By Meredith McCulloch
The holidays are over but Bedford’s budget-making season is in full throttle. January and February are the time when months of budget preparation come together to complete a town budget for presentation at Annual Town Meeting in March. Many people participate in the effort, but the process is steered by the appointed nine-member Finance Committee, with much assistance from the Finance Department.
In September, a budget model that contains all the known financial factors for the coming fiscal year (July 1 to June 30) is developed by Victor Garofalo, Finance Director. It is the vehicle for determining how to match the needs of town departments with the resources available. The model is revised each time better information becomes available, even on a weekly basis. There are many lines on the model, but examples of revenue to the town are income from property taxes and other local taxes, state and federal funds, sewer revenue and the Community Preservation Fund. The expenditure side is based on the current budget, using anticipated salary increases (based on contracts and the salary by-law), estimates for health care and other employee costs, projected utility rates and previously approved bonding costs, to name a few. A target number for capital expenditures for building maintenance of town property, purchase of vehicles and other equipment is included.
A critical factor is the limit set by a Massachusetts law called Proposition 2-1/2 which passed in 1980. It set ceilings on new tax revenues for each town. Simply put, the rule says the town cannot increase taxes in a given year beyond 2-1/2 percent of the previous year plus the value of any new property. Towns may increase the ceiling if voters approve, and many towns have frequent overrides on the limit. Bedford has never asked for an override. (For a full description, see https://www.mass.gov/dor/docs/dls/publ/misc/levylimits.pdf.)
The model guides the decision-makers on balancing the resources available with the costs of supporting town services. With the information available, the difference between projected income and known expenditures results in an available sum that may be distributed among town departments
In recent years the Finance Committee has looked at the funds available and developed the guideline for town departments, distributing funds proportionally across all departments based on previous budgets. With that knowledge, the Finance Committee issues a guideline to departments for their portion of the upcoming budget. Early in the process the Finance Committee assigns a liaison from the committee to each department to help with budget preparation
In the meantime, Town departments are developing their individual budgets within the guideline, anticipating costs for ongoing program expenses and developing justification for any new costs.
Each department’s budget is presented to the Finance Committee which must approve that budget before it is presented at Annual Town Meeting. At any point, primary assumptions (such as the amount of state aid) may change and require a fresh look at the model.
Budgets for departments under the Town Manager review their needs with him, and they are presented to the Selectmen and then the Finance Committee. The independent elected boards – Board of Health, Planning Board, the Assessors and the Library Trustees – work with their staffs to complete a budget request. The School Committee, which has the largest and most complex budget, often meets two or more times with the Finance Committee before agreement is reached. Under Massachusetts law, the Finance Committee cannot approve or disapprove specific line items in the school budget, but can only approve a bottom line number. Bedford’s share of costs for Shawsheen Technical High School is a separate line item.
In a parallel process, the Capital Expenditures Committee develops a budget for the capital needs of the town, aiming to stay within the amount that the Finance Committee has targeted. This committee reports to the Selectmen.
Requests for capital needs are sought from town departments and the Capital Expenditures Committee ranks them by priority. Capital items are wide-ranging and may include maintenance and repair of buildings, computers, copiers, snowplows, police cars and other major items of long-term value. After the requests are ranked, a “red line” is drawn under the items that fall within the budget set by the Finance Committee. Items above the line are recommended for funding. Those below may be requested another year.
An ad hoc committee called the Fiscal Coordinating Committee, which is comprised of representatives from town boards and committees, provides an opportunity for broader discussion of the town’s fiscal health. See: https://www.bedfordma.gov/fiscal-planning-coordinating-committee)
Special accounts are budgeted as reserves for special situations. The Finance Committee’s reserve fund provides a way for unanticipated expenses to be paid between town meetings by a vote of the Committee. Another special fund is the Stabilization Fund, which is essentially a savings account that can be used during times of fiscal difficulty to smooth out the impact of budget fluxuation on the taxpayer. Expenditures from the Stabilization Fund must be approved by a town meeting.
Other special accounts allow a specific income stream to be used to offset related expenses. Good examples of this are the “Water and Sewer Fund “ which allows payments for water and sewer to be used to pay the expenses of those systems. A few years ago an “Ambulance Enterprise Fund” was established so that ambulance fees will offset the costs of the service.
In the end, recommended operating and capital budgets are agreed to and published in the Warrant for voters along with other information about the town’s financial health. The budget is presented by the Finance Committee and must be approved by the Town Meeting. (For the 2015 budget approved last March, see: https://www.bedfordma.gov/sites/bedfordma/files/file/file/town_meeting_budget_handout_fy15_color_0.pdf)
Editor’s Note: Meredith McCulloch served on the Finance Committee for five years and as a town department head (Library Director) for sixteen years.
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