May 12, 2008
Dear Residents of the Town of Sutton:
It is with great respect that I submit to you for your consideration the annual operating and capital budget for fiscal year 2009 in the amount of $25,793,313. This budget, developed in consultation with town department heads and staff, the Finance and Warrant Committee and the Board of Selectmen, is the 1st budget that I have had the privilege to submit to the residents of this great Town. While we face financially challenging times, we have made every effort to put together a budget that continues to support essential services to the Town of Sutton.
The two largest sources of revenue for the Town are State Aid and the local property tax. As a result of a joint resolution between the House and the Senate, the State Aid revenue numbers to the Town appear to be set at this point in time. Chapter 70 State Aid to Schools is increasing by $250,750 while the second largest source of State Aid, the Lottery, is level funded at $971,553. The total net increase in State Aid to Sutton year over year is $218,016 or roughly 3%.
In the FY2009 budget we are anticipating raising $14,656,690 in property taxes. This number represents a 2 1/2% increase plus new growth. While the Town had anticipated additional new growth as a result of the planned development on Rt. 146, these projects have yet to break ground and are not part of our FY2009 new growth. With the recent approval of additional water capacity to the Rt. 146 corridor, we are anticipating these projects breaking ground in the next 6 to 12 months, which will hopefully add to our new growth for the FY2010 and FY2011 budgets.
One additional concern with revenues is the extent to which we are relying upon one-time revenues to support recurring costs. In FY2008 all of the certified Free Cash, $558,978, along with $40,000 in overlay reserves were appropriated to support the operating budget. Presently in the FY2009 budget all of the $544,674 in Free Cash and $100,000 in overlay reserves are utilized to support the operating costs. Use of these one-time revenues for recurring expenses creates a structural deficit in the budget and when the one-time monies are no longer available, you not only have to fund annual budgetary increases, but come up with revenues or cuts to make up for the loss of one-time monies. To the extent possible we should look to reduce these one-time revenues in our operating budget.
On the expense side, our biggest pressure continues to come from increases in employee benefits. The town’s contribution to the Worcester County Retirement System is increasing 19.8% over FY2008. The Retirement Board recently completed an actuarial study which determined that, as a result of asset performance not keeping up with assumptions, local contributions for participating communities will increase significantly. Those communities that participated in an early retirement buyout a few years ago are impacted even more than town’s like Sutton which chose not to conduct an early retirement program. It is my hope that with the State Pension System taking over the investment responsibility of our assets that the rate of return will increase and this budget item will level off.
While health care costs continue to outpace inflation our health care increase, of 5.6% over the FY2008 budget, is below the average increase in health care costs for all Massachusetts Interlocal Insurance Association (MIIA) communities. MIIA is the non-profit health insurance pool that the Town along with 100 other cities and towns belong to. The town primarily offers an HMO with the employees contributing 30% and the town 70% of the cost while most cities and towns in Massachusetts pick-up 75% or more of their employee’s health care costs.
As for departmental costs, most of the town department expenses have been level-funded or have slight 1%-2% increases or decreases. Cost of Living adjustments for Town employees have been funded at 2% for FY 2009. Town departments receiving slightly higher increases include the Fire Department, Data Processing, Veterans and Snow and Ice.
The Fire Department increase is the result of three factors. The first is the hiring of the town’s 3rd full-time firefighter, a position funded in the FY2008 budget. The second reason is an $8000 increase in the training budget to send a firefighter to the Fire Academy. Currently only one of our full-time firefighters has had the benefit of academy training. The third factor is the increase in salaries as the result of hiring our Fire Chief Paul Maynard on a full-time basis.
The budget for Data processing is increasing as a result of additional hours of technical support required to maintain and repair all of the town’s non-school computer systems and software. The town currently contracts with a company to service our computer systems and with the town’s increasing utilization of computers and technology, the costs to maintain those systems is rising. At some point it may make sense to consider hiring a full-time or part-time computer technician to help address these costs.
The Veterans budget is increasing by $20,000 to cover the additional veterans taking advantage of the benefit program. This program provides financial and medical help to veterans in need. Seventy-five percent of all the benefits paid out are reimbursed to the Town on our Cherry Sheet.
One other area receiving an increase on the municipal side of the budget is the Snow and Ice budget. The Town has budgeted $105,000 for Snow and Ice removal for years and the costs continue to climb every year. This year, fiscal year 2008, the Town is over spent in this area by over $70,000. The biggest factor in the increase besides the very active winter is the cost of Road Salt to treat the streets. I have increased the Snow and Ice budget to $120,000 to begin to address some of these increases.
On the school side of the budget, I am proposing an increase in the amount of $513,000 or 4% over the FY2008 funding level for the Sutton School System and a $31,000 increase for Blackstone Valley Regional Technical School. The appropriation to the Sutton School department is on top of the full FY2008 appropriation and includes the additional $400,000 override appropriation. In addition, the capital plan includes $275,000 in capital for textbooks, computers, security systems and building improvements, for a total appropriation of $788,000 to the Sutton School department.
The Town of Sutton continues to make funding our school system a top priority. In reviewing the past 11 years worth of data, the Town of Sutton has annually exceeded the level of Net School Spending required to contribute to the Sutton School System. In the current FY 2008 alone, the town exceeds Net School Spending required by almost $1.1 million dollars. While the town is significantly over the Net School Spending required, we all need to continue to work together to fund programs and capital improvements for the children of our community while requesting additional assistance from State and Federal entities to support higher levels of achievement and underfunded mandates.
The Town of Sutton also has two enterprise funds that are separate from the general fund appropriation. The Transfer Station and the Sewer department are both responsible for raising enough revenue through their operations to support the expenses of their respective departments. The Sewer budget as presented represents an increase of 2.9% over FY2008. This increase is due mainly to the costs of transporting the sewerage through Millbury and to the Upper Blackstone Treatment plant.
The other town Enterprise fund is the Trash Transfer Station. This operation overseen by Mark Brigham, Highway Superintendent, is getting closer to breaking even on operations. Mr. Brigham has worked hard to reduce costs by competitively bidding the hauling contract, aggressively pursuing recycling options and changing our final disposal location to Wheelabrator in Millbury. In addition, the town has reduced staffing to lower our operating costs. The FY2009 Transfer Station budget is 30% lower than the FY2008 appropriation. It is important that we continue to find ways to make the Transfer Station efficient and support revenue increases to make the revenue and expenditures balance. The Transfer Station continues to be an important option and cost savings for the many residents who choose to use this over private collection.
Beyond the operating budget, the capital plan process and budget has become an invaluable planning tool to assess and fund the short and long term capital and infrastructure needs of the town. The town’s investment in the capital stabilization fund not only will be utilized to fund FY2009’s debt service on the Shaw property but also fund a significant amount of the capital plan for FY2009. I have submitted a capital plan in the amount of $509,250 for FY2009. The first year impact of this debt will occur in FY2009. The Capital plan continues to fund the repair and replacement of essential equipment and buildings while providing for funds to plan the future of our town. I have included $40,000 to develop a site plan and Master Plan for the Shaw property. Now that we own this tremendous asset, we need a comprehensive plan to protect and develop it.
Debt service expense for the town peaks in FY2009 and falls slightly in FY2010 and significantly in FY2011. My goal is to bring on modest debt over the next two years so as to not have a significant tax impact and to wait until 2011 when many projects are paid off and our debt service expense decreases by almost $400,000. Doing this lessens the impact on the taxpayer and levels off the impact of debt exclusions, but the impact is a delay of some capital purchases.
While the town has supported significant funding for capital projects there are many more projects that need consideration. One such item where there is still considerable discussion is the purchase of a new Fire Truck. A committee of Firefighters has been studying ways to replace the aging Engine 4. Currently the committee is recommending the purchase of a truck called a Quint that is both an engine and a ladder. With the proposed development of Rt146 and the ever increasing size of residential properties, it makes some sense to have access to a ladder with a reach of 75 feet or more. Almost all of the surrounding towns have ladders that are available for mutual dispatch if not being used at the time of the call however; these vehicles take time to reach a scene in Sutton. This spring the Town applied for a grant from Homeland Security to request Federal funding for a new Quint. Other communities like Douglas have been successful in having much of a new vehicle paid for through this grant process. We hope to hear on the status of our grant application in the fall.
One other significant project on the horizon is addressed in Article 13 of the Town Warrant, the renovation or replacement of the Middle School/High School complex. The Massachusetts School Building Authority (MSBA) has selected Sutton as one of 49 Schools to be move forward in the current round of review and potential funding. The State MSBA is asking the Town to appropriate $695,000, with roughly 51% reimbursed from MSBA, to complete the next step in the process. This next step will fund preliminary or Schematic design of a few options to address the Middle School/ High School issues as well as allow for the hiring of an Owners Project Manager (OPM). The State’s cost estimate of $695,000 is derived from taking 10% of the estimated cost of the project ($43 million) which is a typical design fee and then taking 15% of that $4.3 million to get you to a typical 15% Schematic design level or $645,000.
The additional $50,000 is to hire an Owners Project Manager who will serve as the Town’s project manager from pre-design through construction. An Owners Project Manager is a new State requirement that will require the Town to hire an engineer/architect to work with us to identify issues early on in design prior to construction where costly change orders are needed to alter the plans.
The purpose of the schematic designs completed and the OPM hired is to work under MSBA guidelines to provide additional due diligence to get a more specific plan on the type of Rehabilitation/ new construction needed to address the deficiencies of the Middle School/High School, and to get a more exact number on the cost of the project and scope of work to be completed. Only when this work is complete will MSBA commit to funding the project and commit to the percentage of reimbursement from the State. If this work is complete by next spring, and the State commits to funding the project, then an Article at Town meeting and a subsequent Debt Exclusion override vote by the public could take place next May or in the fall of 2009.
One final Article I would like to briefly comment on is Article 26. Article 26 is a clarification of Article 24 from last year’s annual Town Meeting. Article 26 authorizes the Board of Selectmen to petition the State Legislature to allow for Aquarian Water to establish a Water franchise in West Sutton. The main purpose is to provide a water supply to the School complex which is under consent order from the State Department of Environmental Protection to address water quality issues.
The challenge for our town as we move forward, like any town, is to continue to live within our means while growing at a rate supported by recurring revenues. Sutton is a great town with a proud history and we all will work together to maintain the rural fabric of our town while allowing for Smart Growth where it makes sense, like the development along Rt146.
In closing, I want to thank all of my staff, department heads and all of the wonderful town employees that have assisted me with the budget process and made working and living in Sutton truly enjoyable. In particular, I want to thank Tim Harrison, Catherine Van Dyne and Laura Rodgers for their assistance in putting this budget together. I also want to thank my Executive Assistant, Debra Jacques for her tireless work ethic on behalf of the Town of Sutton.
Lastly, I want to thank the Board of Selectmen and members of the Finance and Warrant committee for their support and input throughout this process.
James A. Smith