FY 2025 Budget Process Begins

Report on the meeting of the Amherst Town Council, November 13, 2023, Part 2
Read Part 1 of the report here.

Highlights

• Budget Coordinating Group receives Financial Indicators presentation from the Finance Department. 

• Tax Classification will not change for FY 2025. Remains a single rate for all taxpayers.

• Safety Zone for Henry Street near the Cushman Scott Children’s Center referred to Town Services and Outreach Committee.

• Town will not contribute reserves to Elementary School Building project.

• Raise in councilor compensation delayed until July, 2024.

• Council issues proclamations for South Asian Fall Festival Day (November 19), Small Business Saturday (November 25), and Human Rights Day (December 10).

This meeting was held in a hybrid format and was recorded. It can be viewed here. 

Present
In Town Hall: Lynn Griesemer (President, District 2), Cathy Schoen and Michele Miller (District 1), Pat DeAngelis (District 2), Mandi Jo Hanneke and Andy Steinberg (at large), and Ana Devlin Gauthier and Shalini Bahl-Milne(District 5). Participating remotely:  Dorothy Pam (District 3), Pam Rooney and Anika Lopes (District 4) and Ellisha Walker (at large). Absent: Michele Miller (District 1) and Jennifer Taub (District 3). Lopes left at 9:40 p.m.

Staff: Paul Bockelman (Town Manager) and Athena O’Keeffe (Clerk of the Council)

Also, members of the Finance Committee, Jones Library Trustees, and Amherst School Committee. There were 20 members of the public in the Town Room and 38 on Zoom.

Finance Department Presents Financial Indicators for FY 2025 Budget
Interim Finance Director Holly Drake, Comptroller Jen LaFountain, Assessor Kim Mew, and Council Clerk Athena O’Keeffe gave a summary of the town’s finances over the past 10 years and projections for next year’s budget.

There will be a public forum on the budget prior to the November 20 council meeting at 6:30 p.m.

The report notes that state aid peaked in 2008, when it comprised 28% of the operating budget. In FY 2024, it is 19.4%, meaning the town has to rely more on property taxes. Values for state aid in FY2025 will not be available until the Governor’s Budget is released in January. Amherst’s operating costs per capita, including students, continue to be only half the statewide average and much less than other area communities.

The town’s bond rating is AA+, due largely to its low debt service right now of 0.8% of the budget. This debt service figure will increase with upcoming borrowing for large capital projects, such as the Jones Library and the new pumper truck. Contributions to reserves constitute about 27% of the budget, which is high in order to prepare to fund the large capital projects looming in the future, such as a new fire station and the DPW. The town’s pension plan is on track to be fully funded by 2033, and the budget will continue to make contributions to the Other Post-Employment Benefit (OPEB) fund, which helps pay for the health insurance benefits for retired employees. 

Town Manager Paul Bockelman stated that the library, schools, and town communicate well. He anticipates a 3% increase in their budgets for the coming year. This includes integrating the salaries of the four firefighters (hired with ARPA funds) into the operating budget. He praised the strategic partnership agreement signed with UMass and noted the need for similar agreements with Amherst College and Hampshire College. Health insurance costs are estimated to increase by 12% next year and retirement costs by 7%. The town will commit $10.5% of the budget to capital investment. The enterprise funds, i.e. water, sewer, parking, and solid waste, are mostly at their pre-pandemic levels.

In addition to the rise in health insurance costs, the schools are facing the loss of federal ESSER (Elementary and Secondary School Emergency Relief) funds, instituted during the pandemic, and the need to plan for the Amherst sixth graders to move to the middle school. Library Director Sharon Sharry said that a major initiative for the library is its efforts at diversity, equity, and inclusion, maintenance (“meeting the needs of the facility”), and trying to reduce its reliance on the endowment.

Comments from Town Officials
Bernie Kubiac, a nonvoting member of the Finance Committee, stressed the town’s critical needs for a new DPW and fire station. He said, “Every dollar spent elsewhere takes away from those. We need to ask, ‘Do we really need to do this?’” Councilor Dorothy Pam (District 3) noted that between the Jones Library and the new pumper truck, the town has $164 million in authorized debt that has not yet been borrowed, which will greatly increase its debt service obligations.

Councilor Ana Devlin Gauthier (District 5) and Pam Rooney (District 4) worried that the low per capita spending might mean we are overworking town employees. Bockelman said that it is hard to make a head-to-head comparison with other towns, partly because the Jones Library  is partially funded by its endowment, which is not the case for most other municipalities, and partly because “we may include different services in public safety.” He is working on a compensation study regarding town salaries. Council President Lynn Griesemer said it would be helpful to compare Amherst to other towns that have a similar amount of nontaxable land.

Mandi Jo Hanneke (at large) asked about the large surpluses that the town has every year, wanting to know if we are underestimating revenues or overestimating expenses. Finance Committee Chair Andy Steinberg (at large) said there is always a question of whether we should spend more and have less free cash, but he worries that if we make a mistake in projected expenses, it will lead to a budget shortfall. Also, free cash permits allocating money at the end of the year to needs like maintenance of  roads and sidewalks, for instance. He said free cash is currently especially important because of the decreases in state aid and the limitations in the ability to increase revenue from property taxes since the passage of proposition 2 ½.

Over the next month, the Finance Committee will develop budget guidelines for the next fiscal year, with a plan for the council to vote on them during its December 18 meeting.

No Change in Tax Classification for Next Year
Assessor Kim Mew’s presentation for the required public hearing on the tax classification recommended that all property (e.g. residential and commercial properties) be taxed at the same rate again this year. The council voted unanimously, with two absent, in agreement with her recommendation.

Mew explained that in 1978, the state established four classes of property: 

1. Residential is anything someone can live in and any accessory land, buildings, swimming pools, tennis courts, etc.
2. Commercial includes office buildings, stores, banks, farms, vacant land, and recreational land (recreational land is not taxed in Amherst).
3. Industrial is property used for manufacturing, processing, or extraction. It includes property used for utility storage or production, such as solar installations.
4. Personal is property owned by individuals or associations that is not part of buildings. A large part of this class is owned by public utilities.

In Amherst, 89% of property is residential, 6% is commercial, 4% is personal, and less than 1% is industrial. The average single-family home now tops $508,000 in assessed value. As she did last year, Mew explained that adopting a split tax rate that taxed nonresidential property at a higher rate would penalize the town’s few businesses by greatly increasing their taxes while only minimally decreasing residential property taxes overall.

Adopting a residential exemption that would tax non-owner-occupied property at a higher rate, would involve a lot of work for her department because they would have to classify each property appropriately. Approximately 33% of properties in Amherst are non-owner-occupied. Residential exemptions would not apply to homes occupied by family members who are not listed on the deed, properties held in trust, and nursing homes. Residential exemptions tend to penalize residents who live in apartments. She said that the town has programs to alleviate tax obligations for elderly residents, veterans, and legally blind residents of low to moderate income. The deadline to apply for these programs is April 1.

Henry Street Safety Zone Proposal Referred to Town Services and Outreach Committee
In response to safety concerns of parents and staff at the Cushman Scott Children’s Center, Griesemer and Cathy Schoen (District 1) proposed a safety zone around the center that includes reducing the speed limit to 20 mph on a quarter-mile stretch of Henry Street (from Market Hill through the intersection with Pine Street), placing one or two speed bumps near the children’s center, and making the intersection of Henry Street and Pine Street a three-way stop. 

This proposal met resistance from Devlin Gauthier and Hanneke, who felt the required traffic studies had not been completed, although the DPW did monitor the speeds of vehicles in the area. The result of these objections was that the proposal was referred to the Town Services and Outreach Committee with input requested from the Transportation Advisory Committee. The vote for referral was 10-0 with 3 absent.

Reduction in Debt Exclusion Override Amount for the New Elementary School
Before the successful debt exclusion override vote for a new elementary school last May, Ellisha Walker (at-large) argued that the override amount be reduced by $10 million from town sources to lessen the burden on taxpayers. The council voted on April 3 to commit $5 million in town funds to the project, to be repaid by reimbursements for energy saving measures. Bockelman was charged with finding a source for the $5 million.

Since the vote was taken, the Massachusetts School Building Association (MSBA) increased its allocation to the project by $9.7 million, which more than covers the mandated decrease in the taxpayers’ share. Because of this increase in the MSBA money, Bockelman said he does not feel he needs to find more money from the town. Walker expressed her  disappointment  that the town is not willing to contribute some of its funds to the project, to help taxpayers, and that the shift in the source of the funds shows a lack of transparency. But most councilors seemed to think that the aim of lessening the burden on the taxpayers has been met by the MSBA funding. Schoen said the building committee would continue to look for other sources of money, such as  private sources and strategic agreements. She said that the committee did approach Amherst College about contributing to the school, but they decided to support the Jones Library expansion instead.

Griesemer then said, “If somebody feels like I need to be more transparent, then they can file [the] president’s report every two months.” She added that she feels “very criticized by both this [Walker’s remarks about funding the new school] and the library, and the lack of appreciation for our legislators for what they do for us.” 

Increased Council Compensation Will Not Begin Until July 1, 2024
The council voted on June 26 to double the compensation for town councilors from $5,000 to $10,000 a year. Bockelman and former Finance Director Sean Mangano suggested three possibilities for paying for this increase this year because it was not included in the FY 2024 budget:

1. Transfer funds from free cash to cover the first six months of the year before the start of FY 2025, when the increase would be budgeted for.
2. Delay the beginning of the increase until July 1, 2024, the beginning of the next fiscal year
3. Keep the compensation as is for the first six months of 2024, then pay a larger compensation in the second half of the year to make the total come to $10,000 for the year.

Steinberg said the Finance Committee discussed the three options and recommended the second one. Pam objected, saying that the council did not vote on the matter and that we just had an election where people ran on the assumption that the compensation would be increased. She said, “We talk about equity, but we don’t do anything.” Shalini Bahl-Milne (District 5) also thought that the intention of the motion was to begin the increase at the beginning of 2024.

There was some talk of referring this back to the Finance Committee, but Schoen felt that this would be fruitless, since the council has had the same three options in front of it for months and is simply avoiding a vote. The vote was then held, with option 2 prevailing by 7-2-1 (Walker and Bahl-Milne voted no and Pam abstained). 

Three Proclamations Passed on Consent Agenda
The council designated November 19 to celebrate the South Asian Fall Festival at Crocker Farm School. The proclamation states, “we the Amherst Town Council express our deepest respect and best wishes for South Asians and all Americans in our community who celebrated the festival of Diwali on November 12th and invite all residents to join us on November 19, 2023, at Crocker Farm Elementary School to continue the celebration at the South Asian Festival of Lights sponsored by the Amherst DEI department, Human Rights Commission, and Amherst Recreation Department”. Councilor sponsor is Bahl-Milne.

December 10 was proclaimed Human Rights Day. Councilor sponsors are Hanneke, Taub, Rooney, Griesemer, and DeAngelis. The proclamation ends: “NOW, THEREFORE, the Amherst Town Council hereby proclaims December 10, 2023 Human Rights Day, encourages our community to embrace every opportunity to reflect and embody the values of the Universal Declaration of Human Rights in their work for the community, and urges Amherst residents to celebrate this day with a communal reading of the Declaration of Human Rights at the Bangs Community Center, December 10, 2023, at 4:00 pm. Please join us.”

The third proclamation designates November 25 as Small Business Saturday. It is sponsored by Griesemer, Hanneke, DeAngelis, and Taub, and states: “Now, therefore, the Amherst Town Council proclaims November 25, 2023 Small Business Saturday® and urges the residents of our community to support Amherst-wide small businesses and merchants on Small Business Saturday® and throughout the year.”

The meeting adjourned at 11:21 p.m. The council will next meet at the Finance Committee meeting on Friday, November 17 at 1 p.m. over Zoom and in hybrid format on Monday, November 20.