Town to End Fiscal Year With $1.5M Budget Surplus

Days before the end of the FY2018 fiscal year, Town Manager Kevin Smith and Finance Director Doug Smith presented an informal budget update to the Budget Committee. While numbers were not final at the time, they expect the town to have an approximately $1.5M budget surplus.

About $500,000 of the surplus comes from lower than expected spending with the remaining roughly $1M coming from higher than expected revenue.  The budget update was focused on the town side of the budget and did not include the school budget which is managed separately by the school district.

Almost all of the revenue upside came from higher than expected vehicle registrations.  Doug Smith noted that this line item has consistently come in higher than expected and each of the past several years they have forecast a higher number, but revenue still exceeds the revised forecast. The FY2018 forecast was $7.5M for vehicle registrations with actual revenue of about $8.5M.

Doug Smith noted that both the number of vehicles registered and the value of the vehicles registered has been increasing.  In addition, the town has seen a higher percentage of leased vehicles and since registration fees are based on the cars value this increases revenue since leased cars are newer. With fewer cars owned outright, not as many vehicles are losing value as they age which would reduce the registration fee.

Doug Smith also shared that investment income came in at about $200K compared to an expected $100K. The increase was attributed to a new banking arrangement negotiated by the town. He also shared that next year and likely the year following, the town would see roughly $350-400K in investment income. Kevin Smith put that in context by saying that equated to $0.06 on the town’s tax rate.

On the expenditure side, Doug Smith attributed the $500K in lower spending to careful expense management by department heads and a few variables breaking the right way. Even though the town views the $34.5M budget from an overall perspective, each department head is asked to keep within their own individual budgets.  The town has the flexibility to cover an overage in one department with an underspend from another department, but the goal is to avoid having to do so.

Doug Smith added that expenses from the waste management contract were lower than expected and the price of fuel was lower than expected.  Also, snow removal was within budget.  These factors contributed to lower spending.

Senior affairs spending was well under budget which Kevin Smith attributed to a lack of seniors taking advantage of the transportation options that the town had funded in the budget.

Doug Smith also provided an update on revenue from the Land Use Change Tax (LUCT).  This tax is paid in some cases by developers who pay a 10% tax on the value of the developed land.  This money is split between the Conservation Commission and the town.  The first $100K goes into the conservation fund and any remainder is split with 60% going to the general fund and 40% going to the conservation fund.

The town does not forecast revenue from LUCT because it is unpredictable based on when building permits are issued for developments.  Doug Smith shared that there was $243K in LUCT in FY2018.  Kevin Smith notes that he expects it to increase substantially in FY2019 because a few large developments including Woodmont Commons and Wallace Farms that were expected to pull building permits in June will get them later in the summer instead.

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