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Terri Burchfield, Chairman
John Henshaw, Vice-Chairman
Hannah Anderson, Secretary
Jay Simeone
George Martin
Marc Luescher
Michelle Walton
Location: Town Hall
Lunenburg Finance Committee
09-13-18
Present: Terri Burchfield, John Henshaw, Hannah Anderson, Michelle Walton
Absent: George Martin, Marc Luescher, Jay Simeone
Guest: Heather Lemieux, TM.
17 Main Street, P.O. Box 135
Lunenburg, MA 01462-0135
978.582.4139
FAX 978.582.4148
1. Open Meeting:
The Chair called the meeting to order at 7:00 pm. This meeting is being recorded and
televised for re-broadcast on the Lunenburg Public Access cable channel.
2. Communications:
Public Comment:
A. Dave Passios, 56 Whiting Street, Welcomes Michelle to the board, his
comments this evening have nothing to do with the person appointed to the
committee but more the process that was taken to fill the vacancy. Town
Council said 30-day clock never started because a written notice, which is
required in that section, was never given for the vacancy. Mr. Passios'
interpretation of that admission is that the entire process is flawed, start to
finish. He believes that without written notice, that legally there is no open
vacancy that appointing committee could act on. Again, his interpretation of
town council's response was that it opens the entire process as being
flawed. Terri agreed, and said that it was talked about at Charter Review
Committee because her take on the situation was that Finance Committee
wasn't part of that section but it is since Finance is a multi-member body.
Also, in her 6 years, she cannot remember sending a written notice for a
vacancy so that is also a factor. The other piece that was missing for Terri,
was that there was no method of giving it back to the appointing authority.
There have been many times that there has been no applicant within 60
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:
From the Committee:
B. John suggests we keep the vertex study front and center as we go into the
budget process. John is still looking into the new growth and the
relationship of the new growth and how it effects year to year increase in
revenue. The fear is with new growth, come 5-10 years from now, we will
need more police, fire, education staff. It's not just money coming in, but
money that may be needed to redirect to something else. Terri agrees that
it is worth looking at and wonders if it is something to consider for policy
development. John will have a presentation for us within 2-3 weeks.
New Communications:
Municipal directory came in the mail. Basically, a phone book for all the
towns/cities in Massachusetts. MMA publication from the senior center and
the Beacon. Remote participation policy.
3. Review policy areas the Board of Selectman want to revisit.
Meet with Board of Selectman on October 11, 2018 at 6:30pm then open the public
hearing at 7:30 to warrant articles.
Terri asked Town Manager, Heather Lemieux if she could give the Finance Committee an
idea on what the policies are that will be discussed on October 11, 2018.
First policy is on Borrowing, the question asked about that was taxing to the levy. If we
include that in the policy and not tax to the levy was one selectman's concern.
Terri asked, where it says Section 3.01 B.4 the regular tax levy is the sum of the prior
year levy, plus the increase allowed by prop 2½, plus new growth? Heather responded,
yes. John asked if it was a question of not taxing to the levy or just being specific about
not taxing to the levy? Heather responded, not taxing to the levy. Terri commented,
when we say regular tax levy, that means taxing to the levy plus all the other things.
Heather said yes it would be a general discussion about the concept that we have
historically always taxed to the levy. John asked to interject because he felt this was a
political decision, by somebody or board bigger than Finance Committee. Terri said
that's why the Board of Selectman want to meet with us. John responded Okay, so they
want us to talk about why we think it's a good or bad idea or what the tradeoffs are on
taxing to or not taxing to the levy? Terri answered, yes.
Second policy is Section 3.03 Free Cash, to mend the language to change the priority
levels of use of free cash. John asked if it was to make the second priority from focusing
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we added any new personnel add the costs of that persons OPE liability amount into
the budget. Terri asked, and leave it as is for anyone that's currently employed? Heather
said, right as far as the 10% of the previous years certified free cash. John asked, when
you say add the cost of the OPEB, what you're really saying is the costs to the town of
contributing or funding, start beginning the fund the OPE liability for this addition?
Heather responded, yes. Terri added that she would need to take a another look at the
policy in terms to see why it would be in regular borrowing. Terri asked, we are defining
that as the rate at which we will hold, so that's basically defined in there, so we know
what to hold the aggregate debt service too? John recalled one of the reasoning was
that at least at the regular tax levy defined as 2.5% of the prior years tax levy plus 2.5%
of the prior years tax, plus new growth, that's a formulate number that's consistent with
the minor exception of new growth. It means we can be a little more stable and
predictable. Terri commented, that she thinks if it's possible to have a discussion about
not going to the 2.5% every year, and what she would look at in that definition to
reword the policy by saying the regular tax levy is "typically or can be" but change it so it
doesn't have to be, but that's what we are setting the debt service against the regular
tax levy or total tax levy. But that's what we are looking at whatever comes out of the
previous year plus whatever percent that we do rather than saying, well if we don't do
that...its still the tax levy. It may be interesting to think of terms of that because all this
is doing is defining what the tax levy is for the purpose of the debt service. John
commented, but it does assume that we would always set the tax levy to what the prior
years levy plus the increase law by prop 2 ½ plus new growth so that was a hidden
assumption here that is probably needless. Terri asked if we should not define it at all?
John replied no, we would want to define it but just not in a way to tie the definition to
the limits of 2.5%. Terri responded, the line actually says, "The regular Tax Levy is the
sum of the prior year levy, plus the increase allowed by prop 2 ½" and a 2% increase
would be allowed by prop 2 ½ so its also all inclusive of any change. Terri then went on
to say that she would probably go by what it says it's allowed by and say that its all
inclusive of anything up to 2.5%. Terri asked if anyone had any questions about the debt
service policy? Michelle asked, why would we want it to be more flexible? Terri said it
sounds like what the Board of Selectman want to discuss is because of the tax burden
town having an older demographic, do we want to always go to 2.5% or is there a year
we want to lower it? Michelle answered that interpreted the policy as saying up to 2.5%
so she interprets that as the ceiling where we cannot go above that. She doesn't see any
restriction of that in the wording. Hannah commented that it sounds like something that
needs to be discussed at Annual Town Meeting and Terri commented it will come to
town meeting, but it will come to what priority do we not address because we don't go
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meeting we need to say look we will do without what we do without and we will have a
2.5% increase this year or a 1.5% increase or whatever. Terri responded and then we
will have to see how it plays out and when the budget is presented we will hear the
arguments on for or against but to get back to the meeting October 11, 2018 | think we
will get more of a sense of what people are thinking along that. Terri and John went on
to talk about free cash priorities. They gave a sum of what we have been talking about
to help Michelle catch up. Initially when we set the priorities applying to free cash, roads
and signage where a big deal. After the borrowing, it became okay, so now we are
putting all the money in and we also have a standing agreement that until we reach 1
million dollars, combination of the pot hole fund and the $550k from the debt it will be
able to have 1 million dollars to maintain the roads in perpetuity, that's the reasoning,
and now that is covered we can redirect the use of Free Cash. And that was originally
written before the debt was agreed to the pavement management plan was funded
through. Hannah asked, from our meeting last time, we have hit our goal, is that what
Karen was saying? Terri asked, the goal of? Hannah answered the goal of 1 million
dollars? John answered no, we haven't hit that, yet we were working towards it with
wat the town voted on that 10% each year ($50K each year) so that's playing out. Terri
said the scary thing is that there is an increase of excise tax that betters that each year.
So that is one of the reasons why that was there and now it is coming out. Terri asked
the town manager, we did not identify Free Cash as a source for the Capital Stabilization
fund, we just have that in the budget, is that correct? Town Manager asked, you mean
within the Free Cash policy? Terri said yes. Town Manager said, yes it's one of the
priorities. Michelle read from the omnibus stabilization fund, "to increase the balance of
the stabilization account if necessary, to level at least 5% of the current fiscal year
budget". Terri replied that was a different stabilization fund, because it helps our bond
rating and because we have so much borrowing going on right now, to keep that figure
at 5% so within the budget you will see to the stabilization fund of an amount that is
going to be 5% of the omnibus budget. The other funds, there is an OPEB trust fund, so
that's not part of that, and the Capital Stabilization fund is within the 5%. I guess the
question is, are we comfortable with that? Because that's interesting, because basically
if we are putting into the capital stabilization fund then it's reducing what is coming out
of the omnibus budget for the stabilization fund. Town manager then replied, it's an
incentive for the omnibus budget though and Free Cash is not included in that. Terri
replied, no if we are saying if we are taking free cash and putting it into the capital
stabilization fund then reduces the amount coming from the omnibus budget into the
stabilization fund or the amount that's need in order to keep the fund? Town manager
replied, the omnibus budget does not include the free cash bonds, total operating
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the capital planning process based on the upcoming large capitai request, so we can use
it to figure what amount we want to contribute into that account not percentage. Terri
responded, that counting it in that 5% troubles her a bit. Town manager suggested it
could be worded, "in excess of the 5%" because the regular stabilization fund is always
5%. John responded, in the effect it is worded that way if necessary level in at least 5%
which means we can exceed the 5% if we have no better use for the free cash. Terri is
not concerned with the free cash at the moment but more concerned with the
stabilization fund itself and the fact that we have a policy around the stabilization fund
that says, "the aggregate amount needs to be at least 5%". Because basically we are
saying that withdrawals should only be used to mitigate a non-reoccurring extraordinary
catastrophic or emergency event or events. So that's not what we do with the capital
stabilization fund or that's not our plan for it and at the moment l am reading Section
3.04 B 2. Then in section 3.04 C it should be limited when possible to the amount
available but the 5% minimum fund balance. Terri suggests separating out the capital
fund because we are anticipating tapping it. Town manager replied, well we should say
that the fund balance should not go lower than the 5% and Terri responded that we kind
of said that but it is left a little bit open. So basically, when it does go below the 5% you
have a lot of work to do because it needs to be brought up as expeditiously as practical.
Terri mentioned us bringing that up at the meeting with the BOS on October 11, 2018.
Because she doesn't know if it would make sense to segregate the capital stabilization
fund. It would still need a 2/3 vote but it wouldn't be based on as an emergency. It's
going to be based on, yes we know that we are buying a new roof or a capital
expenditure coming up that we are going to spend a whole bunch of money on a fire
truck so we are saving for it". John agrees with segregating the capital stabilization fund
because it will be hard to address certain foreseen large capital expenditures to mitigate
borrowing cost for instance. Terri noted that was the original plan of the capital
stabilization fund and that finance would need to revisit the capita stabilization fund.
Terri asked if anyone had any other questions on that and the reply was no. Terri asked
if anyone had questions when we looked through the financial policies? Michelle said
she is unclear what an enterprise fund is. Terri answered that an enterprise fund is
basically self-sufficient through user fees and run like a business as oppose to the town.
For instance, sewer and water district. John added that the town stands as a backdrop if
the sewer department gets into trouble, they haven't but for some reason if they do the
town will be there to back up their other enterprise.
4. 2020 Budget dashboard discussion. GM Lead.
Skipped, George was absent.
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7. Town Manager/Financial Officer Reports
Town Manager, Heather Lemieux- no reports
8. Department Committee Updates:
Committee/Department
Public Access Cable-Marc
Update
Starting to meet in a couple weeks, hoping to get a 5 or in
Capital Planning-John H. some cases a 10 year window so there is a lot of stuff put
in place. Meeting September 25, at 5pm at Town Hall.
Dept. of Public Works-
George
COA - John H
Library-Terri
Police Dept - Marc
Fire Dept - George
Schools - Hannah
michelle will pick wo
Met with Superintendent Burnham. School started, one
issue on the first day of school, new protocols for dismissal
have been put in place and new policies will be added as
well for the safety of children if they go missing at
dismissal. Found out that the town has two dead spots for
dispatch to get in contact with the buses so that is
something they will be working on fixing. There is a safety
team that meets, made up of staff members to figure out
better ways to do things in case of emergencies. The first
week was very hot so they schools had extra bottled
waters for the kids and staff. The talk of adding air
conditioning to thes and the Primary but not sure or a
time line. And additional walkie talkies for the staff at the
Primary school. There is a new education channel that they
will be getting through Lunenburg Public Access at some
point.
Monty Tech - Hannah
Green Comm Task Force-
Jay
Sewer Commission -Jay
Charter Review Comm -
Terri
Looking at controversial items, i.e. renaming the Board of
Selectman to Town Board, town clerk discussion, whether
it is elected or appointed, whether there would be a second
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10. Next Meetings:
September 27, 2018
October 11, 2018 6:30 with Board of Selectman
7:30 Public Hearing for Special Town Meeting
11. Adjournment:
John made a motion to adjourn. Hannah seconded the motion. The committee approved
the motion 4-0 at 8:00 pm
Submitted by: Hannah Anderson
12. Attachments: (3) Policy areas the Board of Selectman want to revisit.
1. Borrowing, Limits on Debt Service Costs Section 3.01
2. Free Cash Section 3.03
3. Investment Policy Section 3.06
4. OPEB Funding Policy Section 3.07