fy 13 revised municipal budget 1. exactly what is a budget?
TRANSCRIPT
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FY 13 REVISED MUNICIPAL BUDGET
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Exactly What is a Budget?
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Exactly What is a Budget?
• A budget is a financial operating plan• A budget is a tool for communicating with the public about how their money is spent.
• Citizens vote on the total budget amount not the individual line items
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How the Budget is Prepared
• The budget process begins in August each year for the following year beginning July 1
• The Select Board gives management budget parameters
• Departments review their current spending and needs for the next year
• Each department submits a preliminary budget by mid September
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How the Budget is Prepared
• The Town manager and CFO review the budget submissions & make recommendations for changes
• The CFO prepares the budget for salaries and benefits and for expenses which affect multiple departments
• The total budget is compiled, then reviewed by the Town Manager
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How the Budget is Prepared
• The preliminary budget is presented to the Select Board for discussion
• Department Heads make presentations to the Select Board explaining their budgets
• The Town Manager and CFO continue discussions with the Select Board to arrive at an acceptable budget
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How the Budget is Prepared
• The final budget is presented at a public hearing
• Management & the Select Board further inform the citizens of the details of the budget through flyers, the website, public access TV, the newspapers and meetings
• The Monday evening before the first Tuesday in March, a Town Meeting is held to discuss the budget with citizens
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How the Budget is Prepared
• The official vote on the total dollar amount of the budget is the first Tuesday in March
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Important Stuff to Know
• Expenses must equal revenues, unless the Fund Balance is used
• All unexpended funds in the General Fund lapse to the Fund Balance on June 30
• The Fund Balance could be considered a Rainy Day Fund
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Revenues
•Projecting revenues is:
• Part science• Part art• Part philosophy• Part luck
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Revenues
• Some revenue sources exceed projections
• Other revenues do not meet expectations
• Types of revenue• Property taxes• Fees • Other • Intergovernmental
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Revenues
• Things that sway revenues• The economy• The weather• Changes in property assessments• Changes in laws
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Expenditures
• Usually easier to predict than revenues• Largest area of expenditures is salaries and benefits, particularly health insurance
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Things that can Change Expenditures
• Natural disasters• Unique opportunities• Legal judgments• Federal or state mandates
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GRAND LIST (GL) GROWTH ANDTHE TAX RATEHow a reappraisal effects municipal taxes.
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BUDGET / GRAND LIST (GL) = TAX RATE• As the GL increases and if the budget stays the same the tax rate will decreases in relation to the GL increase.
• If the budget increases and the GL does not grow than the tax rate will increase.
• Typically both the GL grows and the budget also increases.
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EXAMPLES OF THE FORMULA
Budget Grand List Tax Rate
$10,000,000 $19,000,000 $0.5263
$10,000,000 $19,190,000 $0.5211
$10,100,000 $19,000,000 $0.5316
$10,100,000 $19,190,000 $0.5263
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EFFECT OF REAPPRAISAL ON FORMULA
Before
ReappraisalAfter
ReappraisalAssessed Value $14,000,000 $20,000,000
Budget $10,000,000 $10,000,000
Tax Rate $0.7143 $0.5000
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EFFECT OF REAPPRAISAL ON PROPERTY TAXES
Before
ReappraisalAfter
Reappraisal
Assessed Value $140,000 $200,000
Grand List Value $1,400 $2,000
Tax Rate $0.7143 $0.5000
Tax $1,000 $1,000
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RESULTS OF 2011 REAPPRAISAL• Typical reappraisal; 1/3 increases in tax payments, 1/3
decreases in tax payments, and 1/3 pays roughly the same amount in taxes
• 35% of all tax payers had a less than 5% +/- change in property taxes
• 57% of all tax payers had a decrease in their property tax payments
• 43% of all tax payers had an increase in their tax payments
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SUMMARY
• GL growth = lower tax rates
• Typically budgets and GL will both grow.
• Ideally the GL will grow at a higher rate than the increasing cost of running the town.
• Reappraisal is revenue neutral.
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FY 13 BUDGET REVISIONS
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Budget Revote Required•On March 6, 2012, the Colchester municipal budget was defeated by 394 votes
•56% of the people who voted said no•Only about 27% of registered voters voted
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Where to Cut? How Much to Cut?
• The Select Board and the Town Manager have spoken with many citizens to get input on where to cut the budget
• We have read Front Porch Forum, The Sun & Burlington Free Press & others
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Change in Tax Rate over Time
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Yearly Municipal Tax Rate
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Financial Challenges Remain
•Keep municipal taxes within affordable limits
•Protect key existing public services
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Financial Challenges
•Preserve reserves to remain financially healthy – fiscally sound
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FY 13 - Then•Previous Request
• General Fund Budget $11,275,590• % Increase in Budget 4.2%• Fund Balance Reduction $ 135,000
• Tax Rate $ 0.5669• % Increase in Tax Rate 5.7%
• The tax rate increased at a higher rate than the budget because we reduced the Reduction in Fund Balance from $446,916 in FY 12 to $135,000 in FY 13. This had the effect of increasing taxes.
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FY 13 - Now
•Revised Request• General Fund Budget $11,085,390• % Increase in Budget 2.4%• Fund Balance Reduction $ 236,500
• Management is proposing a transfer of $101,500 from the Police building fund to the General Fund, so Fund Balance will only be impacted by the original $135,000 proposed
• Tax Rate $ 0.5520• % Increase in Tax Rate 2.9%
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Spending Cuts Made
•Employee furloughs $43,000• The combination of furloughs and increases in health insurance will
eliminate the value of raises in FY 13 for nonunion employees
•Reduce hours for several part-time employees (no further cuts to Economic Development) $30,000
•Reduce Fire Depts requests $21,000
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More Spending Cuts Made
•Library cuts $15,000
•Nonprofit organizations $ 8,780
•Technical Rescue $ 1,500
•Rescue $ 3,500
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More Spending Cuts Made
•Parks & Recreation cuts $23,000•Police cuts $15,000•Other cuts $ 7,100
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Surplus Used
• Proposing the transfer of excess funds of $101,500 from Police Building account to General Fund and use it to reduce cuts in order to maintain services and avoid layoffs
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Comparison of Municipal and School Taxes• The Municipal tax rate is about 31% of the total tax bill for
Colchester residents.
• If you have a house valued at $250,000, your FY 12 property taxes would be as follows:
• Education taxes $2,969• Municipal taxes $1,342• Total taxes $4,311
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Cost of a 1.5¢ Tax Increase in FY 13
Assessed ValueFY 13 Tax Increase
Weekly Tax Increase
$150,000 $23 $0.43$200,000 $30 $0.58$250,000 $38 $0.72$300,000 $45 $0.87$350,000 $53 $1.01$400,000 $60 $1.15
$450,000 $68 $1.30$500,000 $75 $1.44$550,000 $83 $1.59
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FY 13 MUNICIPAL BUDGET REVISION
VOTE ON
MAY 1, 2012
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