Even household budgets require data to be effective in managing expenses and how those expenses will be funded. Now consider the monumental task of building a budget for a town, any town, with its various cost centers, revenue streams, and, of course, contingency for the unexpected. Data is king in drilling down and in projecting future financial needs.
On January 28, the Mattapoisett Finance Committee, chaired by Pat Donoghue, came together remotely for its first in a long series of meetings, which will find the committee using new and or updated data provided by Town Administrator Mike Lorenco. With his background in finance, budget processes are in his wheelhouse.
After providing an overview and introduction of new members Tom Kelly and former Selectman Tyler Macallister, Lorenco detailed his planning strategy for FY22, saying of the Capital Planning process: “The updated spreadsheet helps to explain how we are spending money in a more detailed fashion.”
Donoghue responded, saying, “We want to be better prepared than we have been in the past.… I’m happy to see this.” One area that was briefly discussed was any cost savings from insurance carriers due to COVID-19. “I’m on the lookout for any temporary reductions.… Maybe sock those savings away,” she said.
Another topic near and dear to Donoghue’s financial planning heart are school budgets. “The way we’ve been balancing the budget is based on lower enrollments and dropping teachers based on decreasing enrollment.… If they don’t reduce a teacher, we can’t meet contractual agreements, not at 2.5 percent.” She said that the per-pupil cost for grades K-6 was “off the charts.”
Lorenco said one area to look at that might help to improve the ORR District’s School Choice program would be to invite the town of Acushnet to use a negotiated rate. He said a rate of $9,000 per year per student still does not cover the real costs associated with educating that child, but it’s better than the $5,000 the state now allows, he said.
In a follow-up, Lorenco said that schools represent more than 50 percent of the overall town budget. To better understand the impact that funding schools has on the community, he has provided both the School and the Finance Committees with data covering enrollment trends for the past 15 years and per-pupil expenses. He offered website links that provide better insight into relevant school data located at mass.gov/municipal-databank-data-analytics-including-cherry-sheets, as well as profiles.doe.mass.edu/state_report/.
For the town’s many departments, Lorenco said he has provided departmental comparisons, actuals, and trends, including those reported by other cities and towns, to help the Finance Committee through the analysis process. He also said he has advised department heads that level-funding, except for employment contracts, will be necessary for FY22.
Another analysis and projection tool Lorenco has modified is the 10-year Capital Planning spreadsheet. He said that added to that analytic tool is not only the addition of building maintenance needs, roadway culvert design, and engineering and other heretofore-missing expense pieces, but also a column that directs how each line item will be funded, either by free cash, through debt, or grants.
And let’s not forget new revenue sources. Lorenco shared his screen, which showed how much new revenue the town could have collected with a meals tax. Between 2012 and 2020, the town missed out on an estimated $800,000 in revenue. He believes that by establishing a 75-cent tax per $100 spent, the town could bring in new and much-needed money. “It spreads the cost of the town’s expenses over a larger group, not just the residents,” he explained. He said that 243 of the Commonwealth’s 351 communities now have a local meals tax.
Other potential revenue sources Lorenco brought to light include a short-term rental tax of 3 percent, a local room tax of up to 6 percent for hotels, motels, and bed-and-breakfasts, and the current agreement being drawn up for a solar array at the town landfill. Of the array, Lorenco said that this project would “bring in multiple revenue sources, including a PILOT program.” Of the total package of revenue for this project alone, he said, “Annually, it could be a seven-figure sum; it’s much needed.”
The Wanderer reached out to Capital Planning Chairman Chuck McCullough for his takeaways regarding the new format and process for capturing and funding capital needs.
“Things are more detailed, more informative, more disciplined,” McCullough began. “We’ll include how each item will be funded, what revenue source.” He explained that in the past, free cash, enterprise funds, or grants were not specified for expenses at the front end and that having that information at the beginning of project evaluation “will make things a lot cleaner.” McCullough also said that Lorenco is providing department heads with much-needed data, giving those cost centers a more detailed approach to capital requests and budgets. He used the example of the new fire station, saying that for at least 15 years, the project was carried on the Capital Plan spreadsheet at $5 million, a construction project he says is now at $10 million.
The next meeting of the Mattapoisett Finance Committee is scheduled for Thursday, February 4, at 4:00 pm.
Mattapoisett Finance Committee
By Marilou Newell