POWER OUTAGE UPDATE, MONDAY 12/15

MY CELL # FOR ANY QUESTIONS: 978-387-2031.
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Monday December 15, 2008 – Following is the Monday Evening update on the Amesbury Power Outage.
FREQUENTLY ASKED QUESTIONS
National Grid is still working in Amesbury to restore power. They continue to work on main lines this evening, with the anticipation of finishing them by morning. Then the crews will focus on side taps Tuesday and Wednesday. Any restorations expected for this evening will be complete by 8:30PM.

Residents are asked to check in with elderly and disabled neighbors to ensure they are safe and to share with neighbors this information about what to do if they are without power.

If power is out for a few houses on a street, though the rest of the street seems to have power, the issue may be damaged lines to the house. Residents should report any addresses without power to National Grid at 1-800-322-3223 for service. The line has multiple messages about only accepting emergency calls. However if you stay on the line you will receive service.

Damaged wires from the weather head (the elbow-shaped pipe wires from the pole go to) to the meter and meter to the service panel are the resident’s responsibility. The resident will need an electrician to repair any damage and receive an Electrical Inspector’s sign-off. Once the Inspector has signed off, National Grid is notified to restore power to the address. For Electrical Inspections during non-business hours call (978) 388-1333. Residents should still report any addresses without power to National Grid at 1-800-322-3223 regardless of where the damage may be.

The Middle School shelter is closed at this time. If a resident requires shelter until their power is returned they should contact the Emergency Operations Center at (978) 388-8155.

Residents with gas-powered water heaters must contact their gas service provider to restart their water heater. Please use National Grid’s Gas Emergency line at 1-800-377-5325 or at 781-466-5280 to schedule a technician.

Water breaks may occur as frozen pipes thaw. Residents should contact the Emergency Operations Center at 978-388-8155 for assistance with pipe breaks.

Tree limbs may be taken to the compost facility. The facility will be open 8AM to 3PM each day through December 21st. Tree limbs should be no larger than 3 inches in diameter. The sticker and brush card requirement is being waved for this week.
For additional information contact the Emergency Operations Center at 978-388-8155. The EOC will remain open through the evening and is staff around the clock.

Should Amesbury Keep Its Yard Waste Dump?

Regarding the compost dump, I have a few thoughts, which I've communicated to the Mayor. The question of moving the dump is an administrative one and so really beyond the Council's authority (it was not a part of the recent vote to allow the Mayor to enter into an extendable 5 year recycling contract) but that doesn't stop us from asking questions and being able to advocate about it. It's really a question for each Mayor to sort out and Mayor Moak may make this a moot point if he doesn't agree to the deal.

For me, there are TWO competing concerns on this whole issue: Cost Savings vs. Convenience of Amesbury Residents.

First, financial. We all know that bad times are here and more bad times are coming, so costs will need to be cut wherever they can be. The compost dump operates at a loss, when you look at fees collected versus direct costs (gate-keepers, on-site toilets, DPW staff and equipment time to move and turn material) and indirect costs (fringe benefits, etc for that personnel). Amesbury would basically be 'outsourcing' these costs to Newburyport and paying a lump sum to them (and residents would continue to buy stickers for there, rather than here). So, there is the opportunity for some modest savings by doing this. In terms of Cost Savings, it's a 'no brainer' if we save money. (And let Newburyport decide for itself if it's a good deal for them or not.)

One the other hand, there is the issue of having this service available to residents as conveniently as possible. I spoke to the Mayor about this issue and part of his thinking is to ask "Is processing yard waste a core function of local government?" This is a good question and should be asked about ALL the functions of local government, to make sure that we keep focused on core services. I DO think that the removal of household waste (like sewage treatment) IS a core local government service. I am NOT as sure that handling yard waste is a primary function of local government, and so will be a LOW priority when considered against, say, public safety and education.

So, should we lose money on a service that is not a primary function of government? I'm inclined to say NO, which either means raising the fees to cover the true cost of the service or buy the service from someone else (e.g. Newburyport). As it stands, the service is offered on the backs of residential and business taxpayers.

That said, the cost of operating the compost is small in the picture of the whole budget and the perceived value of the compost service is HIGH. About 1/4 of the households in Amesbury have stickers for the dump. For those that use it, it provides a very convenient service. My wife and I use it often, throughout the season its open. With a tiny yard, I would have no where to compost waste on my own property. SO, when you balance Cost Savings against Convenience and Value to Amesbury Residents, it is probably worth continuing to provide the service directly to the community.

I've requested more financial information from the Mayor about the costs of keeping the dump in Amesbury vs. using Newburyport. If the true cost to us is minor, I'd support keeping it here. We'd still have to come up with an alternative site, because I think most folks also agree that keeping it in the cemetery is not a good option.

UPDATE: The Mayor's office has produced a report analyzing the costs of maintaining vs. regionalizing the yard waste site. It also discusses alternative sites in Amesbury. CLICK HERE to read the report.

November 2008 Mayor's Report

CLICK HERE for a copy of the 11/04/08 Mayor's Report.

Included in this report is information about:

*Personnel Compensation and Classification Study update

*Microfab Site update [CLICK HERE for federal EPA Info on this site]

*Budget Review

*Ongoing and Upcoming Road Projects

Split Rate/Tax Classification Workshop Schedule

At our November 18th Council meeting, we received the annual tax classification measure from the Mayor.

We will take up this measure at the December 2nd Finance Committee meeting, with a special Tax Classification Workshop to precede the meeting.

The workshop is at 7:00 p.m. and the Committee meeting at 8:00 p.m. I encourage all who have an interest in this matter to attend both the workshop and the committee meeting.

Amesbury's tax rate is currently divided, with residents and commercial/industrial tax payers paying different rates. Commercial/industrial properties are taxed at a rate 15% higher than residential properties. As you may already know, I have opposed raising commercial and industrial property taxes. Here is the agenda:

Finance Committee Agenda
Tuesday, December 2, 2008
Town Hall Auditorium
7:00 PM

Roll Call

Classification workshop

Public Hearings:
2008-095 An Order to request the Municipal Council vote to hold the annual Classification hearing to vote on four (4) separate items in order to establish the tax burdens for each class of property.

2008-096 An Order to request the Municipal Council vote to increase the exemption amount of qualified applicants.

2008-100 A request that the Municipal Council vote to declare as surplus a municipal vehicle belonging to the Department of Public Works.

Adjourn

UPDATE: CLICK HERE to read the Annual Tax Classification Report produced by the Assessor's Office.

As many of you might already know, I strongly opposed the 2006 and 2007 Council decisions to split the property tax rates and raise taxes on commercial and industrial properties. I will be reviewing the information provided by the Assessor and remain inclined to bring Amesbury back towards a single tax rate for all properties.

Busy Election Morning!

Long line at Town Hall this morning, first thing today. Always great to see people enthusiastic about exercising their right to vote!

No on Question 1

Please consider voting NO on Question #1 on the November 4th Ballot. Eliminating the income tax would eliminate about 40% of the Commonwealth's revenue. Taking regional schools into consideration, Amesbury would lose about $15,500,000 in annual aid from the state. The effects on public education, public safety and infrastructure in Amesbury would be extraordinary, not to mention state-wide cuts to the wide variety of public services provided (mental health, public health, children services, elder services, veterans' services). For detailed information on the effects in Amesbury, go to: http://votenoquestion1.com/towns.

Negative Free Cash for FY08 - What Does It Mean?

There have been some articles in the Daily News lately that have raised some alarms in the community. The Commonwealth's Department of Revenue recently certified Amesbury's 2008 financial records. This included a certification that Amesbury had "negative Free Cash" at the end of the year. Now, we usually have positive Free Cash and have used it to put $$$ in the Stabilization Fund, pay for over-budget snow and ice removal costs and other mid-year expenses.

What does this mean, "negative Free Cash"? Sounds like we ran a deficit. The bad news is that we won't have any unrestricted ("Free") money available through the rest of the year rolled from 2008, which only makes our outlook through the remaining 8 months of the fiscal year all the more challenging (see post below about budget cuts). The 'good' news is that this does NOT mean that Amesbury ran a deficit last year. In fact, we ended the year with positive revenue over expenditures, after adjustments.

The "Free Cash" calculation is complicated. The Mayor gave a presentation to the Finance Committee on 10/28/08 to clarify where we stand. You can CLICK HERE to view the PowerPoint presentation that Mr. Kezer gave us. Even though we ended the fiscal year with a positive balance, we have to deduct several MAJOR costs from that balance. First, there is property tax revenue that we have figured in the FY08 budget that has not yet been paid. This means that we have to account for it as if we will NOT ever collect it, so we deduct it from our positive balance. As of June 30, 2008, this was $763,100. Next, we have to set aside even more $$$ to cover possible loss of revenue from property tax abatement requests, called the "Tax Overlay". This is about $500,000. Then we have to set aside $600,000 for taxes due on the abandoned Microfab site; we may never get to collect those taxes, either.

So, even a $977,000 surplus gets captured and seized up by these different liabilities. As we collect the rest of that $763,000 in property taxes due, we will get to credit that towards this year's Free Cash estimate at the end of FY09. And if we may not have to cover $500,000 in tax abatements, so that $$$ would free up, as well. The whopping $600,000 that we have to basically escrow to cover Microfab taxes due will continue to be a big drag on our bottom line, until that property and its environmental damage gets cleared up and sold. In accounting terms, these are "liabilities" that we either will have to pay later or are revenue we may not collect, so we have to budget funds to cover them.

Clear as mud?

Looking forward to the FY10 budget, one thing we can improve is eliminating our reliance on Free Cash to inject money into the Stabilization Fund and cover Snow and Ice Removal when it goes over. We routinely under-budget that amount and should not assume that we'll always have a positive balance. Also, I wonder if the $763,100 delay in over-due property tax payment is either a sign of increasing inability to pay AND/OR a function of foreclosed properties (where taxes don't get paid until the property finally resells). If so, this means we will have this problem again at the end of FY09, carrying more past-due taxes.

Capital Improvement For Police and Fire Departments

The Mayor has recently brought 2 capital improvement requests for the Police and Fire Department buildings to the Municipal Council, including one for $600,000.I fully support them both.

The first one has already been approved and is rolled into a second request, which the Finance Committee voted to recommend for approval at our 10/28/08 Meeting. You might recall that in 2006 the Mayor requested about $80,000 to grind and re-point the exterior of two sides of the Police Department building on School Street. After much arm-wrestling, the previous Council approved only $60,000 for the work. Unfortunately (and as was apparent at the time), this was insufficient funds to make the necessary repairs.

The building was leaking and the City used a portion of the funds (about $12K) to apply a temporary chemical seal to the exterior of the building, putting off the real needs of the facility until a new request for funds could be made. In the meantime, the building's heating system failed. The Mayor requested that the balance of the original appropriation (about $45K) be allowed to be used to help replace the heating system. (The Mayor had to get approval to use those monies for a purpose other than re-pointing the brick exterior.) We approved this request at our October MC meeting.

The Mayor then brought a large-scale request to the MC to comprehensively address the exterior and heating/cooling needs of the Police and Fire Department buildings. This request is for a $600,000 bond to finance the grinding and re-pointing of brick exteriors, the replacement of 36 windows with energy efficient units, the replacement of HVAC units in both buildings and the repair of the roof at the Fire Station.

It is important to note that this is a bond request, meaning that we will be borrowing the money for a 15 year term, rather than paying it out of a single year's budget. This is how all major capital improvements should be handled, spreading out the cost of the work to all of the 'users' (meaning, taxpayers) of the asset, including future ones. Amesbury enjoys a relatively low debt service-to-budget ratio and thus is in a good position to absorb this cost in its budget.

On 10/27, a number of us Councilors took a tour of both facilities at a posted meeting. This included a visit to the roof of the Firehouse. I can say in very good conscience that the building is in bad shape and it is in the taxpayers' best interest to invest in these properties and protect these major City assets. Here is just one (cell phone) photo from the tour, to give you an idea of the bad shape they are in:

Click HERE and hit the 'ready-only' button to see a whole Slideshow of photos. There were signs everywhere of extensive water infiltration and damage, especially in the Firehouse.

It is worth noting that these repairs were prioritized at the top of the list in this years Capital Improvement Plan (2009-13). This is one of the first things that I checked. It is good to see the CIP working as it should, to identify, prioritize and schedule funding for our capital needs as a community. Maintaining and investing in public facilities is also a priority of the Master Plan.

2nd Quarter FY09 Budget Cuts

At the October Council meeting, Mayor Kezer proposed $125,000 in budget cuts for the current year: $100,000 from the waste removal/recycling budget and $25,000 from Insurance. The good news is that there is room to cut these amounts from each line item without any change is services to the community. The bad news is that these cuts are a taste of things to come. Local revenues are principally made up of property tax and excise tax collection. Excise tax is variable and depends on the value of property subject to excise tax. As I noted back in January 2008, all of Massachusetts is experiencing a dip in excise tax, as folks put off buying new vehicles, making the taxable base go down. Amesbury is experiencing its share of this, with a decline in excise revenues.

Worse, the Commonwealth is experiencing significant drops in tax revenue collections, due to the downturn in the economy. As economic activity slows down, incomes dip and capital gains decline, the tax revenue from these sources will go down. In mid-October Governor Patrick announced wide-ranging 2nd quarter budget cuts. For the moment, local aid to cities and towns was spared any cuts. But as the downturn continues and the Commonwealth has more revenue drops, it is a real possibly that local aid cuts will be made.

You can read the Mayor's 10/14/08 letter to the Municipal Council about this situation by clicking here.

Energy Task Force Established

At the October Municipal Council meeting, we established an Energy Task Force. It is charged with reporting back to the Mayor and the Council with specific recommendations regarding municipal energy use. This is a time limited Task Force, with a commission ending at the end of December, 2009.

Here's the heart of the measure:

3. The Task Force shall report to the Municipal Council and the Mayor regarding the following:

a) Strategies to reduce energy costs of city-owned facilities and vehicles through energy efficiency and renewable energy measures, including strategies to conserve electricity, vehicle fuel, natural gas and oil and identify cost-saving measures, such as performance management contracts or use of bio-diesel fuels;

b) Develop city-wide programs and measures to promote and facilitate smart energy strategies for Amesbury citizens, including energy saving programs and renewable energy generation projects on both public and private real property; and

c) To accomplish the above, identify state and federal grants and resources such as the Massachusetts Technology Collaborative, UMass Amherst’s Center for Energy Efficiency and Renewable Energy, the Executive Office of Environmental and Energy Affairs, the Department of Energy Resources and the Department of Environmental Protection to accomplish these goals and assist the city in applying for and implementing such grants and resources.

The Mayor is accepting applications now for this Task Force. You can find an application HERE. Please consider joining this and other Boards and Committees.

Eminent Domain & the Governor's Veto

Earlier this week, Governor Patrick vetoed the Eminent Domain bill that had been approved by Amesbury voters last November and approved by the MA legislature in late July. The Legislature had to vote on this bill because it represented a change from state-wide laws governing eminent domain and so was a 'home rule' petition. On 8/6/08, I sent a letter via email to the Governor expressing opposition to this bill and encouraging a veto. I always like to explain my positions on things and since my letter was in opposition to a measure that passed at the polls, I especially feel the need to explain myself.

Click here to read the original measure that passed at the polls.

Click here to read the Governor's veto letter.

And click here to read my letter to the Governor (typos and all). (Mayor Kezer and Councilor Neale also sent letters to the Governor.)

'Eminent domain' is the power of the government to take private property for a public purpose, even if the property owner objects. The primary purpose of Amesbury's Eminent Domain bill was to limit the 'taking' of property for economic development purposes. This was done in response to a 2005 US Supreme Court Case, Kelo v City of New London CT that infamously allowed the City of New London to take property for the purpose of putting up a mall, on property that was not 'blighted' and to be developed and owned by a private developer. Some states and communities have responded by making this type of taking difficult or impossible.

As you can see in my letter to the Governor, my objection to this measure was NOT with the limitation on taking for economic development but was ONLY with one part, but it's a significant part--the very first paragraph. In it, the Municipal Council is given absolute powers regarding all eminent domain issues. This might seem like inside baseball but its an important point. Massachusetts General Law distributes eminent domain power in a variety of ways, to legislative bodies, to commissions, to certain public corporations, etc. This granted authority is really related to the purpose for which property might be taken. So, a part of why this bill had to go to the Legislature and to the Governor is that it over-ruled this distribution of authority and gathered it all to the Municipal Council in Amesbury.

Currently, the Mayor has eminent domain power in Amesbury in relation to water/sewer and road betterments (mostly rights of way issues, expanding sidewalks and intersection profiles, that sort of thing). These types of takings represent the vast majority of all eminent domain activity in Amesbury and in the Commonwealth. A 2001 study by the Pioneer Institute, a think tank in Boston with a libertarian bent, stated:

Out of all the data that we collected, 53 percent of all takings were for road repair and road building. This has been the leading category since colonial times. Almost all the remaining takings were for traditional government purposes: municipal services, conservation, public transportation, public utilities.

I firmly believe that the primary purpose of this bill could have been met without making this other move to grab all eminent domain authority for the Council. In fact, when the last Municipal Council put this measure forward last year, the Mayor vetoed it based on legal advise from Town Counsel and offered a reasonable compromise bill that kept the protections around takings for economic development and removed the first part. The Council did not accept the Mayor's compromise bill, putting the original bill on the November ballot instead. You can read the Mayor's proposal and the legal opinion here. The Governor's veto does not close the door on this issue but rather gives Amesbury the opportunity to handle this issue is a measured way. As a member of the recent Charter Review Committee, I can say that we spent a lot of time trying to clarify the different powers of the Council and the Mayor. This vetoed bill undermines that whole idea and is an unnecessary power grab on the part of the Council.

Bartley Machine Building - Lower Millyard

Other Councilors and I have periodically received questions from folks about the Bartley Machine Co. building in the Lower Millyard and whether or not it would make a good site for relocated Town offices and perhaps even the Library. It's a good question and I'm glad folks are thinking about alternatives for Town offices and for better Library space. Bartley Machine has been public about selling the property for development. That said, I don't think that the Town buying the Bartley Machine property is in the cards.

This is true for 2 reasons, mainly. First, the asking price. BMC is seeking $8.28 million for the property. Even if the Town bought the property, it would likely have to spend millions more building out and adapting the industrial property to other civic functions. Such a project would dwarf the rejected costs of redeveloping the current library site. The second reason is connected to the price: the potential for dense mixed-use commercial/residential development at the site.

The property is in a special 'mixed use' overlay zoning district in the Lower Millyard. This means that BMC can sell the property for uses other than its current use for light industrial manufacturing. The overlay district actually adds value to the property beyond its current use, since it opens this (and other) lots up to development for dense commercial and residential development in the village center. This is all part of a larger plan for the Lower Millyard that the Town developed a number of years ago. The zoning overlay district was put in place to enable this mixed-use development.

The Bartley Machine Company has partnered with a real-estate firm to develop this property along the lines of this vision of mixed-use, dense development. You can see their plans for the site at: http://www.reinvestinc.com/amesbury/. This is part of the larger picture of relocating the DPW away from the Lower Mllyard (this will help spark new development down there) and putting in the new Transportation Center/Senior Center in the Lower Millyard.

So, in theory, the BMC building is definitely worth consideration for relocated Town services. Practically, though, it is both too expensive and not the best use of that revenue-generating property.

Governor Patrick's Visit to Amesbury

The turnout was great for Governor Patrick's visit to Amesbury last week. A few photos.

Roads and Sidewalks Workshop

Last night, July 23rd, the Master Plan Implementation and Oversight Committee hosted a public workshop, focused on 'Roads and Sidewalks'. Department of Public Works Director Robert Desmarais spoke. Despite the extreme thunderstorm that passed by, there were about 30 or so folks there, including a few current and former Municipal Councilors.

Mr. Desmarais talked about how the Town approaches road and sidewalk maintenance and repair. With the recent decision to take out a $15 million+ bond on water treatment and water line upgrades, we've taken a good step to start catching up on deferred investments in infrastructure. He identified about $66 million worth of needed infrastructure work:

*$17 million in Roads
*$14 million in Sidewalks
*$10 million in Drainage
*$20 million in Water
*$5 million in Sewer

And here is what we have budgeted for annual repair and maintenance work:

*$75,000 for Sidewalks
*$85,000 for Engineering
*$60,000 for Drainage
*$30,000 for Roads

Now, on one level, this makes some sense. For long-lasting major capital costs like water works, roads, and drainage systems, investment expenditures should be spread out over many years, just as benefits. So, major road or system work wouldn't be paid for out of the operating budget in one year but rather in long-term loans or bonds. That's what the Town did with the big Water bond this Spring, make a big investment through a low-interest, long-term bond. Still, $250,000 for all road and sidewalk work doesn't go to far even just for maintenance. If the Town wants to make progress with the backlog of work above, then it will need to consider making some major investments, which of course means $$$ and burden on the tax-rate. The eternal trade-off. There are options outside of an over-ride for this, such as using a debt exclusion, as our neighbors in Newburyport will have on their ballot this year for similar big investments in road repair.

Mr. Desmarais also talked about how the DPW approaches road maintenance. In line with one of the recommendations from the Master Plan, the Town is instituting a 'pavement management' plan takes an organized approach to approaching road repairs.

The need for some serious --- meaning expensive --- repairs is clear. As with the Water Bond bill, the big question is what can we afford and when, in terms of timing new with current debt. But the longer we take on it, the more it will add up.

My Comments for the 6/18/08 Final Budget Approval Meeting

I was unable to attend the meeting at which we approved the FY2009 Municipal Operating Budget, though I had been able to attend 5/6 of the 20+ hours of hearings that we ran. Here are the comments that I submitted in my absence.

Fellow Councilors and members of the public –

Unfortunately, I am not able to attend this evening’s meeting, due to a long-standing commitment. However, I would like to offer a few comments regarding the important matter before the Council this evening—the approval of the FY2009 budget.

I support the final recommendation of the Finance Committee to approve a budget of $51,303,134.

Sitting as the Finance Committee, we had the opportunity to go through the budget line by line over 6 evenings and many hours. I thank the members of the public who joined us and the Town employees who took time to answer our many questions.

The public schools represent about half of our total municipal budget. I was very impressed by the School Committee’s work on its budget. The School budget was organized around specific educational goals that set clear priorities that guided the Committee’s decisions. The School Committee’s process was a model for budget-making under tough constraints for other departments in Town. Their work gave me strong confidence in the soundness of the School budget.

There are a number of items in this budget that have received a bit of public attention, most having to do with salaries. Since what a Town does is provide services to its citizens, salaries are what drive the budget. However, it is only a handful of salaries that have received any attention, maybe even only one salary, that of the Chief of Staff.

It is important to look at salaries, along with other elements in the budget, in the big picture. In the School, DPW and Police budgets especially, we saw efficiencies put in place that will save the Town money while hopefully enabling it to provide better services. These efficiencies are the result of investing in quality personnel who can analyze our municipal operations and make effective decisions.

Part of our responsibility on the Council is to gauge the success of the Town departments in managing and delivering quality services to the citizens of Amesbury. From our schools to our library, from the Department of Public Works to Veterans and Youth Services, I saw substantial evidence of directed and planned activities and services. With very few but reasonable exceptions, Departments ended their year at or under budget and with substantial accomplishments.

Looking ahead, Amesbury will surely have a hard time next budget season, as we run right into our budget cap under Proposition 2 ½. We may face the prospect of an over-ride next year; but that remains to be seen. For this year, however, this is a responsible and thoughtful budget, representing lower budget from the previous year than the budget approved last year by the Municipal Council, in relation to the prior year’s budget. I commend the Administration and the School Committee for effectively controlling costs and finding efficiencies in operations and I urge the public to support and my fellow Councilors to approve this budget.

Roads & Sidewalks - Master Plan Workshop, July 16th

The Master Plan Implementation and Oversight Committee is hosting the second of a series of workshops on July 16th, 6:30 p.m. at the Cultural Center in the Upper Millyard. Here is the complete Press Release. DPW Director Rob Desmarais will be talking about how road and sidewalk maintenance and improvements are planned and funded.
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Roads & Sidewalks Workshop Scheduled

The second in a series of workshops hosted by the Amesbury Master Plan Implementation and Oversight Committee (MPIOC) has been scheduled for Wednesday, July 16, 2008, 6:30PM at the Amesbury Cultural Center. The July workshop will focus on Roads and Sidewalks, a critical portion of the Capital Improvement Plan.

The workshop is for the benefit of the citizens and is open to all. Robert Desmarais, Public Works Director, will present information on principles of sidewalk and pavement management, classification of roads and sidewalks in the city, sources of funding for maintenance, management and improvements, and the methodology for developing and maintaining the annual list of projects. A discussion session will follow the presentation and opportunities for additional follow-up will be addressed. Councilor Jonathan Sherwood will moderate the discussion. Light refreshments will be served.

Amesbury’s Master Plan calls for a number of activities related to roads and sidewalks. Specifically the Master Plan sets out goals including prioritizing improvements to streets and sidewalks so as to improve efficiency of infrastructure and maximize potential for planned growth in the village core, and to establish and fund Best Management Practices for all infrastructure elements. Additionally the Master Plan calls for a review of options for pavement management contracts and greater emphasis on preventative maintenance to roadways in fair to good condition and a logical program for the rehabilitation of poor roadways.

The MPIOC is planning a total of four workshops for the 2008 calendar year covering topics directly related to Amesbury’s Master Plan. The first in the series, held in March, focused on Economic Development and was well attended by citizens and businesses in the community. Workshops are being planned for the fall and winter with topics still to be determined.

For additional information about the workshop or the Master Plan, contact Nipun Jain, Town Planner, at 978.388.8110 or at Nipun@amesburyma.gov.

Mayor's June 2008 Report to the Council

Click here to read the Mayor's June 2008 report to the Municipal Council.

Budget Questions & Answers, w/ former Councilor Alison Lindstrom

Below is an exchange that I recently had with former District 6 Councilor Alison Lindstrom. I think it's important enough to include here, her email followed by my response:

-----Original Message-----
From: AML [mailto:aml@itsjustart.com]
Sent: Fri 6/6/2008 2:07 PM
Cc: Anne Ferguson; Allen Neale; Joseph McMilleon; Jonathan Sherwood; Mary Chatigny; Robert Gilday; Robert Lavoie; Roger Benson; Stephen Dunford; Macone (Daily)
Subject: Question from your last regular Fin Com meeting Part 1


Hi all,
Not standing on formality this is just too lengthy, I have more questions but this is a start.

Questions resulting from the May 27th Fin Com Part 1
First, I just can't express how generous last year's budget was so any over spending is highly suspect. Second, according to Mass Finance Law it's illegal to intentionally overspend a budget and this relates to the mayor's aide salary and the new cruisers. Third, the last council pushed for money in the stabilization fund.
.
2008-031: Grant for Summer Youth Program:

032: Surplus Vehicles: Alan Neale asked Kendra if this will create a need for more vehicles. Response was Yes it could surplus vehicles were from Public works.
1. How many new vehicles did the DPW purchase or lease in the last 2 - 3 years?
2. How many vehicles has the town purchased or leased in the last 2 - 3 years?
3. What is the cost for maintenance of the 'special use' units? Why do we have those? Does Amesbury use them in town or to aid other communities (reciprocal aid)? What is the cost?
4. How many employees receive free gas for their private vehicles? Why? How much is this costing us?
5. How many town owned vehicles go home with employees? How many private vehicles does Amesbury use?
6. Including the school department, how many vehicles does the town own, lease, and/or maintain?
What is this cost?

036 : Tansfer from the Youth Fund to cover expenditures through the balance of 2008
Mayor is requesting $20,000 to cover the cost of the Life Guards for last summer ($12,000) and the cost of reinstating the Middle School After School Program ($8,000) Youth Fund usually collects about $170,000 which then goes back into program
The Youth program is supposed to be self funding, an 'enterprise fund' (a private fund specifically for the youth program nothing else). What is this request about? The '08 appropriation plus the program's income had money for the lifeguards and the After School Program (parents pay tuition for this program as well). Why was money taken from anywhere else? Where was it taken from? Where is the appropriation from the enterprise fund going?

037: Transfer from Ambulance Fund
Need to transfer $91,000 from ambulance fund to cover 3 on the job injuries. All three employees needed surgery so the money covers medical expenses and overtime to cover shifts. Brickett hopes this will cover it but isn't sure. Roger asked if on of those was hit by another employee. Response: Person on his motorcycle responding to an ambulance call did get hit by ambulance.
What type of health insurance does the town carry where the town budget pays for medical expenses?
What is the true cost of our ambulance service now that we are servicing S. Hampton, Salisbury and sometimes Nbypt?
How much was the fire overtime budget overspent? Were all injuries on the job? How could the firefighter on the motorcycle have been on the job if he hadn't clocked in? Doesn't the ambulance have liability insurance for hitting people? Why didn't that cover the expense? How much higher has our workman's comp insurance risen in the past 3 years?

038: Transfer from free cash for snow and ice


039: Transfer between General Department funds to cover expenditures Money from Employee Benefits to cover various departments to get them through year.
Mayor - $6,000 to cover shortfall of salary for chief of staff. Last council KEPT aide's salary at $46,000 at previous aide's salary. The reasoning was a job description change.
If the benefits account had such a large surplus again and could pay for all this and then some means the tax payer was overcharged by a tremendous amount. This seems to be a consistent theme.

1. The council appropriation for that salary was for $46,000. Overspending that amount is a violation of state law. Where else did the Mayor ignore the last council's vote?

2. The Town does not have a 'Deputy Mayor', the Mayor's "aide" Section 2-2 of the Charter states: "The mayor may appoint one or more qualified assistants to aid in the performance of official duties." Wouldn't creating the "Deputy Mayor" be a position and as such a reorg as in Sec 6-1 (a)(2) of the Charter? Just like the DPW reorganization which will cost us plenty.

Treasurer $7,000 tax attorney for tax titles: Why so much more? How many tax takings? How many compared to other years? Is there a message for the town in this?

Legal an additional $30,000 40 B cases - $40,000 was just approved 2 months ago. What is the total overspending of the legal budget? Have you seen the bills? How much has Urbellis' bill increased?

$5,000 Municipal Building need AC repaired last summer - What about fans? What is the energy savings?

$97,000 for Police Department $85,000 vehicle purchase of leases and $23,000 for dispatcher phone services
1. How did the money for the cruisers get spent without appropriation if it wasn't used from within the police budget?
2. How much is left in their $511,000 overtime budget (this budget does not include traffic details)?
3. 1 1/2 years ago the police spent $300,000 on the new dispatch center. It included 3 climate controlled communication units. (They had requested 2 but bought 3) Why is there a new $23,000 telephone bill for this brand new center? This is unbelievable!

$23,000 Veterans Benefits which we will get some back - how much this year? Money was just approved for this a couple of months ago, How many more veterans do we have?

We are headed down a very bad path. Let me know your thoughts.


--
Alison M. Lindstrom
EotU
New Horizons art & design
Amesbury, MA 01913
www.ItsJustArt.com
Vita brevis, ars longa. Hippocrates

+++++++++++++++++++++++++++++++

Sunday, June 8, 2008

Ms. Lindstrom -

thanks for your questions and comments regarding various items recently recommended for approval by the Finance Committee. You raise a few important points, some 'big picture', some specific. I'd like to take the opportunity to respond and highlight some philosophical differences that I find and that are worth noting.

You note that the previous Council approved the transfer of funds into the Stabilization Fund. As an observer during last year's budget process I was a) very pleased that the Town's management had been able to deliver a surplus at the end of the year and b) was very pleased that the Council approved the largest transfer into our Stabilization Fund that we've had (at least that I'm aware of). This is a very good thing and is a great *start* in adequately funding future stabilization needs. Though the previous Council supported last year's transfer, you seem to suggest generally that ending the year with a surplus represents a problem and that taxpayers were "overcharged by a tremendous amount." This point is worth exploring.

Perhaps you have not been in the position of developing and managing a large budget but it is a basic good practice that one should be 'liberal' in estimating costs and 'conservative' in estimating revenues. It is virtually impossible to end a budget cycle with every line item hitting its mark exactly. This is especially true with a complex enterprise such as a municipality. If the alternative to having 'overcharged' the public by running a surplus is having 'undercharged' them by running a deficit, I think we can agree which represents a better budgeting process. In fact, running a surplus, funding a stabilization fund and having free cash are all considered positives both by the DOR and by our bond raters, Standard and Poor's, with low reserves and free cash indicating a weak financial position and thus a weaker bond rating and thus higher interest costs for our debt. I quote from our most recent S&P analysis (7/26/07):

"The town's weak financial position, which has experienced limited improvement, constrains the town's long-term rating...Although financial operations remain stable, the town's financial position is weak, with below-average reserve levels. Fiscal 2006 closed with a modest surplus of $154,000 and an ending general fund balance of $1.5million, or 3.5% of expenditures, of which $1.4Million (3.2%) is classified as unreserved...According to the town, fiscal 2007 results were in line with budget; actual results did not deviate greatly from budgeted amounts, and town officials project an overall operating surplus of roughly $500,000."

Two important points there. First, a primary source of our weak position is the lack of a substantial reserve of funds to operate as a future buffer or stabilizer against either higher than normal expenses or lower than normal revenues. Second, S&P notes positively that for FY07 the town's spending came in within expected levels of +/- deviation that represent normal levels of business operation. Let's look at these more closely.

To the first point. I've said already that it is a good thing a) that we are generating a reasonable surplus based on good budgeting and positive budget management and b) that we are using that surplus to begin to adequately fund our 'savings' account. Just as it is smart for a household to have savings in place to buffer against unforeseen contingencies, it is smart for a municipality to do so, as well. It is only a bonus that this will also SAVE us money on interest costs, as a stronger stabilization fund positively impacts our bond rating.

To the second point. You raise the notion of 'overcharging' residents. This is certainly a possibility, but it is important to note that a surplus in any particular cost center does NOT necessarily equal an 'overcharge.' My approach to year end transfer requests and line item adjustments is to start with two questions: 1) On the line item being tapped for the transfer, was the excess monies available within reasonable limits? That is, does the excess represent a gross miscalculation, which might indicate bad forecasting, or does it fall within reasonable deviations from the value of the line item, based on sound management principles? 2) Similarly, does the line item that will be supplemented by a request also represent reasonable deviation from the cost center budget approved at the start of the year AND does the basis for the request reflect other positive management principles.

Let's look at an example. You mention the $169,000 tapped for transfer from the employee benefits cost center. I remind you that this cost center was funded last year at $4.44 million. This surplus represents a 3.8% deviation from the budgeted amount. Employee Benefits probably stands with Ice and Snow Removal as one of the most unpredictable cost centers in the budget. It is dependent on factors largely outside the town's ability to control, namely, whether employees join insurance plans as individuals, couples, or families. You might know from your own experience that as family members change jobs and as family compositions change, how persons enroll in insurance benefits can change on a dime. And as you many know, just the change from an individual to a family enrollment will change the *cost to the town* dramatically. I know that for my employer, their costs go up by over 100% if a person switches from individual to family plans. So, applying my litmus test to a cost center driven by ALL of the town's employees, I find that 3.8% is definitely within a reasonable margin for error. Now, if we were grossly over/under this mark, then there would be cause for concern about the town's management abilities. Since this is not the case, this overage--and the request to transfer out of this line--is reasonable.

Similarly I would apply the same standards to the transfer requests. For example, Veteran's Benefits. This perfectly illustrates the question. You note that a transfer from free cash was approved earlier this year. Indeed it was. What drives the Veteran's Benefits cost center? The number of eligible recipients of veterans benefits in this community. This in turn is driven by two things: the relocation of 'new' veterans into our community and the number of existing veterans that may have *become* income-eligible during the year. I remind you that there is a war on and that Amesbury as well as most communities have veterans from these campaigns returning. I also remind you that many recently discharged veterans return to the community with dramatic economic disadvantages. So, we have the equivalent of a winter of bad snow storms going on here. As the unpredictable number of eligible vets in the community rise, so will the required appropriation for this cost center. If this particular example says anything to me, it is that we should perhaps significantly increase this cost center for the FY09 budget, based on this trend. That said, we have statutory obligations to offer benefits, so as this number increases beyond our control, we must and will adequately fund this line item. Again, the bottom line is 'does this transfer request reflect bad management or is it reasonable, given its particular context'?

Thanks again for your note and for raising important questions. I hope you have a better sense where I stand on some of these issues, in terms of approaching the budget and the town's finances.

Jonathan Sherwood
Municipal Councilor
District 6, Amesbury Municipal Council
978-388-0152

Blog: SherwoodD6.blogspot.com

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Senior Center - Transportation Center Appropriation

Back in March, we had a request come before the Council for $60,000 to pay for architectural design work related to the new Transportation Center to be built in the Lower Millyard. Specifically, the request was to do design work for planned space that the Town will be leasing within the Transportation Center. The building will be developed and owned by the Merrimack Valley Regional Transportation Authority; the Town will be 'building out' the 2nd floor of the building for use as a new Senior Center. The space will also host other Town human service employees, such as Veteran's agent, Council on Aging, Youth Services. This would mean that most of the current offices in the Town Hall Annex and the Ordway Building would be relocated.

At our March 25th Finance Committee meeting, I raised a few questions about this appropriation request. I was less concerned about the specific request of $60K for design work as I was about the overall implications for our 'Municipal Campus' and the various building the Town uses for office space currently. The leasing of space in the Transportation Center will set in motion a chain of events about our facilities and it is extremely important that we have a solid, cost-effective and affordable plan in place before we start the dominoes in motion.

I wholeheartedly agree that the Ordway building is very inadequate to meet the needs of Seniors in our community. Adapted almost 30 years ago as the Senior Center, it is not in compliance with the Americans with Disabilities Act requirements---if any facility in our Town should be in compliance, it would be the Senior Center. More than 1/2 the building is inaccessible to people with mobility challenges. The building is about 130 years old.

However, if the Town Hall Annex and Ordway buildings are vacated, what plan is in place for them? Will we surplus the property and sell it? For what? Commercial development? Affordable housing? Condos? And what of the 5 School Street property on the far side? If the sale of this property would be used to offset costs, do we know what they might bring in this slumped property market? How does this fit in with the Town's Master Plan? What is the net impact on our budget (cost of 'new' facilities, revenue from surplussed property, taking properties on/off the tax rolls)? These properties--along with Town Hall and our public safety departments--occupy a key location in Town. Much care needs to be taken, lest we unthinkingly waste these valuable assets (even in their marginal state of value as office property).

I know that many questions have been raised about the prospect of various facilities--the DPW shed, the Library, Town Hall itself. I have many questions about this important puzzle. It is important that we do this right and with prudence. I do not oppose rethinking where and how we configure Town services but I will not be able to support additional requests related to this or other facilities without much more detail and opportunity to think through our options. I was unable to attend the April 8th Council meeting where this first domino was set in motion and the $60K approved, but I would not have been in a position to support it.

Click HERE to view the Mayor's April 8th presentation on this request.

Catching Up - April 2008 Mayor's Report

With 2 months since my last post, I have a lot of catching up to do. Consistent blogging is a challenge and once you get behind, the hole quickly gets deeper. So, I'll start with some housecleaning and then comment on a few important items before the Council recently.

Click here for a copy of the Mayor's April 2008 report to the Council. Highlights include:

• Titcomb landfill negotiations with Waste Management. UPDATE: The Planning Board approved the initial phase of capping this landfill on 5/19/08, per the Town's agreement with Waste Management.
• New waste contract. UPDATE: The Mayor's 2009 budget asked for a $350,000 increase, below what was anticipated in the April report.
  

  We continue to assemble necessary information and develop strategies for negotiating solid waste and recycling contracts. We currently anticipate a $400,000 increase in the total cost of the contract, from $700,000 to $1,100,000 due to expiration of our 15 year lump sum deal.

Master Plan Committee Workshop on Econ Dev, March 20th

The Master Plan Implementation and Oversight Committee, which I've served on since 2005, will be holding a series of workshops in 2008, in order to educate the public regarding progress since the plan was released in 2004 and to focus on key action items that remain undone.

The first workshop--devoted to Economic Development--will take place Thursday, March 20th at the Cultural Center, Upper Millyard, at 7:00 p.m. We will be specifically be discussing concrete steps that Amesbury could take to spur economic growth, particularly in the Downtown and Lower Millyard area. The Mayor will be there and the public is invited. Chamber of Commerce Director Stephanie McCowan and members of the Chambers Econ Dev Committee are also expected. Here's the Press Release:

March 11, 2008

PRESS RELEASE

The Master Plan Implementation and Oversight Committee (MPIOC) is organizing a series of workshops in 2008 on major focus areas of the Master Plan. Altogether four workshops are proposed in 2008 and the first in the series will be on the Economic Development Section.

Over the last three years, the Committee has been working on different action items identified in the implementation section of the master plan. Progress has been made on several of these items which include both regulatory and non-regulatory actions. Periodic updates have been provided to the Municipal Council. The Committee would now like to not only update the community at large on progress made so far but to also discuss creative ways to use limited resources in implementing high priority action items.

The first workshop on the Economic Development Section will be held on Thursday March 20^th at 7 p.m. at the Amesbury Cultural Center in the Upper Millyard Complex. The workshop is open to the public. The Office of Community and Economic Development will be providing an overview of the accomplishments and ongoing activities. The workshop will be moderated by Jonathan Sherwood, Chair of the MPIOC. If you have any questions regarding the workshop or would like to know more about the Master Plan contact the Town Planner, Nipun Jain at 978-388-8110 ext 312.

2009 - 2013 Capital Improvement Plan

Click here to download the recently released 2009-13 Capital Improvement Plan as a PDF file.

It is an improvement over previous versions, more clearly articulating priority projects (rather than just one huge list) and details impacts and connections with other planning better.

Trash Contract Plans

From the Mayor's 3/3/08 general update memo

Solid Waste Contracts
The Department of Environmental Protection has awarded the city with a number of grants and technical assistance relative to our solid waste and recycling programs. Key to these is the technical assistance award that grants the city 80 hours of professional consulting services on the review and contracting of our solid waste and recycling programs. Additional support includes a recycling brochure designed and printed by DEP for the city.

Consistent with the Mayor’s goals of regional problem solving, we have been working closely with Newburyport on the development of solid waste and recycling contracts. With the help of our DEP consultant we have conducted conversations with our vendors to extend contracts through the end of the year, in order to allow sufficient time to analyze options and negotiate the best possible contracts. We have also developed the foundation of a Request for Information (RFI) that encompasses the wide range of options to be considered and begun conversations with various vendors.

The Mayor will be assembling a group of stakeholders to include some Councilors and residents in order to provide input on the process and negotiations. More information to follow on this.

I'm pleased to see the Mayor pursuing a regional approach on this, assuming that all involved will benefit in terms of cost-savings and effectiveness.

Water Treatment Upgrade & Water System Improvement Questions

At the 2/26 Finance Committee, discussion of the Mayor's 2 water-related requests were deferred until the Committee's next meeting on 3/25. The Mayor requested this, in order to give more time to the Water Department and the firm hired in 2006 to finalize a recommendation on the Treatment Plant upgrade. Here are some updates from my end regarding these requests.

A number of the Councilors took publicly-posted tour of the Water Treatment Plant on Newton Road on 2/19. This was extremely helpful for us to a) better understand the operation of the facility itself and b) understand what/where the proposed upgrades will be. The system consists of 2 'trains' of filtration that pull in water from the Powow River on one end and deliver treated and filtered water on the other end. There are 2 primary justifications for the upgrade: a) we need to comply with new EPA regulations (and before the Commonwealth comes in and imposes a solution on us) and b) we need to increase the processing capacity of the plant. At peak seasons/hours--during the summer--the system is at full capacity. If any repairs or maintenance need to be done, they can only be done overnight. The system only has 2 'trains' and can't afford to take one down during daytime use, especially in the summer. The upgrades would fit 4 'trains' into the same space, giving the plant more flexibility in taking any given train off-line if necessary and the 4 trains combined would be able to process water at a higher rate than current, meaning we'd have more flex capacity built into the system. Regarding the EPA requirements, check out the 2/28 Daily News for a story on the Town of Seabrook facing the exact same thing.

I've submitted the following question to the Mayor's Office in anticipation of the Finance Committee's deliberations. Please let me know if you have any additional questions you'd like to have asked.

Sent 2/24:

First, I note that debt service is currently about 25% of the Water Department's operating budget (based on a review of the FY08 budget). Can you get me/us a breakdown of the composition of that debt, including terms, purpose and rates? This will help us to understand the context for increasing the debt service for the water dept's enterprise fund.

Second, could you produce an overall breakdown of its current debt service of general obligations out of general operations (same data--terms, rates, purpose)? This will help understand how new general obligations will fit in with the timing of other debt, etc. and would be helpful for processing future requests. It will also be helpful if that kind of debt forecasting could be incorporated more into the Capital Improvement Plan, to help plan and manage the rolling wave of our debt service in concert with our capital needs.

Sent 2/29:

1) Water Treatment Upgrade:
* For the SRF loan, what is the term and the rate?
* What is the anticipated annual debt service for the 2 solutions?
* For the proposed solutions, what is the anticipated effect/increase on median water bill?
* Separating water bills into commercial, industrial and residential, what would the increase be for the 'average' bill in each category?
* Would would the operating costs of the proposed solutions be, in comparison with current costs: staffing required to operate, electricity use, chemicals, maintenance?
* What would the expected operational life be of the major new components and what significant replacement/upgrades would be expected in during that span?
* Would either of the proposed solutions be more adaptable for possible future EPA/DEP requirements? What might those future requirements be? Would the final filtration step of either solution be able to be enhanced in the future, if need be?
* What are the Town's anticipated water demands 5, 10 and 20 years out? And what will the functional volumes be for the solution(s)?
* At the tour, concern was expressed regarding the ability of the 'multi-train' system that we currently have to operate if one or more trains is 'down'. How will the solution(s) be able to better handle that? At what point will the flexibility that we build in now to take trains off-line be lost in the future, as demand crosses capacity?

2) General Water Department budget:
* In the Water Dept's annual budget, what comprises 'other expenses'? This represents 20% of the Department's budget; this percentage of 'other' seems high; can it be clarified?
* The 'management assessment' paid to the Town is 6.8% of the Water Dept's budget. This doesn't seem high off hand but how is it derived? Do all departments/programs pay this assessment on the same rate or is it based on actual administrative demand on the Town administration (and pro-rated based on that demand)?

3) Water System Upgrades:
* What are the justifications for rehabilitating the Powwow Street water storage tack and upgrading the Challis Hill water pump station?
* What will the effect on operating costs be for each of these facilities?
* Please detail which parts of this request could be folded into the SRF monies and which would not? Also, how would the debt would be distributed (e.g. to Water Enterprise Fund and General Fund)?

UPDATE: Response from Kendra Amaral, clarifying "other expenses" in the Water Dept. budget for FY08:

Jonathan,

I will forward the additional questions on to the team.

Relative to the budget, if you look at the detail of the "Other
Expenses" for water in the budget document you should be able to see the
breakdown of costs. The Other expenses include such items as sludge
disposal, chemicals, and lab work. If this information isn't in the doc
you have, I will be happy to send the detail to you.

Thanks and have a good weekend,
Kendra

Mayor's Bond Request and the Capital Improvement Plan

At the February 12, 2008 MC meeting, the Mayor submitted bond requests for 2 separate items:

• $5,076,000 for Water System Improvements
• $22,500,000 for Waste Water Treatment Plant Upgrades

I look forward to getting more information on these requests at the Finance Committee but here are a few initial observations. I noted in another post the background for the larger Waste Water Treatment Plant upgrades. From the 1/09/08 Daily News article and the orders submitted by the Mayor, it appears that both of these requests would be rolled into the low-rate (2% interest) bonds issued through the MA Water Pollution Abatement Trust award that we were recently given. The DN article in fact mentions that the award covered both the Treatment Plant upgrades required by the US Environmental Protection Agency and "water mains, pump stations and water tanks" for our system.

I looked at Amesbury's Capital Improvement Plan (CIP) from 2007, covering 2008-12, to see if any or all of the items in the Mayor's request were in the CIP. Major capital expenses such as these should be part of a well-developed capital plan and an overall debt management strategy. Click here for a comparison of what was in the CIP versus the Mayor's request.

For Bill 2008-012 ($22.5M), the CIP planned for $13.5M in costs. That's a $9,000,000 or 66% variance/increase. For Bill 2008-011 ($5.076M), the CIP planned for $3.62M. That's a $1.45M or 42% variance/increase.

At the top of questions regarding both of these requests will be the large gap between planned costs (CIP) and these requests.

Only some of the improvements in the Mayor's bills are planned for FY2008. Others are spaced out to 2009 and 2010. The capital improvements in the Mayor's requests are all included in Amesbury's immediate and near term capital planning. The approval of this or any bond does not mean that Amesbury would draw against the bond authority all at once or even up to the limit approved. As I understand it, we'd have quite awhile to actually draw on the monies from the MA Abatement Fund. And I assume that it is likely prudent, if possible, to bundle these planned improvements under the good interest terms from the MA Abatement Fund while we can.

So, the improvements fall squarely within our Capital Improvement Plan. The interest rate for this debt is good. However, the large gap between planned costs and request costs is a significant concern and such large discrepancies would need to be well explained and justified. As ever, the Finance Committee will need to evaluate if Amesbury can afford these particular debts in the larger context of our overall debt service and debt plan.

At the MMA, pt. 2---Cash Flow and Planning Debt

As reported previously, a majority of Amesbury's Municipal Councilors made it to the annual meeting of the MA Municipal Association in January. Here are some of the things that I learned there:

"Sound Financial Practices" session with DOR staff:

This workshop covered a lot of ground. They talked a bit about using cash vs. borrowing. Much like in a home economy, cash makes sense for smaller needs. Making cash available in the flow of budgets takes planning: make conservative estimates of receipts (e.g. excise tax) and liberal estimates of real costs. The result is a positive cash flow ("free cash" after expenses and receipts have been certified at years end) that can be capitalized into community needs. The presenters emphasized that having a reasonable level of free cash at the end of the year is a positive, giving a community fiscal flexibility for unplanned costs (think snow removal!). As you would at home, put resources into a few pots: 1/3 for operations, 1/3 for capital improvements, 1/3 for reserve.

For larger projects (think: buying your own house), borrowing makes sense--we'll never be able to build a school building with cash, of course. Manage debt with a combination of 1-time 'debt exclusions' (which don't get added to the new Prop. 2 1/2 limit) and a rolling debt balance of 8-12% of total annual budget to create perpetual re-investment. 5% debt service (as % of budget) reflects a weak investment in the infrastructure of a community and will only add to costs in the future.

"Debt Management for the Generalist":

This workshop had a Director of Finance (Needham) and a Chair of a Finance Committee (Arlington) leading it. 2 main themes: make sure your community has CLEAR debt policies in place and forecasting, forecasting, forecasting.

Debt policy: Have a policy that articulates how cash and borrowing will be balanced (see above), sets a limit for debt service as % of budget, term of debts, and relation to Capital Improvement Plans. Needham has an ordinance that articulates these items and sets parameters administrative and legislative decision-making on debt. Both presenters emphasized the need for both branches to coordinate policy and decision-making, in order to have effective planning. Which brings us to....

Forecasting capital needs and debt: Policy and planning come together in a good Capital Improvement Plan that not only lays out capital needs and estimates costs but puts this data into a spreadsheet tool that shows the timing and long-term rolling effect of every given project on levels of debt service. The presenters gave us sample debt forecasting tools from other communities that clearly demonstrated how debt service forecasts over time (as obligations are paid off, as annual budget increases) and thus from year to year exactly what the capacity was to take on new debt and how specific capital needs fit into that.

Conclusions: In the context of these key ideas--established debt policy and good debt/capital expense forecasting--I think Amesbury still has a ways to go. The quality of our Capital Improvement Plan has improved but the 2008-2012 CIP released last year does not go beyond a simple cataloging of capital needs. Though needs are listed and priced, there is not even a simple totaling of what the needs are in each category. It tells the reader very little about how the cataloged capital needs fit into the planning of either direct cash expenditure or debt financing within the annual budget and future budgets. Contrast that with the CIP covering the same period from the City of Portsmouth, NH (posted on Amesbury's website by the Master Plan Implementation & Oversight Committee). Portsmouth's plan not only catalogs capital needs but also places those needs in the dynamic context of future budgets and levels of debt service.

Amesbury--starting with the Mayor's Office but working with the Council--should develop and articulate a debt policy and it should improve its capital need and debt forecasting. Successfully anticipating and planning for costly capital needs saves money in the long run and spares a community the budgetary (and social) shocks that come when big costs suddenly appear on the horizon. Perhaps the library improvements would have been approved in 2005 if residents had felt more confident about the Town's overall capital and debt planning.

Finance Committee, pt. 2

Yesterday's Amesbury News article on this proposed change reminded me of the fundamental reason that the Council is proposing to have the Finance Committee as a 'committee of the whole'--the MA Department of Revenue suggested that we do so in a 2001 report. Here is the relevant excerpt, in the context of 2000 Council Rules and Procedures:

We recommend that the Municipal Council act as an Appropriations and Audit Committee of the whole. The practice of assigning fiscal matters to a subcomittee of eight, which already includes five of the nine council members appears counter-productive. We suggest a more practical and efficient structure would have the 9-member Municipal council replace the current committee of eight, three of whom are non-elected participants. In essence, the Municipal council would act as an appropriation and audit committee of the whole. Council rules affording opportunities for participation by residents could remain in effect.

The report went on to recommended that the Council meet twice monthly, in order to be able to effectively discharge its responsibilities. This is what the proposed Rules change would do, create a financial committee of the whole, dedicating 1 meeting a month to appropriations and budget matters and the other 'regular' meeting, to initial and final approval of all measures, etc.

I note that the DOR report also continued the possibility of additional resident involvement, and the Council should consider that option, an expanded Committee of the whole.

[Note: I'd post the full DOR report, if I had it electronically but I don't.]

Proposed Council Committee Changes

A few words about a set of proposed Rule changes being considered by the Council that provoked an unfavorable editorial from the Daily News on 1/28. The proposed set of changes would expand the size but sharpen the focus of the Finance Committee and would bring, I believe, an improved capacity of the Council to handle the full scope of its fiscal responsibilities. Overseeing the financial policies and spending of the Town is THE foremost responsibility of the elected Councilors and the proposed changes support the Council's ability to fulfill that responsibility.

One of the first tasks for an incoming Council is to review and approve the rules that it will operate under during its Session. One of the key parts of the Council's Rules and Procedures are the purpose, scope and composition of Standing Council Committees, including the Finance Committee. Under last Session rules, 3 residents were added to the 3 Councilors that had been on the Committee previously. This Committee carried the burden of a very large set of responsibilities, including: "all matters of finance," all appropriations (including annual budget), review of fees, hiring an auditor (as well as reviewing audit findings), and the review of the Capital Improvement Plan. The Committee is charged to report recommendations on all of the above to the Council.

The heart of the proposed change to the Council is to expand the membership to include all 9 of the elected Municipal Councilors only (no resident members). The 2nd part of the proposed changes is to narrow the scope of the Finance Committee to focus only on "measures that would involve any expenditure of Town funds i.e. appropriations, bonds, insurance, transfers, salaries and wages." This means that every Councilor will be responsible for and fully informed about all budgetary and appropriations matters that come before it, rather than just receiving recommendations from a sub-committee that has spent time focused asking questions. A new Council Committee (3 Councilors) would be formed to focus solely on the audit of Town Finances. Finally, an Advisory Committee (3 residents) would be formed to advise the Council on questions of financial policy: debt management, CIP, bond issues, etc. This dovetails with the proposal to eliminate Standing Policy Committees on Education and Public Safety.

So, rather than weakening the 'watchdog' responsibility of the Council (as the Daily News suggested), these changes would ADD to the time that every Councilor spends focused on financial measures and the health of the Town's financial management--it's what we were elected to do. (Basically, it's saying that we will meet as a whole 2x a month, with one entire meeting devoted to finances.) The Council will again take up long neglected duties to oversee and review the annual audit of the Town's finances. And a Committee of residents with financial expertise will advise the Council regarding key financial planning and management policies.

I'm confident that the proposed changes will significantly improve the Council's capacity to process budgetary and policy questions. As the elected watchdogs of the Town's finances, this is our primary responsibility.

Proposed changes can be found HERE on the Town's website.

Rep. Costello Expresses Dissatisfaction with Gov's Budget Plan on Local Aid

We already know that the lottery revenues that drive local aid in MA were down last year and are expected to be down for fiscal year 2009. As the Commonwealth puts together a budget, many will be watching how the budget handles this. As reported in the previous post, Governor Patrick is proposing to make up for the shortfall in lottery revenue with proceeds from casino development. Given Speaker Dimasi's strong opposition (for now) to the casino plan, this revenue is speculative, to say the least.

Representative Costello weighed in on this issue. This is from the 1/26 Daily News:

Costello rips into Patrick plan; Rep. says budget does little for cities like Newburyport

By Katie Curley , Staff Writer
Daily News of Newburyport

NEWBURYPORT - Rep. Michael Costello blasted the governor's proposed budget this week, saying the plan is based on casino money that isn't there and ignores "real issues" like special education costs and charter school reimbursements.

Gov. Deval Patrick touted his proposed $28.2 billion budget this week as boosting state spending on aid to cities and towns, but local cities and towns won't see much of that increased spending, if any, Costello said.

Governor's Budget Connects Local Aid to Casino Deal

As reported by the MA Municipal Association today, the FY09 budget for the Commonwealth just released today by Gov. Patrick links about almost 14% of next year's lottery proceeds to communities to the passage of his proposed 3 casino plan.

Under the budget submitted today, $124 million of existing Lottery local aid would be contingent on passage of this new revenue source.

What this means is that the Gov. has in fact proposed to level fund local aid, but as currently structured, 14% of that would come from speculative casino revenues. I'm undecided about whether or not casinos are a good thing (my starting answer is 'no' but I've heard some persuasive arguments) but it seems a bit egregious to hold local aid hostage to passing the casino plan. To a degree, the Governor's budget balances on planned revenues next year from selling the 3 casino licenses (let alone future tax revenue).

Of course, the Governor's budget is just the first step. It will be important to see how the House and Senate handle this in their versions. Given the leadership's resistance to the casino plan, I'd be surprised if this allocation stands. If it did, Amesbury would stand to lose quite alot in local aid (if casinos are not authorized next year).

Update: the Boston Globe had this to say today (1/25) about the unlikely prospects of casino revenue anytime in FY09:

But budget observers say that even if Patrick's controversial casino legislation is approved by the Legislature, the state would probably not be able to collect the licensing money in time to help finance the fiscal 2009 budget, which begins July 1.

The casino legislation still has not had formal hearings, which are expected to last for months. And if the bill is passed, the state would have to establish a seven-member gaming authority, allow communities to hold referendums, solicit proposals from casino developers, and auction the licenses. Patrick's budget assumes all that could take place within the next 17 months.

Water Treatment Loan for Amesbury

From the 1/09/08 Daily News:

State Rep. Michael Costello's office said yesterday that Amesbury will receive $17,056,000 for two different projects. A total of $12 million will go toward upgrading the water treatment plant - the current facility is nearing the end of its 20-year life span - and $5,056,000 will be used to install new water mains, pump stations and water tanks at various locations around Amesbury.

I could recall discussions and a vote during the previous Council session about upgrades to our waste water treatment facility but wasn't sure if that included approval of a loan. A quick search on the Town's website got me to minutes from a 10/5/06 FinCom/MC meeting and a 10/10/06 MC meeting where a $500,000 bond issue for a waste water treatment updgrade study was discussed and approved (unanimously). Basically, the Town needs to upgrade its treatment plant to comply with current federal EPA standards. The $.5 million bond was to study how to retrofit our current plant to bring it into compliance with EPA standards. At the workshop and public hearing, the next step after doing the study would be to apply for a loan from the Commonwealth's Drinking Water State Revolving Fund to finance the upgrade. The study was done and the $17M award from the SRF program the other day is next step.

To accept the loan from the Commonwealth, however, the Municipal Council will have to first approve it. Checking out the regulations for this program--Drinking Water State Revolving Fund regulations--local approval is not required before a community can apply for the loan but is required to complete the application. Reading the regulations, it looks like approval needs to be made before June 30, 2008, so I assume that the Mayor will be presenting this as a measure to the Council between now and then.

I'll have a few questions, when this comes up. Judging from the story in the Daily News, it looks like the scope of this loan has expanded since the discussions in October 2006. Those discussions focused on an upgrade to comply with EPA regulations and the SRF loan request was expected to be $10-12M, as opposed to $17M. The current loan includes water main work around the Elm St./Rt. 110 intersection + additional pumping station and tank work. We should be assured that these additional items are part of our Capital Improvement Plan. I'll also want to know what the impact will be on the water rate and our overall debt-to-revenue ratio. On the plus side, the interest rate on this loan is very good (2%) and retrofitting an existing facility is good.

At the MA Municipal Association - Overview

I had the great pleasure of joining Councilors Lavioe, Benson, Neale, Chatigny and Gilday at the MA Municipal Association annual meeting on Friday and Saturday (1/11-12). Mayor Kezer, Kendra Amaral and Michael Basque were also there. Amesbury has a good tradition of participation and for good reason. It was a fantastic opportunity to attend workshops, meet other legislators and executives, learn from our peers and meet vendors and staff from the Commonwealth. It was also a pleasure to see Mayor Kezer and Ms. Amaral receive an Innovations in Government award for the Amestat program.

I focused on financial workshops, attending "Debt Management for the Generalist," "Division of Local Services' Best Practices," and "Reading Financial Statements and Budgets." Most of new Councilors also attended these sessions. I'll try to highlight points of interest from those workshops soon.

I also had the chance to meet and chat with: our bond rater (S&P), our legal counsel (Koppelman and Page), representatives from the MA Board of Library Commissioners (about state of capital project funding), from the Dept. of Environmental Protection (about recycling and waste disposal), from the engineering firm that is looking at the potential new site for the DPW and many other legislators around the area and the Commonwealth.

Vehicle Excise Revenue to go down

According to the December 2007 'City and Town' publication from the MA Department of Revenue, localities are going to take another hit this year in reduced revenue. With cars lasting longer and with folks holding on to them longer in a weaker economy, the taxable value base for local vehicle excise tax is decreasing, after a peak in 2006. In 2007, the statewide value base decreased by 4.89%. In 2006, Amesbury collected $1,736,714 in excise tax. A 4.89% reduction in this would be: $1,651,789, which is a loss of about $85,000 in revenue. This will be an added pressure as we look at our next budget.

New Trash Contract

Adapted from a post I made today on Allaboutamesbury.net:

Our 2008 Refuse Removal expense is $700K and our Recycling expense is $140K, for a total of $840K. This is based on the advantageous terms of a 20 year old expiring contract. From what I have heard in various conversations about this, we can expect to pay up to 100% more for this under a new contract, providing service at the current level ($1.6M). That's a huge increase, needless to say.

A few thoughts. I'll start by saying that I only have limited knowledge about our options on this, regarding how the service might be re-configured. The most obvious alternative is going to fee-for-service, where households and businesses would pay per bag or bin directly, e.g. by buying trash stickers at local markets. On the one hand, this directly ties production of waste with the cost of removing it, which would have the virtue of directly discouraging waste production and encouraging recycling. On the other hand, moving to direct pay would add a new fee to our costs of living, merely shifting the cost from our property tax burden to our household budgets. It is an open but important question whether or not our net cost (all households) for waste removal would be cheaper if we buy the service collectively (via City contract) or pay for it one bag at a time (fee-for-service). That would be my primary question here, which would be cheaper in the end for the residents.

Regarding the question about fairly distributing the cost of waste removal (e.g. why should condo owners pay for a benefit they do not receive from the municipality?)--this is akin to the question of why households that don't have children in school should pay for schools, that don't have seniors at home should pay for the senior center or, better, why residents on private roads should pay for plowing that they don't receive. There are complications to this but there are compelling policy reasons why such costs are borne collectively and not based on use only. The cost of waste removal seems to me to fall in with these other costs. So, that reasoning alone isn't compelling to me for switching to a fee-for-service structure.

So, I'll be interested to hear about our City's alternatives in this regard. As I understand it, this issue would only come to the Municipal Council as part of the FY2009 budget, so our ability to influence the structure of this contract may be limited.