Hi Folks,

First off Happy New Year. I hope you all enjoyed the holiday season. It has been a while since I have posted anything here, and it's good to be back.

As you will see below, it is not going to be a happy fiscal new year. In fact, the news is bleak. Michael Boynton authorized me to share the email below with you. This is the environment in which the Town will be creating the FY '10 budget that we will be reviewing and voting on at Town Meeting in May.

Feel free to contact me with any questions or comments, and I am sure Mike Boynton would be happy to talk to you as well.

Take care.

Jon


----- Original Message -----
From: Michael Boynton
To: Jalkut, Tom ; Abril, Clare - BOS & FinCom ; Lynch, Lincoln ; Nancy Gallivan ; Berube, Cindy - BOS ; Cathie Winston ; Chris Timson ; Cliff Snuffer ; DeNapoli, Al ; Johnson, James ; Sullivan, Dave
Cc:

Sent: Tuesday, January 13, 2009 5:24 PM
Subject: Town Financial Picture - Spending Restrictions

Hello All,

At 3:45PM today I held an emergency meeting with Town Department Heads. The topic was our growing local deficit projection for FY’09, as well as projections for FY’10. FY’09’s outlook as of current is as follows:

Interest Income: $150,000 expected shortfall
MV Excise Income: $300,000 expected shortfall based on commitment now being sent out
Snow & Ice Deficit: $400,000 projected (likely higher based on today’s $201,000 actual deficit)
MINIMUM PROJECTION: $850,000 DEFICIT (not including any additional State Aid cuts)

In addition, we continue to monitor other department budgets that are trending toward a deficit, such as the Fire Department, and will work with the Board of Selectmen and FinCom to address those as soon as possible.

As a result of this, I have instituted the following:

1) Emergency/Contractual Spending Only (repairs, must-do maintenance, contracts, etc.)
2) All Purchase Orders over $100 to be reviewed by Town Administrator.
3) Town Administrator to approve any scheduled overtime (non-public safety).
4) Finance Team to review all existing FY’09 accounts with large balances for possible reallocation.
5) Personnel & Asst. TA to review Insurance Accounts for any projected surplus.
6) Dept. Heads to review operations and recommend any additional cost savings opportunities.

These measures alone will not close the above gap. The following options must be considered, but not finalized until full extent of State Aid cuts are known:

1) Use of a portion of cash reserves
- Free Cash $850,000 ($1.7m balance – hold $850,000 for FY’10 uses)
- Debt Reserve Stabilization Fund $350,000 ($767,000 balance – possibly use more as needed)
- General Stabilization Fund $ ??? ($1.3m balance – last resort)

2) Accelerate POSSIBLE layoffs projected for FY’10.

As far as FY’2010 projections are not at all better. We are anticipating the following at this time:

1) 10% State Aid Reduction from FY’09 base ($1.1m – without Foundation Budget Increase, Net Effect = $2m +/-)
2) 20% Motor Vehicle Excise Reduction ($600,000+)
3) 41% Interest Income Reduction ($175,000)
4) $0 In Prison Mitigation (Suggested: NEVER Again into budgets if we EVER get it back).

The impacts of these cuts are approaching $4m in shortfalls (higher with 5.9% School Budget Increase).

As soon as the Governor’s FY’09 and/or FY’10 budget(s) are announced, we will rapidly need to put a plan in place to address the shortfall. I appreciate any and all assistance you and your Boards can provide. I am confident that we can work through the challenges, and invite you to call me with any questions you may have.

Thank you!!

Michael