Town Finance Director Victor Garofalo and the Finance Committee reviewed the initial financial model for fiscal year 2022, spotlighting specific projections as well as some question marks, during the committee’s October 15 meeting.
There are some strong foundational numbers. Free cash at the close of fiscal 2020 was certified at $11.2 million, about the same as a year earlier, thanks in part to a spending freeze imposed on town departments as the Covid-19 virus arrived.in March. Town Manager Sarah Stanton noted that” in many ways, we did the cuts in 2021 that weren’t required until ‘22.”
Although the annual payment in lieu of taxes with the MITRE Corp. expires after next year, Stanton said “by all indications they have the appetite to put forth a new PILOT.” Negotiations are expected to resume in late November or early December, she said. The initial budgeted amount is $1.77 million.
The fiscal 2022 capital article totals $2,354,000, a little less than the current year, Garofalo said. The number is based on the town’s six-year capital plan.
Through it all, the Finance Committee “will be as flexible as possible, realistic and forthcoming,” said Ben Thomas, committee chair. “We will continue to keep an open mind. Let’s not overreact and let’s not underreact.”
Thomas said the committee should try to formulate annual budgetary guidelines for schools and municipal departments before Thanksgiving.
Looking at the fiscal 2022 model, Garofalo commented, “We need to start somewhere. There are a lot of estimates, but they are based on the information we have.” The 11-page format accounts for all categories of revenues and expenses and will be updated regularly until annual town meeting.
One significant revenue decrease in the model is state aid – from this year’s $8 million estimate to $6.85 million, a 15 percent reduction. The projection is a conservative one, particularly since it was also built into the current fiscal year. That number has yet to be confirmed, pending state budget approval. (The total in Gov. Charlie Baker’s latest proposed budget is a little more than $8 million.)
Garofalo is also budgeting for a 5 percent rise in assessments by the state for fiscal 2022.
A positive variable is covering the annual expense for snow and ice removal, which is the only deficit spending the law allows. The 10-year average is $250,000, Garofalo said, but this year the number is zero.
Local receipts, Garofalo said, are “one of the hardest things to project.” The final fiscal 2020 totals were “doing exceptionally well” before the virus arrived in March, he said. Click this link to learn more about the decline. Some categories have reporting delays, making estimates harder. The fiscal 202 picture is uncertain.
Garofalo said the initial model assumes no change in some categories of expenses from year to year. Increases will be calculated with the upcoming guidelines as a basis. Stanton reminded the committee that the full cost of four new firefighters, approved for a January start in the fiscal 2021 budget, will be reflected in next year’s.
The number for debt principal and interest in fiscal 2022 is slightly more than $10 million. The finance director pointed out that even with this projection, which includes some new projects, the total is just below the threshold of acceptable debt under the town’s financial policies — 10 percent of the operating budget.
Garofalo noted that in recent years, “we have been very fortunate that (utilities) costs have always come under budget.” Currently, however, with purification and ventilation equipment in the schools running non-stop, “it’s not going to be level-funded.”
In response to a question about the town wells, which have been closed as a precaution because of higher levels of chemicals known as PFAS, Stanton said the Capital Expenditure Committee is looking at a proposal to set up a filtration system for fiscal year 2023. “We have the guidelines for PFAS. Costs are still in the early stage of investigation,” she told the committee.
Garofalo said the preliminary increase in the insurance and benefits line is 7.65 percent, and general insurance 10 percent because “we have been hit really hard in worker compensation and increased liability coverage.” He added that he is budgeting for a significant rise in unemployment compensation because 27 teaching assistants are working on one-year contracts in response to the demands of the virus-induced hybrid structure.
The fiscal 2022 model also continues the town’s allocation to a segregated fund for future payments of health benefits for retired municipal employees. That annual number, established by a task force several years ago, is $969,189 — the same as fiscal 2021, which was indefinitely postponed by town meeting.
“We have been proactive in filing for reimbursement on Covid-19 expenditures,” including equipment, technology, and disinfectant, all covered by reimbursements from state and federal sources, Garofalo said.
“It certainly has been a lifeline for the schools and social services,” he continued. “The CARES money we are receiving ends on Dec. 30 and we are taking advantage of whatever is available to us.” After that, “we don’t know.”
“A lot of surrounding communities have not been as strong as Bedford in getting reimbursed,” Thomas pointed out.
In answer to a question from Elizabeth McClung about commercial occupancy rates, Stanton said many laboratories have been working through the virus period. “I don’t know how long that will hold,” she said, adding that the town doesn’t have “so many office buildings.”
Mike Rosenberg can be reached at email@example.com, or 781-983-1763
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