BOS Meets on October 25 to Discuss FY2013 Budget

With the presentation of a financial model for the town of Hopkinton to the Board of Selectmen at their October 18 meeting, Town Manager Norman Khumalo and Interim Finance Director Susan Marchand laid the groundwork for the Fiscal 2013 budget message from selectmen. The information provided will be discussed at their upcoming meeting on Tuesday, October 25.

“This is the beginning of a very long conversation” said Khumalo, who also emphasized that the model is a work in process and its focus is therefore preliminary in nature.

Key to the model were several components, including the town’s projected revenues and expenses, fixed costs, debt projections and assumptions used. On the revenue side, Khumalo listed several assumptions including flat state aid, level or minimal increases in miscellaneous revenue sources, and full cost recovery for the water and sewer enterprise funds.

On the expense side, Khumalo is proposing a flat operating budget for FY2013 for now, with modest increases in health insurance costs, but said that his goal is to minimize tax impacts and protect the town’s excess levy capacity which is in fact now working as a soft reserve.

One question Khumalo said he will be looking for feedback on from the board concerns how much of the allowable 2.5 percent will be used, as he expects increases in the departmental forecasts as the budget process moves forward. According to Khumalo, the board will need to decide how much of the allowable tax levy will be utilized to meet the increased operational and fixed costs.

Over the last two years, Khumalo says the town has been vigilant in balancing the budget with a minimum impact on services while pursuing new initiatives.

“I would like to encourage the board to continue to exercise fiscal vigilance in its approach to the FY2013 budget,” said Khumalo.

Reasons cited by Khumalo for continued vigilance include the sluggish recovery of the economy, increasing fixed expenses, a flat revenue stream and continuing pressure from health care and retirement costs for town employees.

“We are looking down the pike and see several long term capital funding projects that may or may not be approved by the town,” said Khumalo.

Those potential projects include a new DPW facility, a new library, a solution to the Center School problem and some renovations at Town Hall.

“We also know what we don’t know,” said Khumalo. “State aid is not yet determined.”

Khumalo also shared a quote from a recent Gallup poll that said that 32 percent of citizens report that their recently depressed spending will become the new normal for consumer spending, implying slower economic growth than in the past.

“I suggest that we have to be very cautious and remain conservative in planning the town’s budget,” said Khumalo.

After outlining the budget model, Khumalo turned the presentation over to Marchand to explain the details and then asked for some preliminary feedback from the board.

“I think it’s a really great start,” said Ben Palleiko.

John Mosher had questions about whether or not cost savings from past initiatives were included, and requested graphs in addition to spreadsheets for future meetings. Chairman Todd Cestari said it was obvious that a lot of effort and time had gone into developing the model.

“You have a very good staff in Hopkinton,” said Marchand, “that work well together.”

Marchand also said that the model was developed quickly, allowing the town to start its FY2013 planning earlier than in the past.

See spreadsheet attached below. The agenda and portfolio for the October 25 meeting are also attached.

To watch the replay of the board's October 18 meeting, Click Here.