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Everything You Ever Wanted to Know About Lenox Finances and Were Afraid to Ask

Presented by the Town of Lenox Finance Committee Spring 2012

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Objectives of This Presentation

• Background for May 3 town meeting budget vote

• Informed participation in addressing long term challenges

• Will cover– Revenue and expenses– Planning issues

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Property Taxes Biggest Revenue Source

Property Tax58%

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State Funds14%

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Water, Sewer, Ambulance 14%

Hotel-Meal Tax6%

From Reserve4%

Other Fees5%

$23MM Budget

2013 Fiscal Year Projected Revenue in $MM

Property Tax $13.6

State Funds, $3.2

Hotel, Meal, $1.4

Income from Water, Sewer,

Amb.$3.2

From Fund $0.8 All Other $1.1

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Total Property Tax All Other Sources$0.00

$5,000,000.00

$10,000,000.00

$15,000,000.00

$20,000,000.00

$25,000,000.00

20122001

...And Property Taxes Increasingly Important

Other Sources of Revenue Down Since 2001

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State Law Caps the Allowable Revenue Increases

• 2.5% Levy Limit on property tax caps year over year growth in important revenue source– To increase property taxes by a greater %, override

vote at town meeting required• Localities can’t charge sales, income, etc. taxes• State sets amount of reimbursement for

school choice

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Lenox Property Tax Rate Compares Favorably

• Lenox 2013 FY $11.45/thousand in residential assessed value; $15.16/thousand commercial

• State average (2011) for residential $11.75• State average increase 3.3% (2.5% Lenox)• Lenox in middle third for all MA cities and

towns

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Capital Investments

• Examples – Buildings, fire trucks, water and sewer, roads

• Funded by– Annual operating budget– Setting aside an amount (reserve) each year for

future major expense– Borrowing and paying off year by year

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Approx. $29MM Borrowed; $2.7MM/YRBorrowing for Total $(MM) Annual Debt and

Interest $000*Year Paid Off

Water Source Funding 3.3 344 2015Morris 3.8 383 2015LMHS 6.2 661 2016Sewer Plant 3.1 268 2017Town Hall 1.0 75 2017DPW 2.9 366 2018Bertoni Property 0.6 134 2018Reservoir Repair 1.7 85 2022Library 1.5 135 2023Sewer System 3.6 205 2028Water System 1.3 98 2028

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Restrictions on How Much Localities Can Borrow

• Formula based on borrowing as a % of assets• Lenox has sufficient assets to be able to

borrow more – But limited by having revenue to cover annual

principle and interest payments

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How Can Revenue be Increased?

• Raise fees (water, sewer, ambulance, inspections)

• Increase room and dining tax income– Marketing and Events Committee and Chamber of

Commerce• Add to existing base with new construction– Commercial examples: Price Chopper, CVS– Considerable open land zoned residential

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Largest % Expense Budget = Schools

School52%

DPW14%

Fire and Safety

9%

Water and Sewer12%

Lifestyle and Culture 3%

General Govern-ment10%

$23 MM Budget

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Proposed 2013 FY Expenses in $MM

Gen Govt. $2.3

School, $12.0

DPW $3.1

Fire and Safety $2.1

Water and Sewer $2.8

Lifestyle and Culture $0.8

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Much Debate Focused on Smallest % of Budget

Lifestyle and Culture~3% of $23MM Budget

-Community Center-Library-Other

Across Departments – Capital Costs and Personnel Dominate (%)

Direct Personnel43%

Benefits14%

Services9%

Supplies5%

Utilities2%

Debt Service12%

Capital Exp.13%

All Other2%

$23MM Budget

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Across Departments – Capital Costs and Personnel Dominate ($MM)

Direct Personnel $9.9

Benefits $3.2

Services $2.1

Supplies $1.2

Utilities $0.4

Debt Service $2.7

Capital Exp. $3.1All Other $0.5

FY 2013 Proposed Budget

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Other Comments on ExpensesPersonnel Costs• Health insurance costs rising faster than other

costs, revenue– Liability for retiree health insurance costs – Has gone from approximately 7% of budget to 14%

Possible Cost Reductions• Alternative energy sourcing from solar for town/

school electricity • Combining services with other towns

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Budget Choices Voters Will Be Asked To Consider

• 2013 Warrant for May 3 Town Meeting– Budget reflected in articles 3-10 and 16-18--- basis

for this presentation– Warrant separates operating, capital, debt– Beware of optics -- % of space on warrant vs. % of

budget

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Long Term Planning Considerations• 2.5% cap on primary revenue source vs. % increase in – Health insurance costs– Fuel oil, supplies, utilities

• Infrastructure needs– Water and sewer– Cultural and historic assets

• Predicting and planning new growth– When economic situation improves, what are our views

about use of open land?• Inexorable demographics– Over 65 fastest growing age group in Berkshire County

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