Tonight FinComm had a regular meeting. This was actually my second FinComm meeting of the week – on Saturday the subcommittee that I’m part of met to prepare for our budget reviews. Tomorrow the subcommittee meets with the treasurer, and on Thursday with the deputy town manager to talk about insurance. Four meetings in 5 days – not too shabby.

Tonight’s meeting was focused on the warrant. We received a draft copy of the upcoming Town Meeting warrant. We reviewed the articles and decided which ones to have hearings on. For many articles the selectmen have hearings, for some the Redevelopment Board hears, and some come to FinComm. A few of them end up getting heard by more than one group. The draft warrant has 73 articles. There were chuckles and groans as we went through them; some of the articles are repeats of past years’ debates.

In the middle of that review we had hearings on 5 different warrant articles proposed by 10 citizen signatures. Each of those was sponsored by Gordon Jamieson, so he ran through them over about 90 minutes:

• The first discussion was on an article to recompute the town and school budgets for FY07 as 4% increases, not the 3.1% raises that were approved this past spring. The 5-year plan says that health care expenses must be held to 7% increases and other expenses held to 4%. If health care exceeds 7%, then other expenses must be lower to meet the bottom line. This happened in the FY07 budget, and other expenses were held to 3.1% (plus or minus .1%). Gordon argues that the actual health care expenditure in FY07 is less than 7%, not over 7%, and the budgets should be restored to 4%. There are two issues here. One is a factual one: when you look at the FY07 budget and compare actual FY07 spending, are we really going to be less than 7% increase? The second is a policy one: If it turns out that a budget constraint turns out to be uneeded, do you go back and recompute the spending within the 5-year plan? My first reaction to this is that it is a bad idea. This reaction is based on policy, regardless of how the actual numbers turn out. The financial projections show that the town has serious fiscal issues in FY10 and FY11. If we adopt this article we significantly increase those issues. This article will increase spending in this year and every year – we dig ourselves an even deeper hole. The 5-year plan was a way to limit budget increases. It was not a promise to spend to the limits.
• The second was about how health insurance is charged to the Water and Sewer enterprise fund. Ryan Ferrara and Walter Fey’s subcommittee will look into this one.
• The third one was about creating a position of energy manager for the town. We’re going to look at how other towns handle this. The idea was well received, but I sense that FinComm will recommend that it be put to a temporary consultant rather than a permanent employee.
• The fourth was about creation of an Arlington Carbon Bank. We decided this was a selectmen’s article, not a FinComm article. My advice to the selectmen: Ask why this should be done by the town rather than a private group. It seems to me that a private foundation can do this as well as (better than) the town can.
• The fifth article relates to how the town should structure its accounts that handle funds for health care for active employees, retired employees, and savings for future health costs. This article is stimulated by “the GASB change.” GASB, the accounting group, has mandated that all government entities list the liability of retiree health benefits on the balance sheet. This has inspired Arlington (and others) to seek ways to fund the liability so that it can maintain a good credit rating. The article would create two accounts, one for active employees, one for retired employees, and describes which balances would transfer and which revenues would flow into which accounts. The article doesn’t describe any new revenues or any new liabilities – it just says which money should go where. We’ll learn more about this on the 14th when John Bilafer (former treasurer, member of retirement board, and studier of this issue). My gut says that this article is premature. For various legal reasons we can’t move on this fund until 1/1/08, and there is no benefit to voting in May. We should let the OPEB group complete its recommendation and vote the issue in ’08. Push this complex issue off until we have more information, especially when there is no benefit that I can see to acting sooner.

No meeting on Wednesday, but we look solid for two meetings next week.

Last night the Finance Committee met for the first time this year. You can see a few photos from the meeting on Tabblo. The town has been working on the fiscal ’08 budget for months, but FinComm doesn’t really start until January.

Over the next few weeks the FinComm subcommittees will meet with the relevant departments and discuss the department budgets. The subcommittees will report to the full committee and the budgets will be voted. Similarly, any budgetary warrant articles have a hearing before the committee and are voted.

I plan on writing periodically about FinComm meetings. My goal is to give Arlington residents a bit more visibility into the budget process. If you’re not an Arlington resident, you might consider ignoring posts about FinComm. They may get a bit dry. But maybe I can make even budgeting sound fun! (It’s possible, right?)

There were no budgets to hear last night, but the Town Manager was there. He reviewed a series of topics, and a few others were discussed after he left.

• Union negotiations – The library employee contract for FY07 was voted last year at Town Meeting. Since then, agreements have been reached with the 680 union and NAGE (now SEIU). The key points of the new deals are a 2.5% cost of living increase in ’07 and a 3% increase in ’08. There is an increase in medical visit co-payments that, when implemented, will trigger another .5% increase (the co-pay change will kick in when the town can implement a two-tiered co-pay system, which it can’t do yet because of other agreements and limitations within the insurance company agreements). And, starting in FY08, new employees within these unions will pay 25% of their insurance premium, higher than the 15% paid by the current union members. The library union is likely to go along with this as well. These agreements cover approximately 200 employees. The Town Manager is asking the School Superintendant to exercise the “re-open” clause and ask the teachers’ union to accept the 25% for new hires. Of course, these agreements have not yet been approved by Town Meeting, and there was not enough money set aside to cover them, though the sums involved don’t appear to be a large obstacle. There was no agreement with the fire or police unions. To me, this is exhibit 1A in the reason to fight coalition bargaining. If we were in coalition bargaining, we wouldn’t have made this progress. In coalition bargaining, we’d be stuck without any agreements until the fire and police union negotiations were completed.
• The five-year-plan is looking more like a six-year-plan, which is a very good thing. The current predictions are that costs are controlled and the state has provided a bit more money than expected. This avoids a large deficit in the 6th year, although the 7th year (FY11) is predicted to have a large deficit. There were no significant changes since the summit.
• Symmes will hopefully close in March. The lawsuit significantly altered the economics. Not only are there 30% fewer units, but the slump in the housing market has affected the price. It appears that may result in the units being rented until the housing market recovers. The rented units will pay significantly less in taxes. That leaves the town paying off the debt until 2013 or 2015. The town is not a skilled real estate developer, and now it looks like we will pay the price. For a while it looked like we would get lucky and get out almost-even, but the lawsuit dashed those hopes. We’re looking at more than a decade of property taxes that will go towards paying off the debt rather than paying for services or reducing the tax rate.
• Evidently the lease with the state for the ice rink is “not executed” which was news to me.
• FY08 budget notes
• The use of unencumbered funds (“free cash”) is lower because FY07 “borrowed” they Symmes building permits from FY08.
• Warrant articles are high becuase of $300k for the 10-year cycle on house inspection, $375k of Medicare Part D funds going to the healthcare liability fund, and $150k for an item that I forgot!
• State funding levels are still unknown. Gov. Patrick has signaled that there isn’t much coming. There is concern about low lottery receipts.
• There was discussion of the current state house debate about whether or not to let towns join the state health plan. It was noted that that would require accepting coalition bargaining.
• Payroll may be moving from the school budget to the treasurer’s.
• Pierce Field – Nothing new. Open question as to how much the industrial parties think the town should pay.
• Minuteman Regional High – The school is looking for a new superintendant. The in-district enrollment declined from 504 to 456 students. Arlington’s enrollment dipped similarly, but not as much. The drop in enrollment hits their budget hard. Arlington’s assessment is anticipated to go up 10.9%, more than $300k. This was the worst news of the night. I guess I should be glad that the worst is only $300k, but $300k is still bad. Arlington is looking at sending 10% fewer students, but paying 11% more overall. After town meeting last year I said I was going to do more research about per-pupil costs at Minuteman, and that to-do item never made it to the top of the list. It just moved up several notches.
• Park Ave Fire Station – Construction not going as quickly as planned, but still on-budget. Looking at fall occupancy.
• Fire department overtime budget is “not great” but is “well documented” with several injuries causing budget issues.
• Unemployment compensation was discussed and needs more research.
• The Town Manager is talking about regionalization of some services with 12 towns.
• Schools – Special Ed budget will likely use most of the fund created for cost overruns. As previously discussed, the budget is $700k short for ’08. At the same time as FinComm the school committee was having a hearing about fees. There was a question about curriculum tracks at the high school, and how many people were in each.
• School renovations – The group is still working. One path getting a fair amount of discussion is to rebuilt Thompson in a few years with state aid, and renovate Stratton over several years on our own. It appears that Stratton is unlikely to qualify for state aid.
• Fire station rebuilding – The group is contemplating four options:
• Move the HQ to Summer St, and build a 2nd station on Broadway, and close existing stations.
• Rebuild both where they are, which leaves Morningside response times as a problem. That might be mitigated by serving medical calls out of Winchester.
• Rebuild HQ, move Highland to Summer St.
• Rebuild HQ, have a joint station with Winchester.

The question of where to build on Summer St., or if Winchester would go along with the plans, are very much open. The group is in progress and has taken no votes.

The next meeting scheduled is Monday the 5th at 7:30PM to hear warrant articles. Keep an eye out, though; if we can’t schedule anyone to come, the meeting gets cancelled.