Town of Hanover Review of 5-Year Projections and FY2019 (July 1, 2018-June 30, 2019) Budget Prelim Discussion Selectboard Meeting Monday, October 23, 2017 1. Selected Fiscal Indicators a. CPI and MCI b. Selected Hanover data 2. 5-year Projections a. Underlying Assumptions b. Summary of Projected Blended Municipal Tax Rate c. General Fund Projection d. Fire Fund Projection 3. BOS Budget Guidelines Guiding Principles 4. Undesignated Fund Balance a. Current Utilization Policy b. Schedule of Current Balances 2017-10-23 Selectboard Meeting Page 1
6.00 5.00 4.00 3.00 2.00 1.00 (1.00) (2.00) Comparative Year to Year Percentage Change in Northeast Urban Size B/C Consumer Price Index and the Municipal Cost Index No East Urban B/C CPI Municipal Cost Index Aug 17 MCI, 3.39% Aug 11 Oct 11 Dec 11 Feb 12 Apr 12 Jun 12 Aug 12 Oct 12 Dec 12 Feb 13 Apr 13 Jun 13 Aug 13 Oct 13 Dec 13 Feb 14 Apr 14 Jun 14 Aug 14 Oct 14 Dec 14 Feb 15 Apr 15 Jun 15 Aug 15 Oct 15 Dec 15 Feb 16 Apr 16 Jun 16 Aug 16 Oct 16 Dec 16 Feb 17 Apr 17 Jun 17 Aug 17 Aug 17 CPI NE B/C, 1.10% 2017-10-23 Selectboard Meeting Page 2 Percentage Change from Previous Year (12 months ago)
10.00% Comparative Non Seasonally Adjusted Estimated Annual Average Unemployment Rates (source: NH OEP; BLS) 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Hanover, NH New Hampshire United States 2017-10-23 Selectboard Meeting Page 3
TOWN OF HANOVER POPULATION US CENSUS FIGURES NH OFFICE OF ENERGY PLANNING (OEP) POPULATION ESTIMATES 1970 1980 1990 2000 2010 2011* 2012* 2013* 2014* 2015* 8,494 9,119 9,212 10,850 11,260 11,331 11,283 11,302 11,370 11,367 13,000 12,500 12,000 11,500 11,000 10,500 10,000 9,500 9,000 8,500 8,000 1970 1980 1990 2000 2010 2011* 2012* 2013* 2014* 2015* 2017-10-23 Selectboard Meeting Page 4
Town of Hanover Net Property Valuation used to compute Municipal, County and Local Education Taxes 2017, $2,014,097,700 $2,010,000,000 $1,910,000,000 $1,810,000,000 $1,710,000,000 $1,610,000,000 $1,510,000,000 $1,410,000,000 $1,310,000,000 $1,210,000,000 $1,110,000,000 $1,010,000,000 $910,000,000 $810,000,000 $710,000,000 $610,000,000 $510,000,000 $410,000,000 $310,000,000 $210,000,000 $110,000,000 $10,000,000 1999, $776,836,100 2008, $1,898,593,200 2017-10-23 Selectboard Meeting Page 5
TOWN OF HANOVER TAX LIENING ACTIVITY Tax Year 2006 Tax Year 2007 Tax Year 2008 Tax Year 2009 Tax Year 2010 Tax Year 2011 Tax Year 2012 Tax Year 2013 Tax Year 2014 Tax Year 2015 Tax Year 2016 Number of Parcels 26 25 31 32 40 29 22 31 30 26 27 Principal Liened $72,240 $80,068 $113,663 $131,019 $222,634 $145,760 $116,965 $153,997 $141,508 $180,674 $170,761 Tax and Utility Commitment Liened $250,000 $200,000 $150,000 $100,000 $50,000 $0 Tax Year 2006 Tax Year 2007 Tax Year 2008 Tax Year 2009 Tax Year 2010 Tax Year 2011 Tax Year 2012 Tax Year 2013 Tax Year 2014 Tax Year 2015 Tax Year 2016 Number of Parcels Liened 40 35 30 25 20 15 10 5 0 Tax Year 2006 Tax Year 2007 Tax Year 2008 Tax Year 2009 Tax Year 2010 Tax Year 2011 Tax Year 2012 Tax Year 2013 Tax Year 2014 Tax Year 2015 Tax Year 2016 2017-10-23 Selectboard Meeting Page 6
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$400,000 Short Term Interest Earnings $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 2017-10-23 Selectboard Meeting Page 8
$1,500,000 Motor Vehicle Registration Fee Revenues $1,400,000 $1,300,000 $1,200,000 $1,100,000 $1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 2017-10-23 Selectboard Meeting Page 9
$600,000 Building Permit and Related Revenues $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 2017-10-23 Selectboard Meeting Page 10
Budget to Actual Comparison of Fiscal Year Planning & Zoning Revenues $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 Budget Actual 2017-10-23 Selectboard Meeting Page 11
200,000 Shared State Revenue Block Grant 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 2017-10-23 Selectboard Meeting Page 12
Shared State Revenue Meals and Room Tax $600,000 $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 2017-10-23 Selectboard Meeting Page 13
$300,000 Shared State Revenue Highway Block Grant $250,000 $200,000 $150,000 $100,000 $50,000 $0 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 2017-10-23 Selectboard Meeting Page 14
Town of Hanover Five Year Tax Rate Projections FY2019 FY2023 Initial Underlying Premise: Town services will continue to be provided at current levels with current staffing; no additional facilities. Assumptions for discussion and modeling purposes only: General Fund Salaries and Benefits FY2019 total salaries incremented by 3.0% to reflect negotiated 1.0% wage scale adjustment plus a 2.0% Step Increase; out year salaries assumed to increase at same rate current bargaining agreements expire June 30, 2019. Flexible benefit program increased by 4.2% for FY2019 (Guaranteed Maximum Rate for Hanover provided by HealthTrust in early October); 5.5% projected increases FY2020-FY2023 based on our historical premium rate changes since 2006 coupled with the historic redesign of our plan offerings. Current New Hampshire Retirement System (NHRS) employer contribution rates remain in place for FY2019; consequently, this line item is slated to increase in the coming year solely the increase in wages. As the NHRS Board sets contribution rates bi-annually, 5.0% rate increases are slated for the upcoming biennial cycles (in FY2020 and FY2022) to continue to make headway to shore up the funding percentage of the unfunded actuarial accrued liability. Other employee benefits incremented by the same percentage as wages, as these are primarily wagedriven. Other Operating Costs Road Maintenance, Paving and Reconstruction incremented by 2.0% for all projected years. Fuel and Electricity incremented by 2.0% for all projected years. Hanover Ambulance Services (the Town s General Fund contribution to the Ambulance Fund) projected to increase by 0.0% for FY2019; 5.0% for FY2020-FY2023. Other Operating Costs assumed to increase by 1.0% for all projected years. Debt Service Projected based on existing debt service on: (a) 2003 RW Black Community and Senior Center bond ($1.5mm) to be paid off in FY2023; and (b) 2004 Dresden School District Note ($2.0mm) to be paid off in FY2024. Transfers to Capital Reserve Funds Projected based on current information from the CIP dbase; notice projected bumps in FY2020 in the Highway Construction and Maintenance Equipment Capital Reserve Fund and the Building Maintenance and Improvement Capital Reserve Fund. State of New Hampshire Revenues Assume (a) the Shared Revenues initially suspended by the State of New Hampshire in FY2010 and their reneged pledge to cover 35% of public safety retirement system contributions will not be reinstated to the Town; (b) the current Highway Block Grant and distributed Meals & Rooms Tax will stay at FY2018 actual levels, ($293,597 and $591,093, respectively). No further State budget takebacks are factored into these schedules. 2017-10-23 Selectboard Meeting Page 15
General Fund (continued) Motor Vehicle Registration Fees FY2019 projected at FY2017 actual level, and we are projecting a 1.0% increase for out years. Building Permit and Related Fees FY2019 projected at a reasonable level given recent actuals, and we are projecting a 2.0% increase for out years. Short-Term Interest Interest earnings are on the mend, and we are projecting a slow-paced constant increase in this lineitem. FY2019 has been projected based on current year earnings to date; going forward, we are expecting slow-paced and constant growth to reflect greater cash flow volumes and more aggressive (i.e., some longer term) CD investment. Payment from Water Utility Fund This payment is based on the annually adjusted value of the water service property that was on the Town s tax rolls under its previous owner, the Hanover Water Works Company; this line-item is projected to increase by 1.0% each year Other Revenues Other departmental revenues projected at a steady 1.0% for FY2019 FY2023 Net Assessed Valuation Dave McMullen, the Town s Assessor, suggests a cautious approach and suggests a $12mm annual growth figure for FY2019 2023. Fire Fund Salaries and Benefits Same as General Fund. Hydrant System Costs (an internal charge from the Water Fund) No change foreseen for FY2019 FY2023; staff will continue to work towards eliminating this charge altogether and assessing costs related to the water distribution system through the water utility rates. Facilities Operating and Fleet Costs Projected at a steady 2.0% for FY2019 FY2023. Other Operating Costs Projected at a steady 1.0% for FY2019 FY2023. Transfers to Capital Reserve Funds Projected based on current information from the CIP dbase. Other Revenues Projected at a steady 1.0% for FY2019 FY2023. Net Assessed Valuation $12mm growth for FY2019-FY2023; ratio between Fire Districts #1, #2, and #3 assumed to remain constant from FY2018. 2017-10-23 Selectboard Meeting Page 16
Town of Hanover Projected ʺBlendedʺ Property Tax Rate TY2017 TY2018 TY2019 TY2020 TY2021 TY2022 (FY2018) (FY2019) (FY2020) (FY2021) (FY2022) (FY2023) *Uncertified* Tax Rates % Increase from prior year Projected Tax Rates % Increase from prior year Projected Tax Rates % Increase from prior year Projected Tax Rates % Increase from prior year Projected Tax Rates % Increase from prior year Projected Tax Rates % Increase from prior year $ 6.32 1.95% $ 6.46 2.17% $ 6.73 4.24% $ 6.91 2.57% $ 7.16 3.67% $ 7.37 2.99% 2017-10-23 Selectboard Meeting Page 17
TOWN OF HANOVER GENERAL FUND PROJECTION Adopted FY18BUDG FY19 FY20 FY21 FY22 FY23 Operating Costs Salaries (includes budgeted overtime) 7,744,364 7,976,695 8,215,996 8,462,476 8,716,350 8,977,840 Employee Benefits Flexible Benefits Plan 1,782,393 1,857,254 1,959,402 2,067,170 2,180,864 2,300,811 Employee Benefits Retirement 936,597 964,695 1,043,318 1,074,617 1,162,198 1,197,064 Employee Benefits FICA, Wkrs Comp, Other 409,208 421,484 434,129 447,153 460,567 474,384 Subtotal Salaries & Benefits 10,872,562 11,220,128 11,652,845 12,051,415 12,519,979 12,950,100 % Increase in Salaries & Benefits 5.60% 3.20% 3.86% 3.42% 3.89% 3.44% Road Mtce, Paving and Reconstruction 969,552 988,943 1,008,722 1,028,896 1,049,474 1,070,464 Utilities (includes fuel, electricity, telecom) 512,342 522,589 533,041 543,701 554,575 565,667 Ambulance Services Hanover Contribution 284,466 284,466 298,689 313,624 329,305 345,770 Other Operating Costs 679,520 686,315 693,178 700,110 707,111 714,182 Subtotal Other Operating Costs 2,445,880 2,482,313 2,533,630 2,586,332 2,640,466 2,696,083 Total Operating Costs 13,318,442 13,702,441 14,186,475 14,637,747 15,160,445 15,646,184 % Increase in Operating Costs 2.90% 2.88% 3.53% 3.18% 3.57% 3.20% Non Operating Costs Note: Purchases funded from Specific Reserve Sources (UFB, Cap Reserve, etc.) netted out and not presented Debt Service on Existing Debt 193,938 188,674 184,774 180,912 179,312 178,676 Transfers to Capital Reserve: Highway Construction and Mtce. Eqpt. 385,500 348,000 405,000 348,000 338,000 318,000 Bridge Replacement and Renovation 57,500 65,000 58,000 65,000 65,000 65,000 Building Maintenance and Improvement 80,000 60,000 110,000 110,000 110,000 140,000 Road Construction and Improvement 35,000 35,000 35,000 35,000 45,000 35,000 Property Revaluation 10,000 10,000 10,000 10,000 Dispatch Equipment and Center Renovations 25,000 25,000 25,000 25,000 25,000 25,000 Police Vehicles and Equipment 58,000 103,000 103,000 103,000 103,000 103,000 Total Non Operating Costs 844,938 834,674 920,774 866,912 875,312 874,676 TOTAL GENERAL FUND COSTS 14,163,380 14,537,115 15,107,249 15,504,659 16,035,757 16,520,860 % Increase in Total General Fund Costs 2.63% 2.64% 3.92% 2.63% 3.43% 3.03% 2017-10-23 Selectboard Meeting Page 18
TOWN OF HANOVER GENERAL FUND PROJECTION Less: Non Tax Revenues State of NH Shared Revenues (Rooms & Meals, Hwy Adopted FY18BUDG FY19 FY20 FY21 FY22 Note: Transfers in from Specific Reserve Sources netted out and not presented on this schedule Block Grant) (873,247) (884,690) (884,690) (884,690) (884,690) (884,690) Motor Vehicle Registration Fees (1,351,900) (1,425,000) (1,439,250) (1,453,643) (1,468,179) (1,482,861) Building Permit and Related Fees (419,500) (375,000) (382,500) (390,150) (397,953) (405,912) Short Term Interest (60,000) (100,000) (110,000) (120,000) (130,000) (140,000) Payment from Water Fund (77,912) (78,691) (79,478) (80,273) (81,076) (81,886) Registration & User Fees and Other Revenues (1,753,496) (1,771,031) (1,788,741) (1,806,629) (1,824,695) (1,842,942) TOTAL GENʹL FUND MUNICIPAL TAX LEVY 9,627,325 9,902,703 10,422,589 10,769,275 11,249,165 11,682,569 % Increase in General Fund Municipal Tax Levy 2.39% 2.86% 5.25% 3.33% 4.46% 3.85% Net Assessed Valuation of Taxable Property 2,014,097,700 2,026,097,700 2,038,097,700 2,050,097,700 2,062,097,700 2,074,097,700 General Fund Municipal Rate $ 4.78 $ 4.89 $ 5.11 $ 5.25 $ 5.46 $ 5.63 % Increase in General Fund Municipal Tax Rate 1.92% 2.30% 4.50% 2.74% 4.00% 3.11% FY23 2017-10-23 Selectboard Meeting Page 19
TOWN OF HANOVER FIRE FUND Adopted FY18BUDG FY19 FY20 FY21 FY22 FY23 Operating Costs Salaries incl OT (net of charge to Ambulance) 1,181,763 1,217,216 1,253,732 1,291,344 1,330,085 1,369,987 Employee Benefits Flexible Benefits Plan 387,988 404,283 426,519 449,978 474,726 500,836 Employee Benefits Retirement 573,257 590,455 638,577 657,734 711,339 732,680 Employee Benefits FICA, Wkrs Comp 75,849 78,124 80,468 82,882 85,369 87,930 Subtotal Salaries & Benefits 2,218,857 2,290,079 2,399,296 2,481,938 2,601,519 2,691,433 % Increase in Salaries & Benefits 5.40% 3.21% 4.77% 3.44% 4.82% 3.46% Hydrant System (net of private hydrants) 314,888 314,888 314,888 314,888 314,888 314,888 Facilities Operating Costs 141,271 144,096 146,978 149,918 152,916 155,975 Fleet Costs 64,870 66,167 67,491 68,841 70,217 71,622 Other Operating Costs 312,774 315,902 319,061 322,251 325,474 328,729 Subtotal Other Operating Costs 833,803 841,054 848,418 855,898 863,496 871,213 Total Operating Costs 3,052,660 3,131,132 3,247,714 3,337,836 3,465,015 3,562,646 Non Operating Costs Transfers to Capital Reserve: % Increase in Operating Costs 1.41% 2.57% 3.72% 2.77% 3.81% 2.82% Fire Vehicle and Eqpt Capital Reserve Fd 143,090 143,090 143,090 143,090 143,090 143,090 Total Non Operating Costs 143,090 143,090 143,090 143,090 143,090 143,090 TOTAL FIRE FUND COSTS 3,195,750 3,274,222 3,390,804 3,480,926 3,608,105 3,705,736 % Increase in Total Fire Fund Costs 1.34% 2.46% 3.56% 2.66% 3.65% 2.71% Less: Non Tax Revenues Other Revenues (90,881) (91,790) (92,708) (93,635) (94,571) (95,517) TOTAL FIRE DISTRICT TAX LEVY 3,104,869 3,182,432 3,298,097 3,387,291 3,513,534 3,610,219 % Increase in Fire District Tax Levy 3.01% 2.50% 3.63% 2.70% 3.73% 2.75% Projected Tax Rate by Fire District Adopted Fire District #1 1.60 1.63 1.68 1.71 1.77 1.80 Fire District #2 1.40 1.42 1.47 1.50 1.56 1.59 Fire District #3 0.70 0.71 0.73 0.75 0.78 0.80 % Increase in Tax Rate by Fire District Adopted Fire District #1 1.91% 2.08% 2.90% 2.01% 3.00% 2.07% Fire District #2 2.19% 1.45% 3.42% 2.39% 3.51% 2.43% Fire District #3 2.94% 1.45% 3.42% 2.39% 3.51% 2.43% 2017-10-23 Selectboard Meeting Page 20
Budget Guidelines for the Town of Hanover Board of Selectmen Adopted by the Board of Selectmen: December 7, 2015 Introduction: The Board of Selectmen s primary responsibility as it relates to the fiscal management of the Town is to bring to Town Meeting each year a proposed budget for discussion and hopefully adoption. Over the years the Board of Selectmen has been guided by a set of beliefs and objectives that have informed its decision making and are summarized below. Definitions: Grand List: Total assessed value of all taxable property in the Town of Hanover Tax Levy: Total revenues raised from taxes Tax Rate: Tax Levy (Grand List/1000) Individual Tax Bill: Tax Rate x Individual Assessed Value State Downshifting: Downshifting occurs when the State no longer shares revenues (i.e. rooms and meals tax), and /or no longer shares costs (i.e. retirement funding) as they have historically. Downshifting either lowers revenues or increases costs to the Town. Consumer Price Index (CPI): An economic indicator published by the US government which measures the change in the cost of a hypothetical basket of goods (food, clothing, gas, electricity, insurance, etc.) consumed by the average household. Municipal Cost Index (MCI): An economic indicator published by American City and County which measures the change in the cost of providing services to residents of municipalities and counties; to include the costs of labor, materials, and contracted services. Objectives and Beliefs: 1. Our primary budget objective is to balance the needs/desires of our citizens with their willingness and ability to pay. Discussion: Given the unique service provided by a municipal government, pegging projected increases to standard market indexes is problematic. Truly, the development of a municipal budget is more an art than a science. In addition to considering the CPI and the MCI as context for setting the targeted tax rate change for the proposed budget year, The Board of Selectmen will also heavily weigh the following factors: 2017-10-23 Selectboard Meeting Page 21
Anticipated change in Grand List Anticipated impacts on the local property tax from the State s downshifting of its budget responsibilities Projects of high community priority to be taken on in the upcoming budget year(s) Known increases in employee wages and benefits previously negotiated as part of the collective bargaining process 2. We appreciate Town staff as professionals and valued partners and want to provide a climate and culture that will attract and retain the best. Discussion: Our goal is to pay in approximately the 75 th percentile for towns of our size and complexity along with competitive benefits and a positive, long term work environment. We believe that this will allow the Town to attract and retain the best. 3. Before funding new initiatives, our goal is to maintain a high level of current services and to provide them cost effectively. Discussion: Town staff is continually looking at ways to save money. Examples include implementing energy efficiency improvements and selectively contracting out some services (e.g. recycling) while bringing others in house (e.g. downtown trash pickup and highway line painting). Hanover citizens expect a very high level of services (bare pavement plowing, rapid public safety response, paramedic-level EMS services, full range of recreational programs, etc.) which need to be met before new initiatives are funded. 4. Our goal is to adequately fund long term liabilities. Discussion: We do not kick the can down the road. In difficult budget years, the least painful short term ways to balance a budget are to underfund ongoing operations (e.g. road paving) or to inadequately fund capital and / or operating reserves. Not adequately funding current operations inevitably costs more in the long run. Good fiscal management requires that we adequately fund capital reserves to meet future capital liabilities and operating reserves to meet unexpected expenses or shortfalls in revenues. 5. The Board of Selectmen does not use operating reserves to manage the tax rate. Discussion: Our reserve management guideline is intended to assure this. 6. The Town invests for the long-term. Discussion: We would prefer to do a project right rather than cheaply. This is reflected in our willingness to fund projects over several years so that there is adequate money to do the job well. Examples of investing for the long-term include the development of Dresden Village, the rebuilding of Reservoir Road after the flood, and bike lanes on Park Street. 2017-10-23 Selectboard Meeting Page 22
7. The Board of Selectmen believes that spending by the Town on new initiatives can generate significant value to the tax payers. Discussion: Spending requests come from many sources: Affordable Housing, Conservation Commission, Sustainable Hanover, Planning Board, and Recreation Department to name a few. Recent examples of initiatives that the Board of Selectmen believes have added significantly to our collective quality of life (standard of living) or reduced future expenses include: The Richard W. Black Community and Senior Center; Howe Library expansion of facility and hours; Dresden Village improvements; Bike Lanes on North and South Park Street; Properly rebuilding Reservoir Road so that it hopefully will not wash out with every big storm; Etna Library/Hayes Farm Park project; Sustainable Hanover initiatives; Contributions to the Three Party Agreement that led to new and renovated schools. These projects could not have been accomplished without some incremental spending beyond bare bones budgets. 8. We recognize that all of the above objectives may not be achievable in any given year. Discussion: In years when not all of the above objectives are able to be met, the Board of Selectmen will address any deviation from these guidelines during the Budget Public Hearing process and at Town Meeting. 9. The Town will pass through State downshifting to the taxpayer. Discussion: The State, without a broad based tax, has limited ways to deal with State budget issues such as the underfunded State retirement system. The State has solved its problem by downshifting, and thus, in essence, tapping into a broad based tax at the local level. Downshifting has been a very effective strategy for the State and we can expect even more in the future. Absorbing State downshifting is unsustainable to the Town and would quickly lead to a significant reduction of Town services. The Town is sensitive to this added expense to the taxpayer. In years when down shifting is the most severe, the Board of Selectmen will do as much as is reasonable to limit the impact. 2017-10-23 Selectboard Meeting Page 23
Town of Hanover Undesignated Fund Balance Usage Guidelines Adopted by the Board of Selectmen: December 7, 2015 For Tax-Supported Funds (General Fund and Fire Fund) Guideline Undesignated Fund Balances (UFB) represent the cumulative budget surpluses in a particular fund and are intended to be used to buffer shortfalls in revenue and/or to cover unbudgeted expenses in that fund in any given year and to fund expenses that are non-recurring and should not be built into the tax rate. The Town will maintain Undesignated Fund Balance Reserves for the following Funds in the ranges specified: General Fund 10-15% Fire Fund 10-15% Discussion: In general, the town wants to build recurring expenses into the tax rate. Using UFB to offset recurring expenses will over time deplete the UFB and lead to larger tax increases in the following years when the tax rate has to not only support new spending in that year but also support prior year s increases. The % of UFB shall be calculated by dividing the UFB at the end of the most recently completed fiscal year by the total of the annual gross fund appropriations less capital projects funded from capital and other reserve funds as approved by Town Meeting for spending in the most recently completed fiscal year. Guideline If the UFB balances exceed (or are projected to exceed) the range at the end of the fiscal year, the fund balance will be brought to its targeted upper limit over no more than three fiscal years. Discussion: UFB in excess of the range is the result of over taxing in prior years and thus that money should be returned to the taxpayer over a reasonable timeframe. Guideline If the UFB balances fall below (or are projected to be below) the range at the end of the fiscal year, the fund balance will be brought to its targeted lower limit over no more than three fiscal years. Discussion: UFB below the range is the result of under taxing in prior years and thus that fund should be replenished over a reasonable timeframe. 2017-10-23 Selectboard Meeting Page 24
For Proprietary and Special Revenue Funds (Water, Sewer, Parking Operations, Ambulance Service Funds) Supported Primarily by User Fees Guideline The targeted UFB for each fund will be established annually as part of the budget public hearing process. In no instance, will the targeted UFB for any fund be less than 5% as calculated above for the particular fund. The annual Rates and Fees Public Hearing will reflect any fee increases or decreases necessary to achieve the targeted UFB. Discussion: The UFB for the fund should reflect the volatility in the funding sources and/or expenses and need not be the same for all funds. Further, the amount of UFB in these funds will reflect unique anticipated regulatory, legal and operational developments. 2017-10-23 Selectboard Meeting Page 25
Town of Hanover General Fund Unassigned Fund Balance $2,250,000 FY2017, 14.5% 16.0% $2,050,000 $1,850,000 FY2013, 12.1% $1,906,451 $2,011,510 $2,049,400 14.0% $1,650,000 $1,545,196 $1,634,182 $1,547,124 $1,680,399 12.0% $1,450,000 10.0% $1,250,000 8.0% $1,050,000 FY2008, 5.5% 6.0% $850,000 $807,031 $815,309 $650,000 $639,192 4.0% $450,000 2.0% $250,000 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 0.0% Unassigned General Fund Balance Amount Unassigned General Fund Balance % of Budget 2017-10-23 Selectboard Meeting Page 26
Town of Hanover Projected Undesignated Fund Balances Schedule of Available (Non Committed) Balances General Fund Audited Fund Balance @ June 30, 2017 $ 2,049,400 FY2018 Budgeted Draw from Undesignated Fund Balance $ (193,265) Proposed FY2019 Budgeted Draw from Undesig F/B $ $ 1,856,135 PROJ FYE19 UNDESIGNATED GENERAL FUND BALANCE FY2017 Budgeted General Fund Expenditures $ 14,492,869 less: General Fund Expenditures Funded from Capital Reserve Fund, Trust Funds, and Other Reserve Funds $ (692,100) $ 13,800,769 13.45% UNDESIGNATED GENERAL FUND BAL OVER EXPENDITURES Fire Fund Audited Fund Balance @ June 30, 2017 $ 309,654 FY2018 Budgeted Draw from Fire Undesig Fund Balance $ Proposed FY2019 Budgeted Draw from Fire Undesig F/B $ $ 309,654 PROJ FYE19 UNDESIGNATED FIRE FUND BALANCE FY2017 Budgeted Fire Fund Expenditures $ 3,299,380 less: Fire Fund Expenditures Funded from Capital Reserve Fund, Trust Funds, and Other Reserve Funds $ (103,075) $ 3,196,305 9.69% UNDESIGNATED FIRE FUND BALANCE OVER EXPENDITURES Ambulance Fund Audited Fund Balance @ June 30, 2017 $ 153,172 FY2018 Budgeted Draw from Ambul Undesig Fund Balance $ Proposed FY2019 Budg Draw from Ambul Undesig F/B $ $ 153,172 PROJ FYE19 UNDESIGNATED AMBULANCE FUND BALANCE FY2017 Actual Ambul Fund Expenditures $ 886,871 less: Ambulance Fund Expenditures Funded from Capital Reserve Fund, Trust Funds, and Other Reserve Funds $ $ 886,871 17.27% UNDESIGNATED AMBUL FUND BALANCE OVER EXPENDITURES 2017-10-23 Selectboard Meeting Page 27
Town of Hanover Projected Undesignated Fund Balances Schedule of Available (Non Committed) Balances Water Utility Fund Audited Fund Balance @ June 30, 2017 $ 60,811 FY2018 Budg Draw from Water Undesig Fund Balance $ Proposed FY2019 Budg Draw from Water Undesig F/B $ $ 60,811 PROJ FYE19 UNDESIGNATED WATER FUND BALANCE FY2017 Budgeted Water Fund Expenditures $ 1,828,985 less: Water Utility Fund Expenditures Funded from Capital Reserve Fund, Trust Funds, and Other Reserve Funds $ (27,000) $ 1,801,985 3.37% UNDESIGNATED WATER FUND BALANCE OVER EXPENDITURES Water Reclamation (Sewer) Fund Audited Fund Balance @ June 30, 2017 $ 712,649 FY2018 Budg Draw from Sewer Undesig Fund Balance $ Proposed FY2019 Budg Draw from Sewer Undesig F/B $ $ 712,649 PROJ FYE19 UNDESIGNATED SEWER FUND BALANCE FY2017 Budgeted Sewer Fund Expenditures $ 3,173,688 less: Sewer Fund Expenditures Funded from Capital Reserve Fund, Trust Funds, and Other Reserve Funds $ (459,500) $ 2,714,188 26.26% UNDESIGNATED SEWER FUND BALANCE OVER EXPENDITURES Parking Fund Audited Fund Balance @ June 30, 2017 $ 282,836 FY2018 Budg Draw from Parking Undesig Fund Balance $ Proposed FY2019 Budg Draw from Parking Undesig F/B $ $ 282,836 PROJ FYE19 UNDESIGNATED PARKING FUND BALANCE FY2017 Budgeted Parking Fund Expenditures $ 1,835,740 less: Parking Fund Expenditures Funded from Capital Reserve Fund, Trust Funds, and Other Reserve Funds $ (21,000) $ 1,814,740 15.59% UNDESIGNATED PARKING FUND BALANCE OVER EXPENDITURES 2017-10-23 Selectboard Meeting Page 28