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									                        TOWN OF BELMONT
  Office of the                                                    P.O. Box 56
Town Accountant                                              Belmont, MA 02478-0900

                                 TOWN HALL

 January 18, 2005

 Paul Solomon, Chairman
 Members of the Board of Selectmen
 Belmont, MA


 It is with pleasure that I present the FY06 preliminary working budget for the Town of
 Belmont. This represents truly a collaborative project. Without the help of Joyce Munro
 and our dedicated department heads lending their thoughts and input none of this would
 have been possible. I would like to publicly thank those that participated for their patience
 and expertise.

 The town budget presented is balanced. The anticipated revenues equal the anticipated
 expenditures. The revenues are always key to building the budget. Although most people
 perceive the budget as an expenditure document, the available revenues always drive the
 bottom line. The total revenues in FY06 are expected to increase overall by 2.3%. Total
 school expenditures (presented under separate cover) will be increasing by 2.4%. The
 increase for Town expenditures (excluding water/sewer/Chapter 90) will be close to 2.3%.

 The largest revenue source in Belmont is property taxes. This represents 74% of all the
 town’s revenues (85.5%, excluding the enterprise funds). The proposed balanced budget is
 not conditional upon an operating override for the budget in FY06, but based upon our five
 year forecasts, we expect that an override will be needed in FY07 to maintain the existing
 level of services.

 Water, Sewer, and Chapter 90 Highway funds are all voted by the Town Meeting and
 therefore included in our total revenue picture. These services are self-supporting based on
 their fees or state receipts. This represents another 13% of our revenue stream. Because we
 do not have an industrial tax base, we are unable to successfully implement a rate system
 that would escalate as water use increases. This has been used in communities with
 industrial uses to help mitigate rates charged to homeowners.

 The next largest category for revenue is our local aid from the State. This is 8% of the total
 and has been either level or decreasing for a number of years. Our estimate during this
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budget process is that state aid will be level funded between FY05 and FY06. The governor
stated at the MMA Conference on January 7, 2005, that he would be increasing the amount
in the lottery formula by $100M in FY06. Although this is a positive sign, this replaces the
$75M in “one time aid” that was distributed to the cities and towns in FY05 so only a small
increase may be expected. It does appear as if state revenues are decreasing in our analysis
but this is due to an expected decrease in school building assistance that will come about
because of the final audit of the Chenery.

The final category of revenues is licenses, permits, earnings on investments, fines, fees,
voted use of free cash and transfers from the Light Department and represents the last 5% of
revenues. The fees here range from our fees for recreational services and building permits
right down to parking fees. If progress is made with development at McLean, the Town
may see a rise in building permits; but any such rise would be offset by an increased need
for inspectional services.

The two items that stand out as the largest contributors to the increase in the Town’s budget
are retirement pension costs that are rising 13.3% and the Town’s salary and benefits
reserve, which has increased 11.4%. Just recently many of our union contracts were settled
with a three year contract that represents 1.5% in FY05 (current year) and 3% in FY06 and
FY07. The Town still has two contracts outstanding (SEIU and Librarians) for FY04
forward. The projected costs of the collective bargaining agreements have been aggregated
the General Government budget within a salary and benefits reserve. Health insurance
continues to be a budget buster with another 16% increase in premiums projected for
January 1, 2006. We hope to be able to mitigate our prescription costs for those with
Medicare coverage with a reimbursement program from the federal government. This
program will have no impact on the health insurance coverage for our retirees. We are
recommending an enhancement to our Property Insurance coverage to include some basic
liability coverage.

This upcoming fiscal year will be the first full year in the newly renovated Homer
Municipal Building. The staff is excited about this opportunity to move into such lovely
space; but the budgetary stress and maintenance demands placed upon the Building Services
Department from the increased square footage is reflected in this department’s budget

The Town’s budget has been severely constrained for the past five years. Over the past three
years of my tenure only one new position has been recommended and four positions were
deleted, despite continued increases in service delivery expectations. This year I feel it is
important to add three and a half full time equivalent positions to respond to growing
demands and which could actually save the Town money overall over the current budget.
This puts our staff level on the Town side as nearly level with FY2003.

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One position would be in the Cemetery Division. The department is currently staffed with
only four full time employees. It takes four employees to carry a casket and every time
someone is out for sick/vacation/or personal time, this causes a hardship. Rather than
risking anyone getting hurt, it would be less expensive to fill a position. Add to this the
potential increase in acreage from the new cemetery, this position is desperately needed.

A part time clerical position in the fire department would help in the permitting process to
be sure that we are collecting permits and doing clerical work for the fire prevention
division to allow the officers to do more field work and less office work. State and federal
mandates for reporting are crucial to all public safety operations and the billing for permits
will help to pay for the position in the long term.

An IT Specialist in our Information Technology (IT) Department will be able to help with
the myriad of issues that this department is faced with daily. Due to the shortage of staff,
there is a significant delay in the installation of new equipment and upgrading of software.
The Town is also requesting the Capital Budget Committee look at purchasing financial
software and GIS software in this upcoming year. All of this will require more internal

The Council on Aging has been requesting a full time custodian position for some time.
Currently there is a shared use of Building Services custodial staff. For the safety of both
the volunteers and the seniors that come for recreation and enrichment, it is imperative that
there regularly be someone in the building to clean up spills to prevent slips and falls. Also
moving the furniture should not be relegated to our volunteers. The Building Department
custodians will be freed to spend more hours on the increased maintenance demands of the
Homer Building.

In addition to these position changes, I am recommending the Administrative Assistant in
the Selectmen’s office being upgraded permanently based on additional responsibilities that
have been assumed during this transition period.

Finally as part of the recommended changes in staffing, I am requesting an Assistant Town
Accountant replace the existing Staff Accountant position. The Accounting Office has seen
increasing demands from new and ongoing GASB requirements and a requirement for more
in-depth accounting knowledge and the ability to work independently on internal audits.
Originally I had felt that a part time position added to the department would meet these
goals, but there is insufficient office space in the Accounting Office at the Homer Building
to support the addition of another person in this office. Therefore the upgrade of the
existing full-time position is most prudent.

Public Safety
In this time of unrest in our global community our citizens see public safety for themselves
and their families as paramount. Although the proposed budget maintains the current level
of sworn officers and firefighters, both the Police & Fire Chiefs have made compelling

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arguments about the real need to return to former higher staff levels. This has not been
included but there have been some overtime increases in the Police department and a part
time clerk in fire to help keep uniformed personnel on the job for more hours. Our
Emergency Management Department is mostly made up of unpaid hardworking volunteers.
Their budget is also kept level funded except for a small increase in training money for the
volunteers and for the replacement of equipment. Although we hope never to be faced with
using this department’s expertise, it is good to know that they are trained and ready to

Public Works
The divisions within the Department of Public Works have taken the biggest budgetary hits
over the past 15 years. The consolidation of all the divisions has allowed the department
head greater flexibility in using the remaining personnel in the most efficient manner.
Personnel increases are desperately needed to maintain the same level of service. Much of
what this department does is related directly to public safety, because having safe, passable
streets has tangible impact on life safety. This department is the one that responds when
circumstances and environmental conditions are at their worst (e.g., snowplowing and
repairing water and sewer main breaks during severely cold weather and storm conditions).

In September of 2005 the current contract that the Town has with Northeast Solid Waste
Committee (NESWC), our trash disposal facility will end. There has been a new contract
negotiated with NESWC that has a first year savings for disposal of nearly $500,000. This
however is anticipated to be a one time savings in that our trash collection contract will be
ending in FY06. The last time we renewed this collection contract there was a substantial
spike in costs although we are optimistic that we will be able to somewhat mitigate the
increase. I have proposed that $125,000 of these savings be considered “one-time” savings
and be set aside (with a corresponding vote of ATM) in a Stabilization Fund for the purpose
of funding the Town’s unfunded retiree health insurance liability as required by GASB 45.
GASB 45 is the new requirement to identify the post retirement benefits due our current and
retired employees. This cost is expected to be substantial and setting aside an early funding
mechanism will be viewed favorably by our rating agencies.

An additional consideration for this ending of the NESWC contract is the distribution of
approximately $2.5M of amounts currently on deposit with NESWC in our Tip Fee
Stabilization Account. We propose a second Stabilization Fund be voted by Town Meeting
for the purpose of capping the Landfill. The funds from this distribution will be deposited
to the Stabilization Fund to help pay for this EPA mandated project.

Water & Sewer Budgets are now accounted for under enterprise systems. The entire cost of
these operations is borne by the rate payers. The good news is that under the enterprise
systems, these are run like a business and remaining funds can be used to offset future rate
increases. The Sewer budget is anticipating a 1% increase in expenditures and the water
budget a 6% increase. The DPW is recommending that the Water Retained Earnings be
used to fund some of the capital expenditures and help mitigate rates. Most of the water

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increase is predicated on large expected increases from the MWRA of 9.5%, although
preliminary estimates from the MWRA are as high as 17%. The Town of Belmont is very
different from other communities in that we have been very active in the past few years
replacing water and sewer lines within our regular operating budget. We do not borrow
those funds incurring interest costs but use current year receipts to replace antiquated lines.
The only exception to this is when we are offered interest free loans from the MWRA.

Human Services
These departments respond to our most fragile residents whether because of age or health
issues. The youth department is also considered in this category and helps to meet our
changing needs for that age group. The budgets for these departments have been funded at
a level-service for FY 2006.

Culture and Recreation
Both the library and recreation budgets have been funded at a level service for FY 2006.
The library continues to be funded at the level sufficient to maintain their state aid
reimbursement. The recreation department attempts to meet the needs of a wide range of
ages and interests. Each year the programs change to reflect the current needs of the group.

Debt Service
There has been an overall decrease in debt service in FY06 of $200,000 from FY05. The
first year of the Fire Station debt represented an increase of $350,000 in this category in
FY05, so we are returning to historic levels.

Capital Budget
We are recommending an initial funding of the Capital Budget of $1.994M. Information
Technology (IT) funding that had previously been included in the capital budget has been
transferred to the Town and School departments ($206,000). Mike Speidel, the Chair of our
Capital Budget Committee, has requested that ongoing IT operating costs, including the
systematic replacement of older equipment, be moved out of the capital budget. The
proposed budget recommendation has taken the FY 2005 IT capital appropriation for
equipment replacement and placed them in the respective Town and School budgets. This
proposal is made as a “placeholder” for policy discussion about appropriate placement of
the IT replacement costs and is not a particular judgment about the appropriate funding

Allowance for Abatements and Exemptions
The Assessors are requesting $850,000 for “Overlay” for the upcoming fiscal year. This
represents an increase of 9%.

UNMET Town Needs:

The departments met with the Selectmen over a series of weeks in October to explain their
goals and how the overall needs of the Town are unmet. Not surprisingly many of these

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long range goals necessitated the increase of personnel, as you will note from the list of
recommendations for budgetary increases. Many people tuned in to these televised
meetings that included: Records management (fiche for permanent records) and
environmentally friendly vaults for originals, a Purchasing agent to combine purchases &
seek the best possible prices (town & school), a Grant Writer to seek out available federal
and state grant sources, and increased public safety employees.

Community Development has proposed a resident engineer on staff to oversee our road and
sewer construction. Just the savings in fees paid to our consultants will offset the salary.
Should GIS become a reality in FY06 the GIS specialist in the IT department will be key to
the effective implementation of this program across the many disciplines.

It would be my suggestion to hire a consultant to send out a citizen survey using random
sampling techniques to seek input on what the townspeople want. A consultant would
either do this over the phone or in writing depending on which way would provide the best

Although this town budget is able to sustain level-services, there continues to be really
important needs that have not been addressed. Attached is a list of in priority order of
proposed budget enhancements for the Town should additional funds become available. I
look forward to working with your ideas and suggestions and those of the Warrant
Committee as we strive toward a final budget recommendation for the Town Meeting.


Barbara E. Hagg
Interim Budget Director
Town Accountant

Cc: Warrant Committee
    Capital Budget Committee


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