Public Meeting On Federal COVID Funds And State Aid Set For Wednesday, March 31

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Photo: Poster to the meeting

The $8.6 million Belmont will receive from the $1.9 trillion American Rescue Plan has been the topic of a heated debate ever since it was signed into law by President Biden on March 11.

In one corner are those who are attempting to defeat a $6.2 million Proposition 2 1/2 override who see the money filling town coffers with more than enough funds to render the override moot.

On the other side, proponents of the override contend that most of the cash is restricted to reimbursing town revenue lost due to COVID-19 and can’t be used to as a one-time stop gap for the town’s structural deficit.

And in the past three weeks, “I am seeing some things that are being misreported in regards to those numbers,” Town Administrator Patrice Garvin told the Select Board Monday, March 29.

In an attempt to provide a clearer picture of the funds and how they can be used for, the Financial Task Force II and Warrant Committee are inviting the public to a virtual presentation to share the latest information regarding the new Federal Aid Bill and also provide an update on projected state aid in the coming fiscal year 2022.

When: Wednesday, March 31
Time: 7 p.m.
Zoom: https://us02web.zoom.us/j/87434286149

Questions will be taken at the conclusion of the presentation period
through the Q&A function. The meeting facilitator will inform those
attending when questions can be submitted.

First Peek At Fiscal Year ’22 Budget: Public Meeting On Dec. 9

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Photo: The town created its FY ’22 budget with the expectations that voters will approve a Prop 2 1/2 override in April.

John Phelan express the obvious in his opening remarks when presenting this coming year’s school budget on Monday, Nov. 23.

“We look towards a very unique year in budgeting in a very unique year in our time,” said Belmont schools superintendent as the town and school provided the public its first peek at the fiscal year 2022 budgets.

The “unique” year Phelan mentioned was seen during a topsy turvy nine months in which Belmont’s finances took a beating and where the town budget was revised twice – and likely a third time – as COVID-19 played havoc to fiscal assumptions.

During this upheaval, the fiscal year ’22 budget was being cobbled together. At first glance, a growing degree of normalcy has returned to the budgets: expenses such as overtime and road repair funding are back while the school district is seeking to add educators even as over all enrollment has declined by 250 students.

But the documents Phelan and Town Administrator Patrice Garvin presented before a mega joint meeting of the Select Board, Financial Task Force and the School, Warrant and Capital Budget committees are unique insofar as they are contingent on voters passing a multi-million dollar Prop 2 1/2 override at this April’s Town Election.

Just how big is the override’s price tag? That figure remains up in the air. What is known as currently calculated, the all town ’22 budget is approximately $8.1 million in the red.

It will be an especially unique new year as the town and schools will present sometime early in the new year a version of the fiscal ’22 budget if the override fails at the ballot box.

“So we will be preparing two budgets this year,” said Phelan, to allow the public see the impact on services and staffing with and without override funds.

The town will hold a Zoom public meeting on the impact of a Prop 2 1/2 override on the fiscal year ’21 budget on Wednesday, Dec. 9 at 7 p.m.

For Town Administrator Patrice Garvin, while “we are inundated every day with what is horrible about 2020,” she said that there are reasons to see the past year in “a positive note”: town services were continued to be delivered while measures were taken to soften the blow from revenue losses including hiring freeze and maximizing turn backs from school and town departments to build up the town’s free cash account.

Due to its conservative approach to the operating budget, reaching out for grants and award – including $2.1 million it received from the federal government’s CARES Act – and seeking new sources of revenue (the McLean development and two marijuana host community agreements), the town retained its top ranked triple A credit rating as it approached developing the coming budget.

All-Town Budget

What is known at this early stage of the budget process is the combined town/school budget- excluding the enterprise funds of $6.9 million – is being set at $144.5 million, a 3.8 percent increase from the pre-pandemic fiscal ’21 budget.

The FY ’22 budget breaks down as:

  • Town: $43.5 million
  • Schools: $67.6 million
  • Fixed costs: $31.4 million
  • Capital budget: $2 million

Due to the wild fiscal year the town underwent in 2020, the percentage change between the ’21 and ’22 budgets are significantly different. If compared with the “original” fiscal year 2021 – the pre-pandemic budget from March 2020 – the fiscal year ’22 budget has increased by 3.8 percent, which is in line with annual budget growth over the past decade. Substitute the original ’21 financials with the COVID-19 budget – in which town and school stripped out $7 million in expense savings – the increase jumps to 9.2 percent.

Highlighting the town budget, Garvin pointed out that while FY ’22 will be a minimal level service budget, there will be personnel adds to a few departments such as a social worker for the Council on Aging as well as a newly created town-wide procurement manager.

The town will increase the tree budget by $50,000 for the increasing number of damaged timber and replenishing deferred expenses such as $450,000 for equipment and furnishings for town departments as well as bringing back overtime.

View a detailed PowerPoint presentation of the ’22 town budget here.

Reporting on the schools, Phelan said while its current fiscal budget did take a significant hit due to COVID-19, it was able to employ educators to support remote learning and secure supplies and computers through federal grants.

Because those expenses were paid for with one-time funds, Phelan said the district will attempt to carry those expenses over to FY ’22 but not embed them into the annual budget but rather place them in what is being called the “COVID parking lot.”

“So we only provide these service (including technology specialist, aides and nurses) and ask for the funds if they are actually needed,” said Phelan.

The schools will be budgeting to a model created by the Financial Task Force II which has been working for eight months with the district and the Warrant Committee on the assumptions of anticipated expenses.

The detail presentation from Superintendent Phelan of the FY ’22 school budget can be found here.

At the end of the day, the preliminary fiscal ’22 is swimming in the red by $8.1 million, or about two-thirds as large as the $12.5 million in override funds the Select Board is seeking at April’s Town Election. The Board has said the override amount that will be before voters in the spring will be reduced sometime in the next two months.

To provide residents the real world consequence of the override measure, Garvin and Phelan will be creating a second budget over the next month of two that will show the services and staff cuts to town and schools if voters reject the override.

While both the town and schools expenses are set, the more interest part of the meeting was how the revenue side was looking. There were two nice surprises on that side of the ledger: the first a great leap in free cash to $11.2 million. A detailed explanation on this year’s free cash account can be found here.

There is also a healthy amount of state aid – $3.2 million – the town was not anticipating in fiscal ’21 as the town expected a drop of receipts by 20 percent. But after the budget was approved, Gov. Charlie Baker’s administration stated it would maintain the same amount of aid in ’21 as in the previous year.

But Garvin said the restored state revenue – which has yet to arrive from the state – is slated to go into fiscal year 2023 free cash account.

And every penny of funding is needed as the town has yet to find an answer to the bain of Belmont’s fiscal existence: a persistent structural deficit. With Belmont’s real estate classification at more than 90 percent residential and new growth limited due to a lack of open space, the “Town of Homes” is hamstrung by the four decade old Proposition 2 1/2 that places a 2.5 percent ceiling on total property taxes annually – which makes up 77 percent of tax receipts – as well as the 2.5 percent limit on property tax increases.

Override Postponed To April After State Surprise Town With $3.3M And Lots Of Uncertainties

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Photo: November override rescinded

In a dramatic 180 degrees turn, the Belmont Select Board voted Tuesday morning, Aug. 4 to rescind the Nov. 3 Proposition 2 1/2 override vote it approved last week in response to a surprise announcement last week from the state that it will likely provide level-funded local aid in the current 2021 fiscal year.

Since Belmont balanced the fiscal ’21 budget assuming a 25 percent cut in Chapter 70 aid, the news from the Division of Local Services within the Department of Revenue will add approximately $3.3 million to the town’s coffers.

While calling the state’s action “really good news,” Board Vice Chair Tom Caputo said the substantially more state funding coming to the town has also introduces a “fair bit of uncertainty” to the financial forecasting and some challenges to budgetary assumptions.

Needing time to recalculate forecasts performed by the Financial Task Force 2 and allow the economic landscape to settle, the Select Board members said an override vote will now take place at the annual Town Election in April 2021.

The state announcement came days after the Select Board approved last Monday, July 27 a $12.5 million override to resolve an ongoing structural deficit and town revenue lost to the COVID-19 pandemic in the fiscal ’22 budget and beyond.

One of the first decisions to be resolved, according to the Task Force’s Mark Paolillo, is whether to take the $3.3 million and spend it in the fiscal ’21 budget that took substantial cuts or “bank” it, placing it in the town’s stabilization fund and spread it out over time.

“That’s going to be a question we’re not going to answer right now but that’s a big question because that will have an impact on the override figure,” said Select Board Member Adam Dash.

In addition to the Task Force creating multiple new forecast scenarios, there is a growing level of uncertainity on the assumptions coming from the state.

“We do have a bit of a disconnect that we need to resolve between the modeling that we’ve done and [data] we’re getting from the state,” said Caputo. “The challenge … is trying to figure out to what degree we can rely upon this information.” He pointed to the state’s assurance of providing level-funded Chapter 70 aid that has yet to be voted on by the legislature or signed into law by Gov. Charlie Baker.

From now until April, there is the likelihood the town could be eligible to receive federal funds to help fund COVID-19 expenses or other state revenue that could reduce the override amount even further. With state and federal aid in flux, Dash cautioned the town “to be very careful about keeping an eye on how this plays out.”

In addition to the increased uncertainties, the board faced a hard deadline of Tuesday to either keep the override on the Nov. 3 ballot or rescind it, according to Town Clerk Ellen Cushman, who under law needed to submit

“We are backed into a corner,” said Caputo. “Unfortunately, we have very little time to fully process all the information that the state provided regarding that state aid.”

With so much ambiguity thrown on its plate, the Task Force reversed the last week’s recommendation and unanimously voted to request the Select Board to change the date for the override in the spring. The Board voted 2-0 – Caputo and Dash voting yes, Chair Roy Epstein was unable to attend the meeting – to scrap the November override.

‘A Big Ask’: Town To Seek $12M-$14M Prop 2 1/2 Override Likely In November

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Photo: Tom Caputo, chair of the Financial Task Force 2.

With town finances at the precipice of a financial black hole coming this time next year, the Belmont Select Board will ask voters to pass the largest Proposition 2 1/2 override in the town’s history of between $12 to $14 million.

“It’s a big ask,” said Tom Caputo, Select Board member and chair of the Financial Task Force II Committee on Thursday, June 25 as the town faces the duel impacts of the COVID-19 pandemic on state and local revenues while battling a persistent structural deficit that has become the hallmark of Belmont’s fiscal woes.

“It is an incredibly challenging time to contemplate anything of this scale even in a great economy … It is particularly challenging in an environment where we’re looking at an economic recession,” said Caputo.

If the override is successful, the impact the average home assessed at $1.2 million will result in an additional $1,250 to a homeowner’s annual tax bill. If rejected, the town and schools would be required to make crippling levels of cuts in staffing and teachers, limit or cancel programs and cuts in essential services such as police, fire and schools.

“What we hope folks will appreciate is that there is no one silver bullet going to solve this problem,” said Caputo, pointing out that bridging the $12 million deficit with just employee cuts would require a reduction of approximately 120 full time equivalents (FTEs) positions.

“This is not trimming [costs], these are substantial reductions in order to achieve” balanced budgets starting with fiscal year 2022, said Caputo.

Timetable for November override by the Financial Task Force 2.
(Image: Town of Belmont)

While the date of the override remains fluid, the task force’s preferences are to link the vote to the Tuesday, Nov. 3 presidential election as the town can anticipate an 80 percent voter turnout – in 2016 82.4 percent of voters cast a ballot – which will provide a “fair and accurate read” of residents sentiment, according to the Select Board’s Adam Dash.

Others believe the November date doesn’t give the town enough time to “educate” voters on the need for a revenue push of such a historic amount.

The reason for the proposed override is the combination of the town’s structural budget deficit which is the result of the town’s nearly exclusive reliance on residential property taxes coupled with a 2 1/2 increase limit on the town’s property tax levy.

While constrained on the revenue side, town expenses related to skyrocketing school enrollment, a steady need for capital improvements and key cost drivers such as health and pension costs, employment expenses and mandated school services continue to rise yearly by 3.5 percent to 4.5 percent. The structural deficit alone would have required an $8 to $9 million override to close in fiscal 2022. Add the continued impact of the COVID-19 on state and town revenue of $3 to $4 million and the override comes in the $12 million range.

The Board and Task Force have expressed some optimism if the override is approved the funds will last several years more than the current projected three years just like the 2015 override.

The most recent Prop 2 1/2 override occurred in April 2015 when voters passed – 55 percent to 45 percent – a $4.5 million increase in property taxes to fund schools, town services, capital projects, road repair and sidewalks. It was the only override to pass in the past 17 years.

Originally meant to last three years, a combination of thoughtful planning, fiscal prudence and a good state economy allowed the town to stretch the funds through the current fiscal year.

The joint committees also agreed that seeking voters’ approval for an override must be conjoined with a concrete five-year budgetary blueprint to mitigate the structural deficit by seeking new sources of revenue and discovering ways to tame costs associated with employee pensions and health insurance.

Despite a great deal of heavy lifting by Belmont officials, residents and town boards and committees to pass the unprecedented override, Dash stated his confidence the measure will pass voters muster.

“I think we have a compelling case,” he said. “[The override] is not due to bad management … it’s due to just some structural issues we’re trying to address in addition to the COVID which is totally unpredictable.”

“If we put the case out there and we show people what they’ll get with it and what they’ll lose without it, they’ll make a fair decision and we’ll move on,” Dash said.