 and welcome. I'm James Milan and this is Town Meeting Matters, a brief series that we are doing that preparing town meeting members for the rather extraordinary gathering that's going to take place on June 15th on which they're going to compress a lot of town meeting business into one session. I'm talking today with Sandy Pooler our deputy town manager who has a better grasp of all of the numbers that are going to be presented to and considered by town meeting members on the 15th. Sandy is our expert and so Sandy thanks very much for joining us. James I'm glad to be here. You know every year we do get to visit you with you around this time or usually a little earlier right because everything's been delayed and then we we dive quite deep into the weeds happily I have to say but that's what we spend a lot of time doing. We're going to be looking to do that with you again in a kind of more concise fashion this time and also though get a sense of not just what the budget numbers presented to town meeting for this year are going to be and where they're coming from and what the changes are but also what the implications are over the next number of years. So let's let's start with fiscal 2021 though. Obviously everybody's very aware of the dramatic reduction or almost elimination of economic activity both in Arlington and in the state. So tell us a little bit about what the a little bit tell us what the implications are for the budget for this year which had I know already been pat and you know already been scrutinized in its original form and now you've had to make make a bunch of changes. So tell us about those. Well our budget was based on a state aid number that had come out of the governor's budget which he released in January. We had a very significant increase in state aid particularly in our school aid at that time. So it had done a lot to eliminate our future year deficits put off the size of our anticipated override for FY24. When the override passed last June we told voters we wouldn't have an override again until FY24 and then when the governor's budget came out it really reduced the size of that override number and then everything changed. Right everything was looking good there for a while sounds like. Everything was looking very good. So then with the COVID virus and the impact on the economy we've seen a couple of things. We've seen a slowdown in some of our own local revenues. There are certain things that we know have decreased such as our hotel motel tax and our meals taxes. We've seen a little bit of decrease although not significant in some other things like other local receipts like building permits and other things like that. We've delayed the collection of our taxes so that's slowed down a little bit but still seems to be coming in on a strong basis so I'm not worried about our tax revenue. The big thing I am worried about is state aid. There's been a lot of speculation as to what the governor is going to do when and the legislature is going to do with a new state aid number. We've heard estimates anywhere from 10 to a 20 percent cut in the amount of state aid in the governor's budget. So through a series of long-range planning committee meetings and other internal staff meetings we came up with a budget that the finance committee eventually passed that's assuming a 15 percent cut in the state aid from from what the governor's original numbers were. So that's what we've built in now. We're waiting to see what the legislature is going to do because they still haven't passed a budget for FY 21 and we don't know when they're going to pass that so we're going to go into town meeting with our best guess and then we will have to come back for another town meeting in the fall to make any adjustments at that time based on what the legislature finally does. Okay and what do the numbers look like for this year based on as you said an assumption of about a 15 percent or a 15 percent reduction in the state aid we will be getting. How are you accounting for that in FY 2020 I mean FY 21? So we have reduced one our state aid estimates across the board in all categories by 15 percent. Two we have level funded our local receipts usually every year we increase that by a hundred thousand dollars but we've level funded that. Which just means haven't increased it at all? Haven't increased it at all. The one area we did increase was the estimate for how much we can take from the overlay reserve the money that the assessors set aside to give rebates or tax breaks to people who file and successfully earn an abatement. That has been for many years two hundred thousand dollars. The long-range planning committee looked at that looked at how much money the assessors have set aside over the years and agreed that a four hundred thousand dollar revenue source would be more appropriate so that has helped us a little bit. And then I'll talk about spending cuts in a minute but I do want to say with that 15 percent cut in state aid that affects not only this current year but every year going forward because it's built into a base and that base would grow over the years and then when you collapse the base that growth has to come down so it affects all of our future budgets as well as this year's. Right and certainly after we talked about FY twenty twenty one we will we do want to talk about what you've just said the effect on the future budgets and I'm sure you'll show us as well because I know you've got some some documents there that are going to kind of help illustrate what you're saying. Sure in fact I would think at this point what I might do is just put up on the screen some document a document about FY twenty one. That'd be great. This is appendix E the last page of the finance committee report and it shows a series of budget moves. Excuse me let me just interject how many new members probably know this already but the finance committee report can be accessed easily on the town's website of course. That's right. It is up on the website. The printed copies will be mailed to people finance committee is printing those now and if they haven't already sent them out they will soon. So but I would very much encourage people to go online and look at this document. So pardon me. We have in several areas here. This first part the top part are cuts that we have made to the town side budget and essentially what we've done is we've taken five new positions that we were going to add and we've taken them out of the budget. So we were going to add a new person in town manager's office and by the way if you're looking at the details in the finance committee report under appendix B B as in boy the town manager budget is section three. You can see over here. So we eliminated a new position that we had added to help deal with all of the public records requests that we've had which have really grown tremendously in the last couple of years since the legislature changed the public records law. Second, we have two positions that are in the Department of Public Works. Those are in section 17A and B. They are for a systems innovation manager somebody who is going to help the DPW set up more online and computer systems to manage their data and manage their workload. We also had a new permits engineer that was going to help DPW and engineering process various projects and help with particularly some of the projects we were getting from some state aid numbers which we think now we're less likely to be able to do so we cut that out. We're going to add a new police officer and add a second school resource officer to the police department. We've cut that back and in the library in section 23 we eliminated a clerical person in the library director's office. So those all added up to $261,000. On the school side, let me just interrupt you for second there Sandy. So I can see right there at the top in bold where it says town manager and the original increase was $1,200,000. So I assume that that's what the budget was going to be increased by and that that is now going to be reduced by the 261,847 figure there. So there's still going to be an increase in the budget. It's just going to be a smaller increase than people than was in the original budget. That's exactly right. We are still growing. We still have property tax increases under prop two and a half that are built into the budget and so we're still growing the budget which we need to do every year to maintain our services. So this is pretty much a level service budget on the town side. Not a lot of big increases. There's some things we have to fund as an increase. Our trash contract, for example, is going up. We have contracts with all of our union employees who probably 85% are employees or unionized. So yes, there are increases. And we are not cutting staff at this point where you have not done any layoffs in this budget and will not as long as our revenue estimates stay solid. All right. Thank you. Yeah, sorry. You were you were going to go on, I guess, to the school department. The school department under the direction of the long range planning committee instituted recommendations for a 10% cut in the growth of its budget. So it was going to grow $4.6 million. So they cut $460,000 out of their budget. So when administrative positions, they have cut out some of the teacher and professional additions that they were going to add on in a small reduction in other expenses. They have not, they are working out some of the specifics of which those positions and how that affects as people might get bumped or not added. So we will hear more about that at town meeting. But they did meet the 10% request for cuts that the long range planning committee asked them to do. And then finally, we did a number of smaller cuts just from warrant articles. There was a $30,000 line item for I'm going to jump in and just say that looks like small potatoes. And just because we have so much ground to cover, let's let's go ahead and keep moving. Sure. A couple of other bigger things that we did. We always set 1% aside in the budget for reserve fund, which is the reserve that the finance committee can use at the end of the year to replenish accounts, particularly if we have a bad snow and ice year. We cut that by 10%. We usually every year put $100,000 into the long term stabilization fund. We are not doing that this year. As I mentioned before, we increased how much we are taking from overlay surplus as a revenue source. And as opposed to the budget that we had in January, where we were going to put money into the override stabilization fund. Now we have to take $2 million out of the override stabilization fund. So all that adds up to $3.2 million in changes from all of these sources keeps our budget in balance. And very importantly, make sure that we still do not have to have an override before FY 2024. That was one of the major policy decisions that all of us agree was a promise we had made to the voters and that we needed to keep. Excellent. So given that this looks like, you know, an accurate depiction of where the budget savings are going to be coming from. I have to say that it doesn't look as apocalyptic as people might have been expecting at least not yet, right? Not for next year's budget. You guys have figured out how to, again, it's not great news. It can't be. But you figured out how to do this without too much palpable pain, it seems like, for Arlington's residents. May not notice the changes much at all. But of course, no doubt we will be paying the price further down the line, especially as you mentioned earlier with the fact that the 15% if it comes out around there, whatever the reduction is in state aid that is going to continue to permeate our budgets for the foreseeable future, right? That's absolutely right. So we've made our best estimate. I think you're right. I think the public will see a continuation of services. And we will have to reevaluate once we get the final numbers from the legislature to see if more cuts are rearranging how we do things is going to be necessary. We're all waiting with our fingers crossed, see what those numbers are going to be. Absolutely. All right, so tell us what the story is over the next several years, then. So I'm going to go to another document here. This is section appendix D in the finance committee report. It's our long range plan. And it is. It's really an embodiment of something that's happened here in the town for many years now where we have a long range planning committee that made up a slight board finance committee, school committee, town manager, school superintendent and other staff that come together on a regular basis to discuss what our budget needs are. And we do a five year plan. This column here is the FY 21 budget. So this is what we're going into. We're having a $5.8 million increase in that budget. It's about a 3.4% increase. We have these zeros on this balance number, which shows we have a balanced budget that revenues at the top match ongoing expenses at the bottom. So in FY 21, 22, and 23, we have balanced budgets. FY 24 then becomes the year that it looks like we would have to have another override, which was all part of the plan that we had for last summer's vote. That number now is at $17.6 million. Again, when the governor's budget came out, that number was three and a half million dollars. The deficit has really gone way back up in FY 24. So it's a big challenge for us. I think that's a big number. We would certainly like to see that number come down. I'm hoping that we will see a recovery and stay date in the next few years, particularly because Arlington is one of those communities that has had ever expanding school enrollment. And a lot of our state aid is based on the number of kids we have coming into the school system. And that is one of the reasons we had a $2 million boost originally in state aid in FY 21 instead of our $1.4 million decrease as is in the plan now. So I hope at some point that flips around. We'll watch it carefully. But if it doesn't, we're really going to have to come to grips with what to do about our budget in FY 24. And yeah, I mean, that is a can you people may just be curious and I don't know if there's a short, you know, if there's a succinct way of explaining this. But even to my mind, you said that that looked like on the original budget for this year before, before everything cratered, three and a half million. And now that's up to 17 something 17 and a half. So that looks like a five that's been increased by five times. That seems extremely dramatic. Can you tell us, is there any short way of explaining how how it could be so, you know, kind so much? It really all has to do with this state aid line, which had originally been a $2 million bump up. And now it was a $1.4 million bump down. And so losing that $2 million, plus essentially losing another 1.4 every year, essentially adds up to the difference, that $14 million difference in this line here. Again, I hope at some point we see a rebound in that state aid number. We should if the state economy turns around. But that is right now the big question for us. When will state revenues turn around so that they have enough funds to fund state aid at a level we expected? Right. All right, great. So it does seem then that what this encapsulates right at the moment is in some, at least arguably, a kind of worst case scenario, or at least a bad case scenario, in terms of it is assuming that there is no change on the state aid side, while we can reasonably hope as well as perhaps even assume that there will be some change because the situation would have to continue to be very bad at a state level for a long time for that not to change. That's correct. So we keep an eye on it. So one way or the other, though, we can assume that our audience for this presentation and in general need to understand that there will be this reckoning of some sort in fiscal year 2024. There always was going to be according to the plans. But it could be a significantly greater hit than we had anticipated. That's right. And we know really, our budget is very much driven by large increases in school enrollment in the last few years, which is both good news and bad news. Financially, it's a difficult decision. But on the good side, it means that we have a very good school system and people keep moving to town to go to that school system. We are one of the fastest growing, if not the fastest growing school district in the state now. And so it shows we in the school department are putting out a good education system. And so that's positive thing, I think. It just means it costs a lot of money to grow it every year. Alright, well, thank you so much for kind of taking us through what things look like for fiscal year 2021, especially on the town budget side. Is there any other business to be conducted on the 15th that people need to be aware of information that we haven't yet shared with them? Well, first, I would say if people have more questions, the moderator, John Leone, has set up a system, he sent a letter to all town meeting members saying they can and should forward any questions they have to him by Thursday so that the staff can answer them and get those answers out to people. And I would very much encourage people to do that. We do have a full financial agenda where we have the operating budget, the capital budget and other related financial issues like authorizing bonding and so forth that we really have to get voted on in order to go into FY 21 so that we can keep the government running. Hey, so I would ask you to sorry, just sorry to interrupt. Can I ask you just to we can take the document off of the screen now and focus just on our lovely faces. All right, great. Thank you. Sorry, carry on. So we need to pass a budget by June 30 in order to keep the government running. And as I said, the major elements are the operating budget, the capital budget, bonding, our Minuteman Assessment and other related financial issues. So I would encourage people to look at the Finance Committee report. It's well done. Each department's budget is laid out in Appendix B, page by page. They're all summarized on Appendix C, which shows where the money is coming from and where the money is going. And I don't think it's going to be controversial conversation I've seen in the last few years that the budget is actually I think the least controversial part of telling me in the last few years. Congratulations. It continues to be the case. And I think, you know, people like the services that we've been able to provide here in Arlington, we try to continue those services and passing a budget while I was to do that. Okay, and one last question that people may be interested in knowing. You mentioned that fiscal year 2021's budget includes no job cuts. Assuming I mean, I know that there's a range of scenarios going forward, depending again on the amount of state aid, what happens with our own tax revenues, etc. Is there from what you can tell, you know, how much concern might there be that some jobs are going to need to be eliminated at some point? The scenario right now does not show our need to do that. If the state aid cuts were much more serious, and particularly if that meant pushing an override earlier by our projections, at that point, we would really have to look at all of our spending and come up with some scenarios for reducing that which might involve job cuts. I think we would certainly try to avoid job cuts. We would first look at eliminating positions to nutrition, not filling vacancies, and things like that, both because of the impact on people, we don't want to lay them off. And because frankly, we have to then pick up a lot of costs like unemployment insurance if we lay people off. So we do try to look at that all together as the package and avoid it if possible. Yeah, and it does sound from what you just laid out. I don't want to I'm not trying to back you in the corner or anything like that, but it does sound like the possibility of a given town employee, a teacher or whatever, losing his or her job in in this next while is relatively remote. I hope so. Again, yeah, not trying to nail you down on that. Nobody knows, of course, but it's not an imminent concern at the moment. There seems like that's a lot of other things first. There are other towns who have started layoffs. We are in a fortunate position because of our long range plan and because we had an override last year, not to be in that position. And hopefully we can stay in that position. All right, well, it's been bad timing for a lot of things. It sure was good timing retrospectively for the override as it turns out. So that that was done last year or so. All right, Sandy Puler, Deputy Town Manager, thank you so much for really elucidating a lot of what is on these, you know, these these documents that are filled with numbers. You've kind of distilled down to the ones that matter the most. So we appreciate your time. We hope that and think that our audience will find it helpful. Thank you, James. It's always a pleasure to talk to you. Yes, and you too. And we look forward to doing so under normal circumstances again at some point soon. I'm James Milan. I have been talking to Deputy Town Manager Sandy Puler. This is Town Meeting Matters and thanks for joining us.