 01:20:01,080 have to get to the microphone as an the 2 and a half% if you go back to where it 882 01:19:57,880 --> 01:20:06,800 came from that was the longterm goal for inflation in America has been two 2% so 883 01:20:03,880 --> 01:20:11,840 it's 2% inflationary plus a little half percent for growth so you get into 884 01:20:09,120 --> 01:20:17,800 trouble when you're in the three four 5% above that so again the rationale was to 885 01:20:15,320 --> 01:20:21,960 keep level with long-term inflation and allow a little bit of that half percent 886 01:20:19,560 --> 01:20:26,560 for growth so it is an interesting perspective the way bring it up thank 887 01:20:24,040 --> 01:20:30,480 you all yeah thanks Jake thanks Jake I procedurally can I ask a question 888 01:20:29,159 --> 01:20:35,719 as a community oh yeah you're part of the T So Nina just do your name and 889 01:20:33,000 --> 01:20:40,360 address because we are recorded Nina McKinnon Lil land farm so I had a 890 01:20:38,560 --> 01:20:45,239 question and I think it's coming up because we're hearing about the override 891 01:20:42,040 --> 01:20:52,440 that did not pass but um we did see the slide that our taxes on average people 892 01:20:48,520 --> 01:20:56,920 saw 7% increase of their taxes offand do we we can anyone remember if the 893 01:20:55,199 --> 01:21:03,400 override had passed what people's taxes would 894 01:21:00,560 --> 01:21:06,920 be the override didn't pass we have to remember you probably wouldn't have used 895 01:21:05,080 --> 01:21:12,159 all that Levy capacity so there would be some offset it might not be that 896 01:21:09,120 --> 01:21:16,679 different okay and so from that I guess my other followup and I should disclose 897 01:21:14,639 --> 01:21:19,920 I'm on the finance committee so to Ben seven years I have three and a half 898 01:21:18,040 --> 01:21:24,360 years some know some of these terms more so what are the consequences and I I'm 899 01:21:22,920 --> 01:21:29,239 say asking this more from the public standpoint to understand what are the 900 01:21:26,480 --> 01:21:34,719 consequences or impact the fact that we've used up all our Levy limit in the 901 01:21:32,159 --> 01:21:43,239 one year I think Jody you just said we have 20,000 remaining as we look 902 01:21:39,040 --> 01:21:47,480 forward I I would say that it um 903 01:21:44,800 --> 01:21:52,480 it I don't want to put a negative spin on it but it's just another constraint 904 01:21:49,639 --> 01:21:57,199 that we're operating under in terms of uh uh evaluating budgets going forward I 905 01:21:55,880 --> 01:22:04,840 mean the other thing that I didn't mention before if you take the 906 01:22:00,600 --> 01:22:09,440 town's cost structure and uh you know most entities fin uh Municipal entities 907 01:22:07,800 --> 01:22:14,760 are like this the school I don't think is any different you you look at the uh 908 01:22:12,440 --> 01:22:19,080 you look at the structure of those costs you 909 01:22:15,600 --> 01:22:23,159 have human expenses you know you have personnel and then you have uh other 910 01:22:22,120 --> 01:22:28,960 expenses and the Personnel costs are collective 911 01:22:26,320 --> 01:22:35,080 bargaining they're contractual costs so we know you know we know that we have 912 01:22:31,159 --> 01:22:41,480 built in to a certain layer of our budget a 2% increase and uh so then you 913 01:22:39,800 --> 01:22:44,679 you don't really have levers on those things that have been collectively 914 01:22:43,000 --> 01:22:53,920 bargained so you're you're looking at the the other expenses uh in terms of of 915 01:22:48,639 --> 01:22:59,080 belt tightening so it is um uh you kind of have to to look at the whole picture 916 01:22:56,600 --> 01:23:04,480 without having that I mean the thing is historically we haven't really used Levy 917 01:23:01,960 --> 01:23:08,800 capacity other than extenuating circumstances like a failed override so 918 01:23:07,080 --> 01:23:16,600 just in terms of an annual budget process it's not hugely different but I 919 01:23:11,719 --> 01:23:21,760 mean it is uh uh we've just lost a layer of flexibility that's all right and 920 01:23:19,199 --> 01:23:25,199 there was a there was a year where the town of Manchester did have to go to for 921 01:23:24,360 --> 01:23:30,480 an override around the school and the town 922 01:23:27,760 --> 01:23:34,679 didn't and it was because there was Levy capacity um at the time we should also 923 01:23:33,239 --> 01:23:40,960 mention that there are a number of things that over time have been kind of 924 01:23:37,480 --> 01:23:45,639 entrained into the budget so when the canal Point leases were a new thing and 925 01:23:44,280 --> 01:23:52,520 we went from about $110,000 a year to $500,000 a year on on 926 01:23:50,679 --> 01:23:58,639 only onethird of the property by the way away that was a new source of Revenue 927 01:23:55,760 --> 01:24:03,920 when we went from our running our own Regional uh our own 928 01:24:00,280 --> 01:24:12,719 dispatch to the regional Dispatch Center that was saving like $300,000 a year um 929 01:24:09,159 --> 01:24:18,600 all of those things over time have have have been put to bear on increasing 930 01:24:15,679 --> 01:24:24,520 costs in addition to Levy capacity that we managed to save from year to year but 931 01:24:22,480 --> 01:24:29,920 if you look at the inflationary environment that is most times well 932 01:24:27,080 --> 01:24:35,000 beyond 2 and a half% those are just some other things that we've been able to use 933 01:24:32,800 --> 01:24:39,320 but they've kind of all run their course now they're all in trained fully and 934 01:24:36,880 --> 01:24:45,360 they're not going up anymore um they're fully counted on so you know it's is 935 01:24:42,600 --> 01:24:51,360 definitely going to be um quite an important discussion as we head into 936 01:24:47,639 --> 01:24:54,360 what we're doing now this 25 budget 937 01:24:56,119 --> 01:25:00,800 any other thoughts questions 938 01:25:01,159 --> 01:25:10,520 comments well um feel free to reach out individually uh and um I appreciate 939 01:25:08,600 --> 01:25:17,360 everybody coming here uh do we have another question uh Teresa has a 940 01:25:12,960 --> 01:25:23,480 question oh Teresa uh you can either can we take an audio stream or do you want 941 01:25:19,000 --> 01:25:28,080 to type it in can you hear me yes yes I'll turn my volume down so it doesn't 942 01:25:25,520 --> 01:25:33,480 mess up with you is that better you're good we can we can hear 943 01:25:30,199 --> 01:25:37,280 you yep we can hear um my question I I just have a couple um specific questions 944 01:25:35,960 --> 01:25:42,400 what was the percentage of the total budget last year that um that was free 945 01:25:39,840 --> 01:25:48,080 cash that came back well I think our our free cash 946 01:25:45,040 --> 01:25:53,480 number was 2.4 million yeah so that's around 947 01:25:49,320 --> 01:25:59,480 10% rough rough numbers right not on right on the on the basically on the 23 948 01:25:56,639 --> 01:26:08,760 on the 20 million yeah 2.4 on the 20 so a little over 10% 949 01:26:05,119 --> 01:26:13,639 right free cash okay um question about OPB when do you are you using from it 950 01:26:12,040 --> 01:26:17,000 now are you still funding and at what point do you think you're going to get 951 01:26:14,639 --> 01:26:23,239 to a point of um meter so that you can actually be using from it yeah that 952 01:26:20,080 --> 01:26:30,960 there's actually I think it gets every 3 years there is uh uh an 953 01:26:27,000 --> 01:26:37,840 Actuarial uh report that gets updated which has the um liability date I want 954 01:26:34,440 --> 01:26:43,760 to say that it sort of starts in the 2030s uh in yeah and I mean up until 955 01:26:41,639 --> 01:26:49,280 this point it's been pay pay as you go so we've always had to pay for retiree 956 01:26:47,320 --> 01:26:53,719 health insurance cost but we're paying as we go cash every year the goal is is 957 01:26:52,400 --> 01:26:59,119 knowing that people are going to live longer so there'll be theoretically more 958 01:26:55,440 --> 01:27:04,400 retirees alive to pay um if you can amass a certain amount of principle then 959 01:27:02,199 --> 01:27:09,560 that money the interest that comes from that goes to pay what is going to be a 960 01:27:07,119 --> 01:27:18,080 growing cost of the town and that was recognized many years ago and so it's 961 01:27:14,040 --> 01:27:22,440 it's like doubly beneficial because a the cost is going up and B we have a way 962 01:27:20,320 --> 01:27:27,480 to pay that larger cost with without actually hitting current year funds so 963 01:27:25,000 --> 01:27:33,639 OPB when we get there and I think that's why Theresa is asking about it will be a 964 01:27:30,360 --> 01:27:38,159 way to relieve a portion of costs that the town is paying year to year but 965 01:27:36,280 --> 01:27:42,199 until it matures to a certain point and we haven't gotten there yet um we need I 966 01:27:40,679 --> 01:27:46,679 think we need to talk to our actuary about about the and our financial 967 01:27:44,560 --> 01:27:52,199 adviser about recommendations around that we're in a we're in a um a growing 968 01:27:49,880 --> 01:27:57,199 phase not in a using phase but there will be a time fairly soon that we need 969 01:27:54,400 --> 01:28:02,880 to we need to understand um what what would be prudent in that area right 970 01:27:58,760 --> 01:28:07,679 because then we have the Ben once so um right now it's about 50% funded give or 971 01:28:05,760 --> 01:28:14,159 give or take I think when when I started on the fcom it was about 25% funded but 972 01:28:11,119 --> 01:28:19,760 we've been sort of putting that a portion of the free cast free cash each 973 01:28:16,639 --> 01:28:23,119 year has been going into OPB sometimes more and right now the interest 974 01:28:20,920 --> 01:28:26,840 generated rolls into the fund to help get to the goal so if you start using it 975 01:28:25,440 --> 01:28:31,960 prematurely you're not going to get to the goal as quickly right but when we do 976 01:28:28,960 --> 01:28:37,480 get to the goal rather and it becomes self-funding for what that liabil that 977 01:28:34,360 --> 01:28:42,119 future liability is going to be we have the added advantage of not having to 978 01:28:39,159 --> 01:28:44,840 keep shoveling money into it so that that's why we've been trying to use the 979 01:28:43,679 --> 01:28:49,480 free cash that's going to be the analysis like do you keep growing and 980 01:28:46,880 --> 01:28:53,000 rolling in and getting there does that make more sense and does that ultimately 981 01:28:51,159 --> 01:28:57,560 save you more money than to take a little bit out now but not reach the 982 01:28:55,080 --> 01:29:03,800 full self funding status that we're trying to achieve which is actually the 983 01:29:01,360 --> 01:29:07,679 uh the accounting standard is is pushing us to achieve 984 01:29:05,000 --> 01:29:12,600 it do we do we have any employees that are drawing from it now for former or 985 01:29:10,000 --> 01:29:18,280 retired employees Brandon do you know no the town is still paying as we go so 986 01:29:15,360 --> 01:29:24,320 there's there's always a cost so retired employees if they're on the HMO retire 987 01:29:21,119 --> 01:29:30,520 product the town is funding 25 uh 75% of that they're paying 25% of that if 988 01:29:27,080 --> 01:29:37,639 they're on the PO or the more uh generous uh product the um Town pays 60% 989 01:29:36,520 --> 01:29:40,960 I don't think we have anyone on I see what you're saying that just comes out 990 01:29:38,800 --> 01:29:45,520 in our benefits year to year pay as you go the goal is to have so much money in 991 01:29:43,440 --> 01:29:49,600 that account that no matter how big over it takes over there's no more current 992 01:29:47,320 --> 01:29:52,639 your money going in to pay for that cost we always have had the cost we always 993 01:29:51,080 --> 01:29:57,560 will have the cost the standard is about getting it so that 994 01:29:54,440 --> 01:30:02,360 self funding right got it Teresa did you have another question I do so just to 995 01:30:00,119 --> 01:30:06,480 clarify though we don't have a Target date for when that plan is to take place 996 01:30:04,560 --> 01:30:11,239 you're just reevaluating every few years not yet because the um amount of money 997 01:30:09,480 --> 01:30:17,000 that the town is able to put in there on a year-to-year basis varies widely and 998 01:30:14,440 --> 01:30:23,679 so it's hard to predict because if you look at our contribution over the years 999 01:30:19,320 --> 01:30:28,440 it's kind of noisy not a contri a mandated you know that you've 1000 01:30:26,000 --> 01:30:32,280 agreed to in any way I'm sorry I couldn't hear you on that one I'm sorry 1001 01:30:30,639 --> 01:30:36,600 so you don't have a planned out like a dedicated specified contribution that 1002 01:30:34,360 --> 01:30:41,400 you need to make based on no while we're ahead of like like Ben said we're we're 1003 01:30:39,159 --> 01:30:45,080 ahead of the curve as compared to a lot of other 1004 01:30:42,280 --> 01:30:47,840 towns it's not possible to always say this much is going to go in so there 1005 01:30:46,639 --> 01:30:52,520 would have been more that went in this year but we bought a fir TR because that 1006 01:30:50,239 --> 01:30:57,520 had to happen um and it's been that way all along we have 1007 01:30:55,040 --> 01:31:02,840 made great progress but it's not not entirely predictable yeah I just had one 1008 01:31:00,760 --> 01:31:06,199 other question thank you for that um regarding the levy capacity I was 1009 01:31:04,440 --> 01:31:11,239 surprised to hear how far back it went I know we used excess capacity so when was 1010 01:31:08,159 --> 01:31:16,040 the last year that we you that we um that established a levy at 2 and a 1011 01:31:14,360 --> 01:31:20,080 half% um 1012 01:31:17,600 --> 01:31:25,119 well I'm not sure I under so the question was when was the last year that 1013 01:31:22,040 --> 01:31:28,639 it established the levy at 22% in other words when's the last year that we fully 1014 01:31:26,719 --> 01:31:33,000 levied what we were oh I see what you're saying able to Levy you know um Teresa 1015 01:31:31,679 --> 01:31:36,760 I'm going to have to take that as a followup because I think we'll that'll 1016 01:31:34,800 --> 01:31:41,360 be either CH I don't know off hand but we'd have to look at each year and and 1017 01:31:39,280 --> 01:31:46,600 add that up I can take it take that down right that's okay I it's it's it's a 1018 01:31:44,040 --> 01:31:51,840 specific one I had heard Jody had mentioned I think that uh it it dates 1019 01:31:48,960 --> 01:31:57,760 back but we can we can get like that's a factual question so we can get an answer 1020 01:31:53,639 --> 01:31:57,760 for that thanks for that 1021 01:31:58,280 --> 01:32:02,000 yep any others any 1022 01:32:02,600 --> 01:32:10,679 others well thank you all and like I said feel free to ask any questions I 1023 01:32:08,360 --> 01:32:16,840 think we need to close out right orj I will entertain I will make a motion to 1024 01:32:12,840 --> 01:32:20,840 adjourn all those in favor I all right and I'll make a motion to adjourn the 1025 01:32:19,080 --> 01:32:24,719 the finance committee second all in favor I 1026 01:32:22,360 --> 01:32:29,840 thank you thanks everybody thanks everybody thank 1027 01:32:26,840 --> 01:32:29,840 you