FY 13 REVISED MUNICIPAL BUDGET

1. FY 13 REVISEDMUNICIPAL BUDGET

2. Exactly What is a Budget?

3. 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

4. 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

5. 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

6. 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

7. 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

8. How the Budget is Prepared • The official vote on the total dollar amount of the budget is the first Tuesday in March

9. 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

10. Revenues • Projecting revenues is: • Part science • Part art • Part philosophy • Part luck

11. Revenues • Some revenue sources exceed projections • Other revenues do not meet expectations • Types of revenue • Property taxes • Fees • Other • Intergovernmental

12. Revenues • Things that sway revenues • The economy • The weather • Changes in property assessments • Changes in laws

13. Expenditures • Usually easier to predict than revenues • Largest area of expenditures is salaries and benefits, particularly health insurance

14. Things that can Change Expenditures • Natural disasters • Unique opportunities • Legal judgments • Federal or state mandates

15. GRAND LIST (GL) GROWTH ANDTHE TAX RATE How a reappraisal effects municipal taxes.

16. 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.

17. EXAMPLES OF THE FORMULA

18. EFFECT OF REAPPRAISAL ON FORMULA

19. EFFECT OF REAPPRAISAL ON PROPERTY TAXES

20. 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

21. 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.

22. FY 13 Budget Revisions

23. 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

24. 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

25. Change in Tax Rate over Time Yearly Municipal Tax Rate

26. Financial Challenges Remain • Keep municipal taxes within affordable limits • Protect key existing public services

27. Financial Challenges • Preserve reserves to remain financially healthy – fiscally sound

28. 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.

29. 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%

30. 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

31. More Spending Cuts Made • Library cuts $15,000 • Nonprofit organizations $ 8,780 • Technical Rescue $ 1,500 • Rescue $ 3,500

32. More Spending Cuts Made • Parks & Recreation cuts $23,000 • Police cuts $15,000 • Other cuts $ 7,100

33. 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

34. 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

35. Cost of a 1.5¢ Tax Increase in FY 13

36. FY 13 MUNICIPAL BUDGET REVISION VOTE ON MAY 1, 2012