FY2021 Budget

The recommended budget has been balanced with a proposed $0.365 tax rate 6 , a reduction of 2.5 cents from the current $0.39 tax rate that has been in effect since adopted in FY 2017. The proposed $0.365 tax rate is 4 cents over the calculated revenue neutral tax rate of approximately $0.325 and is proposed to retain crucial resources essential to sustaining programs and services at existing expected levels. Resources generated from a RNTR do not fulfill that need. Alternatively, reduced tax rate scenarios have been evaluated and will be discussed during the budget work sessions but require substantial reductions in staff and programmatic priorities. The proposed FY 2021 budget does not include allocations to the Roadway and Transportation Capital Reserve fund 7 . A transfer of an equivalent of one cent ($0.01) on the tax rate has been transferred to this reserve since 2017. A total of $1,865,000 has been transferred to this reserve over the past four fiscal years. Appropriations of $1,350,000 from this reserve were included in the FY 2020 budget, resulting in a $546,000 (excluding interest) balance. An additional $476,000 of appropriations from this reserve for projects is proposed in FY 2021 and leaves approximately $100,000 in this reserve. Town staff has been working to explore possible legal application of collected Streets Payment in Lieu funds collected over the years. Should it be determined that this source of restricted reserves can appropriately be utilized for the items identified, staff will allow Roadway & Transportation reserves to remain intact for future identified CIP projects. The proposed FY 2021 budget also does not include allocations to the CIP Reserve. This reserve has a balance of approximately $920,000 (excluding interest). No appropriations from the CIP reserve are proposed in FY 2021. Additionally, no allocation to the Fire Apparatus Reserve, used to accumulate funds for significant future purchase of fire vehicles over several years, is included in the budget proposal. The next significant fire vehicle purchase is slated for FY 2025. Higher allocations will need to be considered in future budget years to accumulate these funds. Establishment of a Debt Service Fund is recommended in FY 2021 separate from the General Fund to more effectively manage budgetary debt capacity at consistent levels and recapture retired debt to facilitate efficient and transparent debt financing and payment activity. Existing debt service of $3,492,200 recognized in FY 2020 plus bond referendum costs included in the FY 2021 proposed budget will be transferred to the Debt Service Fund. The Debt Service Fund balance remains a part of Fund Balance calculations but reduces the perceived increases and decreases in the General Fund influenced by significant debt financing activity such as when bonds or other debt is issued. This recommendation is a financial accounting best practice for debt management programs. The proactive road maintenance allocation of $300,000 that has been allocated since FY 2016 is included in the proposed FY 2021 budget. These additional funds complement Powell Bill resources to advance proactive remediation of roads in poor condition and to avoid expensive

6 Town Council changed the proposed tax rate from 36.5 cents to 36 cents at adoption. 7 Town Council included an appropriation of $900,000 to the Roadway & Transportation Capital Reserve fund at adoption and shifted the proposed usage of these reserves to fund designated expenditures to fund balance.

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