Less Revenue, Fewer Services – Making Do Until the Economy Improves

Introduction

2003 will prove to be one of the most difficult years to craft an acceptable budget (or to simply be a public official) since 1991, when the State Budget was unbalanced and in deadlock between competing fashions in Augusta, state employees endured furlough days, and the Department of Education decided it would be best to simply not send the last of twelve monthly checks to school districts. In 2003, the national economy continues to lag below expectations, the regional economy remains stalled, the State of Maine is attempting to reconcile a $1.17 billion deficit (without raising taxes, if possible), revenue sharing is down and capped, and student enrollment in the Greenville Schools is down, which will continue to decrease state aid for education. In addition to these factors, the Town's state property tax valuation jumped from $126 million to $144 million from 2002 to 2003, a fact which immediately increased our share of Piscataquis County Tax by $41,367 and one which will eventually decrease our school union's share of General Purpose Aid (GPA) for education. The only things we know for sure from the school at this time is that (a) we will not be receiving an Isolation Grant; (b) we will not likely receive much if any funds for a “hardship cushion”; (c) labor costs will go up by 1-3% as per the new contract; (d) local option expenditures are likely to go up between $100,000 to $130,000 as a result of all of this.

This is a tough year. The appetite of the Greenville taxpayers to endure a mill rate increase is lower than ever since the re-factoring of base property values in Greenville were increased this year after the completion of a three-year sales study of actual real estate sales. The re-factoring resulted in the removal of the 10% depreciation of building values implemented after the revaluation of 1991, an act which increased the total assessed value for most all homeowners in Greenville. However, the increase in base land values where the study showed they were significantly undervalued (e.g., shorefront lots), off-set most of the assessed value increase for non-shorefront homeowners by driving down the mil rate from $20.20 to $17.80 per $1,000 valuation. For all of the revenue shortfall reasons listed above, along with a municipal budget which will attempt to deal with the long-term cost of failing infrastructure, last year's mill rate decrease is in jeopardy of being fully rescinded this year.

In the following narrative and the attached municipal budget spreadsheet, I have prepared (with a great deal of assistance from staff, most notably Bookkeeper Cynthia Hanscom) a draft budget which I feel meets the needs of the Town without excess. I have not made any draconian cuts in the below-listed accounts. Rather, I have given you a draft budget (Manager's Budget) which allows the Town to continue to function, a budget which delays some major projects for fiscal reasons, and one which is realistic, in my opinion.

If, however, the Board of Selectmen and the Budget Advisory Committee wish to reduce municipal spending artificially in this particularly difficult year, I have listed below some accounts from which the budgeted amount may be reduced or even eliminated. Most of these accounts are reserve accounts, and I warn those involved in crafting and approving the budget that part of the reason why we have high costs for improvement of infrastructure at this time – the need to rebuild roads, sidewalks, the municipal building, the Junction Wharf, and even the airport – comes in great part due to the lack of funding and saving over the years for properly maintaining and incrementally improving these facilities. To reduce these proposed appropriations would reduce the cost of local taxation at this time, but will increase that cost in the future. I do not recommend making these cuts except as a last-resort alternative to eliminating programs or positions. The more extreme cuts would be in the following accounts:

Account	Current Reserve Total	Proposed Appropriation	Reduced level	Total Savings
1. Municipal Building Reserve	$50,000	$25,000	$0	$25,000
If this is reduced, the recommendations of the municipal building task force will be delayed or never implemented. If the plans are implemented, the fewer reserve funds available will result in greater debt service to finance the project, increasing the cost of the project through added debt service.
2. TRIO Upgrade	N/A	$2,900	$0	$2,900
This upgrade will bring the remaining "modules" for our TRIO software program into the windows environment. Our computer system and networking is having difficulty dealing with both DOS and Windows based programs, and therefore the system is very slow and has severe printer sharing problems. Without this upgrade, the system will remain substandard, reducing efficiency in the front office.
3. Winter Roads Equipment use	N/A	$45,500	$30,500	$15,000
To reduce the equipment use funding for winter roads is to likely eliminate any net addition to the equipment reserve accounts, and to possibly decrease the current reserve account amounts for each piece of equipment through the cost of repair and maintenance costs. Reducing the equipment reserve accounts will make it more financially difficult to replace equipment in the future, if not impossible without borrowing funds.
4. Summer Roads Equipment Use	N/A	$27,000	$20,000	$7,000
To reduce the equipment use funding for summer roads is to likely eliminate any net addition to the equipment reserve accounts, and to possibly decrease the current reserve account amounts for each piece of equipment through the cost of repair and maintenance costs. Reducing the equipment reserve accounts will make it more financially difficult to replace equipment in the future, if not impossible without borrowing funds.
5. Road Improvement Account	$0	$36,600 ($10,000 from local taxes)	$26,600	$10,000
The local share for building additional sidewalk along the Lily Bay Road this summer when the MDOT road project commences is between $5,000 and $10,000. If $10,000 is not appropriate from local taxation, then $10,000 will have to be taken from the MDOT Local Road Assistance Funds we receive each year for paving. This will cut nearly in ½ the length of paved road we resurface (unless a road improvement bond is secured).
6. Health & Welfare Accounts	N/A	$23,250	$14,500	$8,750
The $8,750 reduction shown here would eliminate all donations to service groups and retain only $4,000 for General Assistance and $10,500 to CA Dean Ambulance.
7. Night Basketball Program	N/A	$1,500	$0	$1,500
The Town of Greenville received a $5,000 grant to install lights around the outdoor basketball court, and to implement a night-time basketball program. It has taken nearly all of the funds from the grant to pay for the lights: to implement the program will require additional local taxdollars. Without these funds for a coordinator, there will be lights, but no program, and quite possibly, little benefit to the community.
8. Airport Reserve Account	$732	$40,000	$20,000	$20,000
This $40,000 reserve appropriation is meant to front the money necessary for hangar development at the airport, development which will be paid back by the lessees. The money, once returned, will be used to pay for the local share of the runway reconstruction project. If these funds are reduced, two things will likely happen. One, there will be insufficient funds to "front" the hangar project, and the revenue the extra hangars will bring will be delayed. Two, the fewer funds we set aside now, the more funds we will be forced to either borrow or appropriate next year to meet our 5% obligation for the $1.5 million runway reconstruction project (total estimated cost to the Town - $100,000)
9. Rubbish Pickup	N/A	$32,000	$0	$32,000
The Town has a contract with Moosehead Rubbish for weekly trash pickup year-round. This service is expected of our residents. The contract says that the validity of the contract is dependant upon funding at Town Meeting each year. I do not think we should try to get out of the contract. But if the funds were not approved at Town Meeting, the contract could be broken. Residents would be free to purchase trash pickup services from Moosehead Rubbish or any other company on their own. If the contract were broken, legal guidance – and possible legal representation - would be required.
10. Landfill Reserve	$55,398	$28,000	$0	$28,000
In roughly 20-25 years, the Town will be forced to (a) close the landfill at a cost of about $500,000; (b) develop a transfer station at a cost of about $250,000, and (c) pay for on-going annual transfer station costs and also annual post-closure requirements for the landfill at a cost of about $125,000 per year. To avoid having to appropriate or borrow at least $875,000 in one year just for solid waste, the Board and I are committed to fully capitalizing the landfill closure account. This also guarantees that the entities using the landfill at the time will also contribute to its closure. To reduce this reserve amount now means that more money will have to be paid later, when the tax rate will likely be higher as well.
11. Hazardous Materials Pickup	N/A	$6,500	$0	$6,500
There are a number of materials (mercury thermometers, liquid paint, anti-freeze, computers and other CPUs) which we cannot accept at the landfill or the recycling center. These products can be collected by a professional disposal company such as Clean Harbors. For Towns which do not regularly accept waste of this nature, companies will come for one day to collect different types of hazardous waste for one lump-sum fee. I have a quote from Clean Harbors for $6,500 for a one-day collection. If this is not done, more of this material will appear illegally in our landfill, jeopardizing the long-term use of the facility and triggering prematurely the facility's closure.
12. July 4th Fireworks	$0	$3,500	$2,000	$1,500
Currently, we are waiting for a donation to arrive from the Chamber of Commerce for the Fireworks display which was set-off this past July 4th, 2002. Assuming these funds arrive, and assuming additional funds could be raised (such as from the funds raised for the Sno-Fest fireworks), I believe we could get by with $2,000 and still have enough for the celebration. This account line also pays for parade trophies, flags, banners, porta-potties, and advertising for the Fourth of July celebration. At $2,000, we would likely have a fireworks display half the cost and duration of last year's 23-minute, $4,000 display. In short, for $2,000, we would have an Independence Day celebration on the verge of collapse and failure due to lack of funding.
13. Proposed Budget "Extras"	N/A	$9,400	$0	$9,400
In the budget summary and in the appendix, you will find some additional expenses for "extra" projects, most notably the incremental rehabilitation of the current municipal building. As part of financing scenario #2 for the implementation of the recommendations of the municipal building task force, certain safety, ADA, and functional improvements are recommended for the current municipal building, to be included in the operation budget for the municipal building, listed under repairs / improvements for the municipal building under general government. These proposed expenses are outlined in the appendix, but roughly include improving the two main bathrooms to become ADA compliant, along with the front entryway; installing emergency lighted and lighted exit signs during power failures; and a lease on a new phone system. These safety issues need to be addressed (and should have been addressed several years ago). All proposed improvements must be contingent upon a commitment by the Board of Selectmen to a distinctive improvement plan for the municipal building. I strongly recommending adhering to scenario two of the task force recommendations (highlights included in the appendix). If these funds are not appropriated, certain safety issues will persist, and the total cost of the project will increase when it is finally implemented.
TOTAL POSSIBLE SAVINGS: $167,550
(again, I strongly DISCOURAGE the Board of Selectmen from making these cuts except as an absolute LAST resort)

DEPARTMENT ACCOUNTS

Below you will find headings for departments identical to those headings used on the Town Meeting warrant and also the budget summary sheet. I have quantified the finite additional increase or decrease, and have also calculated the given percentage change, comparing the Manager's Budget figure to the FY2002-2003 appropriation. I have limited my comments in each section. Please check the appendix for background material relevant to each department's request. As always, if you have any questions or concerns, please ask.

Respectfully Submitted;
John Simko
Town Manager
March 7, 2003

DEPARTMENT ACCOUNTS - EXPENDITURES

General Government – Up $54,022, or 27.11%

All employees' wages are proposed to increase by 3%. The TRIO Software system currently utilizes some modules in the DOS format, some in Windows. By the end of April 2003, all TRIO modules will be available to use in Windows. The cost for the Town to upgrade to this better-functioning system (and to eliminate on-going system “lock-ups”) is $2,900. The Code Enforcement Officer's pay rate climbed only 3%, but his hours are proposed for 30 hrs. / week instead of 20 hrs. / week. The Office of Code Enforcement is growing busier every month; this could easily be a full-time job. At ½ time (or less), the clerks simply give out what information they have, and tell those inquiring about building a home, a garage, an addition, or sub-dividing to come back at a later time. The cost for website maintenance has been artificially decreased in previous years by sharing the cost with the Economic Development Account. This year, the full cost is borne from the proper account. Budget increase drivers here include:

Revaluation Reserve: $25,000 Increase
Wages: $8,672 Increase (includes additional ten hours per week for CEO)
TRIO Software: $1,450 Increase
Assessing: $1,250 Increase
Internet / Web Site: $550 Increase
TOTAL LISTED: $36,922

Public Safety – Up $27,472, or 7.57%

Fire Department costs remain relatively constant, except for the inclusion of $12,500 for the Municipal Building Reserve. As the recommendation from the Municipal Building Task Force calls for the construction of a fire department annex, and considering that the Piscataquis County Commissioners were put on notice that there may be a budget increase to reflect this building construction, I have split the cost of the $25,000 Municipal Building Reserve appropriation between both General Government and the Fire Department. The Town of Greenville will ultimately pay about 65.43% of that cost. The Police Department salary account for constables has been broken out into three lines: constables covering two shifts per week, constables covering full-time employees on vacation, holiday, or sick time, and constables working on special events. Due to the combination of these three sectors, this year's constables' budget line has been greatly exceeded. Full-time employees for the PD are allowed the same benefits as other full-time Town employees. Some full-time employees were out for extended periods this year recovering from surgery or illness. I have included in the appendix a listing of anticipated hours for special events through the calendar year. I believe this is a more accurate way to budget for police coverage. The Police Cruiser Reserve amount is also up to reflect the cost of purchasing a new cruiser. This amount - $8,600 – is an estimate. Once we have secured a price from a selected dealer, we may be able to reduce this price (before Town Meeting). Budget increase drivers here include:

Fire Department – Municipal Building Reserve: $12,500 Increase
Police Department Salaries (holiday/vacation/sick time & special events): $7,681 Increase
Police Cruiser Reserve: $4,600 Increase
Police Department Operations: $575 Increase
TOTAL LISTED: $25,356

Public Works – Up $10,079, or 4.63% Increase

Public Works accounts have kept relatively constant. This year we will be focusing on closing the stump dump, stockpiling and possibly screening fill material at the airport, a limited amount of ditching, and some addition of surface gravel to unpaved roads. If the Town opts to borrow funds for road paving, we will be focusing also on prepping these roads for paving (some shoulder cutting, ditching, and possible culvert replacement). We will be working around the major MDOT road project on Lily Bay road this summer. This project will include the construction of new sidewalk from roughly Wortman's Store to McAfee Street. The Town will have to pay for this cost, which is estimated between $5,000 and $10,000. In the “additions” section of the budget summary, I have included $10,000 for this sidewalk cost. If the extra money is not appropriated, our paving budget will likely be reduced by $10,000, and we will likely only resurface one street this summer as a result. If the Town opts to borrow funds (Dexter just authorized a $500,000 bond for road paving this year), then the $10,000 appropriation could go toward the bond repayment. The only other cost increases are for operation of the Public Works Garage (we have finished one full budget cycle at this facility and now have a better handle on actual costs, including heat, electricity, taxes, and association fees), and the sandpile, which was under-funded this year by $7,000. This, too, is a case where we did something different (no contractors in the pile, therefore no off-setting revenue), and it took a year's experience to properly budget for it. Budget drivers here include:

Sandpile: $7,000
Public Works Garage: $2,700
TOTAL LISTED: $9,700

Health & Welfare Accounts – flat-funded at $22,200

No change here. One drastic cut could be to eliminate all donations to service groups and fund only the contribution to CA Dean's Ambulance Reserve fund and the General Assistance Account (required by law). I recommend flat funding.

Recreation – Down $3,253, or 7.00% Decrease

We have added $1,500 for a nighttime basketball program coordinator, and increased some other program accounts, but decreased the facility accounts. We have added some funds for the skate park / skating rink as it will need some work this year.

Cemeteries & Memorials – Flat Funded.

I had originally increased this by $200, but have yet to hear from the Corporation, so therefore I have flat-funded the total.

Airport – Up $22,850, or 63.38%

In FY2004-2005, work will begin on the reconstruction of runway 14-32. 90% of this total cost, including engineering and obstruction removal, will be borne by the FAA; 5% by the MDOT, and 5% by the Town of Greenville. The total estimate for this 5% local cost (as projected in our 2000 Airport Master Plan Update) is $100,000. Engineering work is underway for this project right now. We have not been able to receive any funds from the two counties, although I will attempt this year to develop a long-term cost-sharing relationship with them this year (the airport advisory committee and the representatives from the two counties did not want to form a new regional airport authority, but did seem to leave the door open for a cost-sharing arrangement). Our local share for the engineering cost this year is expected to be between $15,000 and $20,000. We also want to build an access road and a gravel taxiway for new hangar construction at the airport. The cost for this construction would be paid back by the new lessees through an evenly-divided surcharge per lot. I do not year have an estimate for the cost of the road construction and taxiway construction. We do have several potential lessees who want to build on the lots. We cannot allow construction until we have a completed Site Location of Development permit from the DEP (expected this Spring). Although $40,000 for reserve seems like a lot, it is actually less than what should be set aside for the projects coming. We will most likely have to borrow funds to pay for our share of the runway project, and possibly tie in the debt service repayment to a cost-sharing agreement with the two counties. In the appendix, please find some information related to the runway reconstruction project scope of work. Budget drivers for this increase include:

Airport Projects Reserve Account: $25,500 Increase

Sanitation / Solid Waste – Up $4,566, or 1.51%

Contract costs for landfill operation and rubbish pickup are up, along with the cost of road maintenance for the landfill. But the cost for removing white goods and tires is down considerably, mostly due to the lesser volume of these goods since the fee systems were implemented. The landfill closure reserve is down due to the extended lifespan of the landfill through lower volumes and greater recycling and compaction. Costs that are up include the cost for hazardous waste pickup through a contractor such as Clean harbors. If appropriated, this would allow for the company to come to Town one day and pick up any amount of material people can haul in (from our service area ONLY) of products which are not accepted at the landfill (anti-freeze, liquid paint, paint thinner, mercury thermometers, NiCad batteries, car batteries, etc.). This would reduce the amounts of these materials which are deposited illegally in the landfill without our knowledge, or which are dumped or poured into the ground in our region. The construction costs for the stump dump are also up this year. Budget drivers include:

Stump Dump Construction: $7,000 Increase
Hazardous Waste Pickup: $6,500 Increase
Recycling Center (Labor): $4,125 Increase
Recycling Center Baler: $4,000 Increase
Engineering: $4,000 Increase
Road Maintenance: $2,250 Increase
Contracts (Rubbish and Landfill) $1,905 Increase
TOTAL LISTED: $29,780 Increase
(Decreases include less for tire and white good removal, less for Stump Dump engineering, less for reserve fund, and less for operations at the landfill)

Employee Benefits – Up $9,237, or 9.49%

The largest increase in cost here is for health insurance, which went up 8% this year and I have budgeted for 15% next year. Health insurance premiums change at the beginning of the calendar year, therefore giving us two different rates for each half of each fiscal year. The other increase is for Social Security (higher wages, higher FICA contributions). All other costs are descending or holding constant. Budget increase drivers include:

Health Insurance: $8,629 Increase
Social Security: $2,900 Increase
TOTAL LISTED: $11,529

Shaw Library – Up $2,779, or 5.76%

A detailed listing of the proposed increase for the library is listed in the appendix as provided by the Library Board of Trustees. I have reduced their request to an even $51,000, down by $257, in an effort to contain costs.

Unclassified Accounts – Up $87, or 0.36%

Although this entire appropriation is down by $113, Economic Development is up by $1,100. This account has been funded in recent years by the proceed from industrial park lot sales. There are not many lots left to sell. I believe $1,100 could cover the expenses for business attraction intended for this summer (e.g., hosting businesses from Quebec).

TOTAL NET INCREASE IN EXPENDITURES AS PROPOSED: $127,839

County Tax – Up $41,367, or 21.28%

Since the Town's state valuation increased by over $17 million, and since the County Budget increased by about $10,000, Greenville's share of the County Budget has gone up dramatically. I have included in the appendix some information about other Town's and their state valuations. Clearly we are one of the fastest-growing state valuations in the County.

DEPARTMENT ACOUNTS – REVENUE

Surplus – Down $50,000, or 47.62%

This is the largest hole in our revenue bucket. Although our listing of unappropriated surplus in the past showed an extra $233,000, this money was in fact appropriated in 2000 for the purchase and renovation of the current Public Works Garage /Recycling Center. Last year's spending from surplus (listed below) was based on having over $480,000 in unappropriated surplus. Poor communication between the office and the auditor resulted in this misunderstanding. We expect to begin FY2003-2004 with only $115,000 in unappropriated surplus. We cannot afford to take more out of this than $55,000. I have discussed taking this much out with the auditor and he concurs that it should not be more than this. The expense breakdown is as follows:

Unappropriated surplus (as of July 1, 2001): $480,672.07
Public Works Garage Expenditure (June 5, 2000 TM): ($233,990.25)
Donation to IF&W Rescue Boat (Special TM 10-16-02): ($2,500.00)
Water / Sewer Line Project in Ind. Park (Special TM 10-16-02): ($40,000.00)
Off-Set Taxes (June 2, 2002 Town Meeting): ($105,000.00)
Municipal Building Reserve (June 2, 2002 TM): ($15,000)
TOTAL BALANCE EXPECTED JULY 1, 2003: $84,181.82

This balance will increase by $40,000 if the water / sewer line project funds are not expended or carried forward by June 30, 2003.

Revenue Sharing – down $9588, or 6.53%

Total sales tax revenue is down state-wide, and there has been a cap placed on the total which may be distributed to the Towns. This figure represents the latest estimate, which I am sure will change before Town Meeting.

Vehicle Excise Taxes – up $7,000, or 2.64%

Although the economy is sluggish, people still seem to be purchasing new or newer cars, especially with interest rates being low. We typically increase this revenue line by $15,000 to $20,000 per year. I have kept it to a conservative $7,000 this year, and will hope actual revenue in this line will exceed our expectations.

Town Clerk Fees – Flat funded.

This doesn't seem to change much. I have kept it constant.

Lien Charges – Flat-funded.
Building Permits – up by $500, or 6.67%

Last year we increased the fee amounts by 10% across the board, and removed the cap on the total cost of a building permit. The number of building permits continues to climb. I estimate a $500 increase as a minimum.

Fire Department Services – up by $7,134, or 28.16%

Two factors have driven up this revenue line: the addition of Frenchtown Twp. to the total building valuation used to calculate the percentage cost borne by Piscataquis County for our budget, and the increase of $12,500 in the reserve account line for the budget.

Police Department Services – flat-funded.

We received more than anticipated last year due to some donations which came in. We typically receive at least $3,000 from Beaver Cove for calls to their Town. I have left this at this amount.

Airport Revenues – up by $8,300, a 100%+ increase.

Last year, we did not use revenue from hangar leases or airplane excise tax to off-set taxes. Rather, these funds went directly into the airport projects reserve account. This year, I propose a larger-than-usual appropriation for the airport reserve. I do not think we can afford to NOT off-set this appropriation with these airport revenue. Therefore, it is included here.

Landfill Reimbursement – down by $1,606, or 1.96% decrease

This amount is directly related to the total landfill budget, which has decreased this year. 41% of all landfill costs are borne by outlying communities; this figure represents the result of that calculation, utilizing the landfill budget as proposed.

Recycling Reimbursement – up by $15,886, or 150.46% increase

This amount reflects 41% of the cost of a larger recycling center budget from last year.

Recycling Revenue (NET) – flat funded at $9,500

Even though our volume of commodities has increased, the average price for these commodities has been in decline. I expect the prices will rise this summer (they have risen some in the past 30 days). I recommend flat-funding this line, and hoping to have our expectations exceeded.

Boat Excise Tax – down $800, or 8.60%

We have not seen as much revenue in this line yet as we expected this year. I believe the economy is impacting the number of boat registrations. I believe this estimate is conservative.

Tire / Appliance Disposal Fee - down $2,500, or 62.50%

We have not seen as much revenue as expected in this account line because far fewer people are bringing appliances or tires to the landfill. Subsequently, our expense line for disposing of these items is also down. I believe $1,500 is an accurate estimate for next year.

Other (Veteran's & Tree Growth Exemptions, etc.) – flat funded at $25,500

Changes in this line would likely be the result of legislative action to cut these programs. I do not believe this will occur for Tree Growth or Veteran's Exemptions.

TOTAL DECREASE IN MUNICIPAL REVENUES (Projected & Estimated, 3-7-03): ($25,674)

Total expected Mil Rate increase, including increase in municipal expenditures: $127,839

County Tax: $ 41,367
Decrease in Municipal Revenue: $ 25,674
TOTAL: $194,880
1 mil = $144,859 (using 2002 assessed value)
Total mil rate increase WITHOUT County Tax (Municipal Expenses ONLY)
$153,513 / $144,859 = 1.059 mils
WITH County Tax
$180,315 / $144,859 = 1.3453 mils