HomeMy WebLinkAboutFY 2019 Town Admin Budget Message 12.11.17_201805030959462576
Town of Nantucket
Fiscal Year 2019 Budget Message
As of December 11, 2017
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TABLE OF CONTENTS
I – Introduction…………………………………………………....pg.1
II – Overview of FY 2019 General Fund Budget..………………...pg.3
A. Projected FY 2019 General Fund Revenue
B. Projected FY 2019 General Fund Expenses
III – FY 2019 General Fund Budget Recommendations………...…pg.5
IV - Future Year Considerations……………………………………pg.12
V - Other Recommendations
VI – Conclusion……………………..…………………………….pg.14
APPENDICES
A. Moody’s Credit Rating Report, May 11, 2017...………….pg.16
B. State of the Economy………………………………………....pg.24
Global Economy’s Momentum to Continue in 2018,
The Conference Board, PR Newswire, November 13, 2017
C. The Muni Watch – Economic data dashboard………………...pg.32
D. FY 2019 General Fund Revenue Breakdown…………..……...pg.33
E. FY 2019 General Fund Expenditure Breakdown………..…….pg.34
F. FY 2019 Expense Increase Request List…….………………...pg.35
G. New Growth and Local Revenues…………………………….pg.37
H. Other Postemployment Benefits (OPEB) Trust Fund………...pg.38
I. Stabilization and Reserve Funds..…………………………….pg.39
J. Free Cash and Unused Levy Capacity……….……………….pg.40
K. Enterprise Funds Subsidies and Retained Earnings..…………pg.41
• Our Island Home
• Solid Waste Enterprise Fund
L. General Fund Debt Service Schedule…………………………pg.42
M. List of Collective Bargaining Agreements……………………pg.43
N. Town of Nantucket Financial Policies
• Link: http://www.nantucket-ma.gov/186/Financial-Policies
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I. Introduction
The Town ended FY 2017 in a strong financial position and preliminary results for FY 2018
are positive overall. We remain confident but cautious going into FY 2019, although we are
monitoring a number of economic and financial indicators, some of which are showing
continued signs of leveling off. The following demonstrate the Town’s strong financial
condition:
» The Town’s bond rating was reaffirmed at Aa1 by Moody’s Investor Services in
November of 2017 (Appendix A) with an upgrade from a Stable Outlook to a Positive
Outlook. The Town continues to have a rating of Aa+ from S&P Global. These bond
ratings are one level below the highest bond rating issued by each of the rating agencies.
The benefits of these high ratings include the opportunity to borrow at lower interest
rates.
» Free Cash for use in FY 2018 and FY 2019 was certified by the Department of
Revenue on October 4, 2017 in the amount of $6,215,883. Pursuant to Town policy
and best management practices, Free Cash is only used for non-recurring items.
» The Stabilization Fund remains strong with a current balance of $5,053,411 (Appendix
I). A best management practice is to have reserves that are 10% of the budget. Using
an approximate budget of $90,000,000, the Stabilization Fund balance is
approximately 6%. However, when we account for the Certified Free Cash
(undesignated reserves) balance of $6,215,883, the reserve amount exceeds the best
management practice guideline (Appendix N).
» The Town maintains a balance of $1,250,000 in the Capital Projects Reserve Fund. The
current balance represents 1.4% of expenditures while the target is 3%.
» Short-term and long-term capital project planning continues. In the fall of 2017, the
Capital Program Committee, working with Town Administration began to develop a
more robust review process for FY 2019, involving a standardized review process that
will allow for a consistent approach to prioritizing capital projects in a systematic
manner that also allows additional transparency as well accommodates anomalies or
unusual circumstances.
» Increased focus on Town infrastructure continues. The proposed FY 2019 General
Fund budget allocates additional funds to the DPW budget for infrastructure
maintenance and personnel.
» Local receipts including meals excise tax and room occupancy tax revenues remain
stable after a strong growth period in the aftermath of the Financial Crisis of 2007-
2008. New growth continues to exceed the historical average, although its appreciation
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has stabilized and resulted in a 3.6% decrease in FY 2018 ($33,280 less than the prior
year) (Appendix G).
» The Town maintains its commitment to funding the OPEB trust (Other Post
Employment Benefits) with annual contributions of $500,000 since 2015 and therefore
lower its net liability. The current balance of the OPEB Trust Fund is $1,903,825
(Appendix I).
» The Town continues to make its annual required funding to the Barnstable County
Retirement System. When compared to the rest of the Commonwealth’s municipalities,
Nantucket remains in the top half in terms of retirement funding levels.
» In the last year, the Town realized significant savings in certain rapidly growing fixed
costs. First, the Town rebid all of its insurance policies with the help of industry
experts and secured comparable coverage at lower costs to the Town. Secondly, in
order to address ever rising health insurance costs, the Board of Selectmen authorized
plan design changes which are expected to generate substantial annual cost reductions
going forward. As the law requires, the Town has already paid out mitigation payments
to employees covered by the Town’s health insurance which represents 50% of the
estimated savings over the first year under the new terms. Therefore, the full effects of
the cost reductions will impact the budget in FY 2019. This action has allowed for
increased flexibility in the FY 2019 budget to focus on the items being recommended.
Local economic conditions continue to appear stable and favorable despite a significant surge
in activity on the Island in the last few years. At the national level, indicators are also largely
positive with employment at an all-time high and gross domestic product finally showing signs
of life. On the other hand, interest rates are expected to steadily rise over the next year and
some might argue we are due for a market correction sooner rather than later (Appendix B). In
addition, there is uncertainty as to the short- and long-term impacts of any comprehensive
Federal tax reform that is currently proposed. Here on the Island, the Town still faces a
balancing act between the increasing demands of a growing community, rising costs and
financial flexibility. Again this year, the growing needs of the community are putting pressure
on the Town’s ability to remain below the levy limit for FY 2019.
Each year, we are challenged to not only present a balanced budget but a plan of service for the
community that must acknowledge that all requests and competing needs cannot be met to the
degree desired by individual groups and departments. We continue to be challenged by the
effects of the current growth period on the island, which are straining Town resources. Fixed
costs are always increasing, especially those of employee benefits, service contracts, insurance
and (generally) utilities. The Town’s levy capacity for FY 2019 will allow for funding of fixed
obligations and annual appropriations, as well as a limited number of new expenses that
address some goals and priorities of the Board of Selectmen and Town Administration.
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II. Overview of FY 2019 General Fund Budget Projection
A. Projected FY 2019 General Fund Revenue
As noted earlier, local economic revenue indicators are showing overall continued strength. In
FY 2017 there were modest to significant increases in most areas of revenues such as: new
growth, building permits, room occupancy taxes, meals taxes, ferry embarkation fees and
motor vehicle excise taxes. As we near the end of the first half of FY 2018, we are seeing
increases in certain revenue categories while others (building permits, for example) are
showing signs of stabilizing or even slight decreases year-over-year. Refer to Appendix E
for a detailed breakdown of the FY 2019 proposed General Fund budget revenue as compared
to the FY 2018 approved budget.
Tax Revenue
$80.3M (86%)
Local Receipts -
All Other
$2.1M (2%)
Motor Vehicle
$2.5M (3%)
Rooms and Meals
$3.9M (4%)
Licenses and
Permits
$1.5M (2%)State Aid
$3.3M (3%)
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B. Projected FY 2019 General Fund Expenses
The proposed FY 2019 General Fund budget will fund:
» Town and School salaries and operational expenses
» Fixed costs allocated between several expense categories including:
- Health Insurance for active and retired employees, which is projected to rise at a
rate of 10.0% for FY 2019 after applying any savings from plan design changes
made effective November 1, 2017, which translates into a 3.3% decrease
compared to the FY 2018 budget
- General Insurance, which is projected to increase from the FY 2018 actuals, but
decrease by 7.4% compared to the FY 2018 budget given the savings realized in
2017
- Debt Service, which is established by the current repayment schedule (Appendix
L)
- Retirement assessment, in the Barnstable County Retirement System, which is
assumed to increase 8.5% in FY 2019
» General Fund subsidies to the following Enterprise Funds:
- Our Island Home – reduce General Fund subsidy and increase reliance on
Retained Earnings (more on this in Section III)
Municipal
Departments
$27.1M (28.7%)
School
Department
$29.3M (30.9%)
Non-
Departmental
$26.1M (27.6%)
Special
Appropriations
$12.1M (12.8%)
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- Solid Waste Enterprise Fund -- $6,039,503 in transfers for operations as well as
$700,000 for the continued mining of the landfill (similar to arrangement in
recent prior years)
» Capital funds of $898,000 within the budget*, allocated equally between the Town
and School departments for capital improvements, pursuant to a requirement of the
Town Code:
*The Town shall spend on capital projects a minimum of 1% of total Town local receipts collected in the
prior fiscal year plus 1% of the total real estate and personal property taxes collected in the prior fiscal
year. If local receipts fall below the 1% minimum, the Town may forego the funding requirement.
Nantucket Town Code Chapter 11, § 11-12.1
» Special Annual Appropriations allowing the following:
- $500,000 to the Other Post-Employment Benefits (OPEB) Trust Fund, in
accordance with the Town’s OPEB policy. FY 2019 will be the 5th consecutive
year in which a deposit to this Trust Fund is made. The current balance of the
fund through the first quarter of FY 2018 is $1,903,825 (Appendix H);
- $500,000 to the Reserve Fund (see Appendix I);
- Funding to Health and Human Services, Cherry Sheet charges, the County
Assessment and unpaid bills from prior fiscal years
Refer to Appendix E for a detailed breakdown of the FY 2019 proposed General Fund expenses as
compared to the FY 2018 approved budget
III. Town Administration Recommendations
FY 2019 Expense Increases
Over the past 5-6 years, Nantucket has experienced significant growth and the Town’s scope
of responsibility has increased as well. We have taken on initiatives in response to needs
and/or mandates yet service levels have not all kept up with the island’s growth, particularly
in areas such as: infrastructure and public building maintenance, project management, code
enforcement, parking enforcement, expansion of water quality initiatives, community and
town employee housing efforts. While the FY 2019 expense increase recommendations
address some of these issues, Town Administration received:
Requests for 18.5 additional FTEs totaling (with benefits) $1,824,159
Requests for $1,904,930 in increased expenses
After applying health insurance cost reductions, removing one-time expenses from the FY 2018
Town budget and providing additional funding to the School budget, we have approximately
$1,085,000 available for Town use (available levy capacity) for FY 2019. As one can see, there
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is a significant gap (over $2,500,000) between the requests received (total of $3,729,089) and
available funds.
We have categorized all of the requests as follows:
Goals/Mandates/Priorities (GMP)
Operational Efficiencies (A)
Public Safety (B)
Maintenance/Infrastructure Improvements (C)
Personnel Classification Consistency (D)
Increase in Seasonal Demands (E)
Contractual Increases (F)
We have then prioritized the requests into Tiers:
Tier 1 = Must be done (goal, mandate, public safety)
Tier 2 = Must be done in order to address a goal, mandate or directive but can be deferred 1-3
years)
Tier 3 = Not required but would help meet demands, efficiencies, provide a benefit
Since it will not be possible to fund most of the requests without either additional revenue or
reductions elsewhere, we have:
focused our recommendations on what we believe are the most critical needs
recommended use of funds from other sources
used a different approach to accommodate the request
not recommended funding or a different approach (in other words, no action)
From a broad perspective, the proposed FY 2019 budget will begin or continue to address the
following goals and priorities:
» Facilities maintenance (buildings, parks, fields, beaches)
» Increasing public information mandates and/or initiatives (compliance with
amendments to Open Meeting Law made in 2017; increase capabilities for
televising/videotaping public meetings)
» Administrative management improvements (information technology improvements,
personnel/payroll/human resources management improvements, project management
improvements and increased engineering oversight, increased focus on regulatory
enforcement and review)
» Fleet maintenance (replacement vehicles; additional dedicated staff)
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Specifically, the above goals and priorities will be addressed with the following expense
increases:
Personnel-Related Expense Requests
1. Town Administration
» Full-time additional minute taker/Open Meeting Law compliance position
The Town has close to 50 boards, committees, commissions and work groups. All of these
require agendas to be prepared, meetings to be posted, space to be reserved, coordination with
NCTV for video recording meetings, minutes to be taken and posted and follow-up actions to be
taken and documented. Pursuant to recent amendments to the Open Meeting Law, the
requirement for the time frame within which minutes must be completed has become more
defined. While some of these committees have dedicated departmental staff, the ones that do not
often find it beyond volunteer member resources to accomplish what it takes to hold a meeting.
2. Public Works
» Deputy Director – Capital Projects/Facilities
We have long had a need for a position dedicated to capital project oversight, including point of
contact, coordination with other departments, future planning, procurement coordination,
outreach, scheduling. There are too many current and upcoming projects for existing staff with
other duties and responsibilities to also properly manage the capital projects. The majority of
capital projects are public works-related so it makes sense for the position to be with DPW.
There may remain “one off” large projects that will still require dedicated, specialized resources
(ie, Our Island Home) that may need to be engaged separately, however, this position could
remain the point of contact on where such projects stand. We have recently seen projects occur
which haven’t had the proper coordination from the start, which has resulted in lack of
addressing issues that would normally be included in a project (ie, road and infrastructure
improvement projects).
3. PLUS
» Senior Planner/Code Enforcement
With several plans coming up that need to be updated and/or prepared (including Master Plan,
Coastal Resiliency Plan, Open Space & Recreation Plan, Harbors Plan), as well as more
complex development proposals coming before the Planning Board, dedicated resources are
needed to focus on these issues. Additionally, dedicated resources are needed to focus on
code enforcement – including the development of a proactive program of enforcement,
including monitoring Special Permit conditions, tracking and inventorying code violations
and addressing “problem property” issues. We have been working to do this with a staff work
group; however, the group needs a dedicated central resource to identify issues, receive and
process complaints, schedule meetings, work on approaches to compliance, and follow up.
4. PLUS
» Part-time Building Inspector
The volume of building permit applications remains high with activity level increasing from
historic numbers since FY 2013 and has remained consistent since FY 2015. In addition, code
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changes in recent years have resulted in increasingly complicated applications, and by extension,
the time needed for inspectors to review the applications, perform inspections, and have
availability to respond to questions/concerns from customers has also increased – meaning it is
taking longer to handle many requests. Additional resources are necessary in order to complete
building permit application review and required inspections within statutory and regulatory
timeframes.
5. Public Works
» Mechanic
A long-time Town Administration/Public Works goal has been to establish a Central Fleet
maintenance division within the DPW. With the recent hire of a Central Fleet manager, we
now need to staff the division appropriately. In order to keep town vehicles functioning
properly and with as little down time as possible, it is critical to keep the division adequately
staffed. This position could also assist with certain other DPW functions as needed.
6. Human Resources
» Full-time benefits coordinator
The Town is the largest employer on the Island with over 1,000 active employees (seasonal,
part-time and full-time) and retirees; and, 13 collective bargaining units. It was hoped that this
could be a part-time position in FY 2018; however, increased regulation, reporting
requirements, the need to manage, track and analyze employee benefits in a focused manner is
not adequate with a part-time position for as many employees and retirees as we have.
7. Department Salary Adjustments
This would include: overtime and shift differential increases in certain departments, union
position reclassifications, market/internal parity adjustments for non-union positions.
Operational Expense-Related Requests
1. Town Administration
» Board of Selectmen Strategic Planning Initiatives
Allows funds to be available for initiatives and/or follow-up to the Strategic Plan that the Board
of Selectmen/Town Administration is working on in FY 2018.
2. Town Administration
» Increase in contract with NCTV for recording all public meetings
This item, while not critical to Town operations, has been requested by multiple internal and
external sources. On occasion Town staff is not available to manage the complex audio,
visual and streaming equipment at meetings. This contract will ensure transparency by
dedicating trained NCTV staff to be onsite to troubleshoot any audio and visual issues and
record, stream, broadcast and archive meetings for the public. Additionally, NCTV will
provide for “mobile” recording of meetings at remote locations when the Town’s preferred
meeting spaces are already taken.
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3. Town Administration
» Municipal employee housing (rent)
Not surprisingly, we are finding it more and more difficult to attract and retain qualified
employees without having already secured housing. This item would allow us to rent and
keep a housing unit available. The employee hired would then take over the rental payments.
4. Town Administration
» Pond Management Projects
This would be the third year of Town contribution toward pond management projects, in
conjunction with the Nantucket Pond Coalition. Prior year funds have helped to complete or
continue several beneficial projects including Long Pond phragmite removal; weed removal
at Hummock Pond and a phosphorus study for Miacomet and Hummock Ponds. We anticipate
this item becoming a permanent part of the budget effective with FY 2019.
5. Fire/Facilities
» Siasconset Fire Station building study
This item was requested last year but did not make it into the budget. The fire station in
Sconset (unstaffed) is facing numerous maintenance and repair issues. CPC funds have been
allocated for painting the exterior of this historic building; however, there are many interior
needs. The study would identify repairs and improvements that could be made to the building,
including what it would take to incorporate a housing unit (seasonal or year-round) and/or
meeting/training space.
6. Health Department
» Replacement vehicle
The Health Department uses three vehicles. Two of these are 2008 Ford Rangers – one
recommended for replacement in FY 2019, the other in FY 2020. Both vehicles are reaching
the end of useful life. The replacement vehicle would likely be a small hybrid SUV-type.
7. Information Technology
» Additional MUNIS application
The additional application would be MUNIS “Self Service Solutions”. It allows employees to
access certain information about their pay and benefits directly (including accruals, pay and
employment history, withholding information), resulting in less time needed to be spent by
HR/Payroll responding to requests for routine information.
8. Information Technology
» Server Virtualization Support Services
This item is for support services associated with a FY 2019 capital request for the
implementation of a new server virtualization environment. Virtualization is a methodology
used to simplify management, lower costs, provide redundancy for security purposes and
improve performance of servers.
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9. Town Clerk
» Election expenses
There are three elections currently scheduled to occur in FY 2019. Funding in the Town
Clerk’s budget has not been adequate to fully fund the cost of holding an election
(approximately $7,000). This recommendation would more fully fund the cost.
10. Town Clerk
» Voting equipment (tablets for voter check-in)
Over time the use of electronic devices to check voters in for elections and town meetings
would be much less time-consuming, more accurate and eventually require fewer personnel
resources. This is something of a pilot program.
11. Natural Resources
» Replacement vehicle
Natural Resources used four vehicles. The vehicle recommended for replacement is a 2008
Ford Ranger which has reached the end of its useful life and constantly needs repairs. The
vehicle is used for tasks including beach water quality sampling, boat and other hauling
activities, endangered species monitoring. It would be replaced with a larger 4WD truck.
12. DPW
» Increased allocations for: engineering services, facilities inspections – including
systems inspections (ie, fire alarms) and maintenance plan development; road and
roadside maintenance materials; landscaping
DPW is expected to take on more in the way of project, facilities and infrastructure
management and maintenance. Simply put, budget allocations must be increased in order to
accomplish expectations.
Additional Recommendation Regarding Funding for Our Island Home Budget
For the last two years, the topic of an override for Our Island Home (OIH) has been part of
budget presentations and discussions. The current “gap” between OIH revenues and expenses is
approximately $3,900,000 – which has been covered by a general fund subsidy and retaining
earnings in recent years. An override of $3,900,000 in FY 2019 would cover the subsidy for Our
Island Home and allow for approximately $1,500,000 in the General Fund for other
Town/School operational purposes. Retained earnings for OIH are uncertain going forward and
facility expenses are increasing as well as regulatory pressures which are likely to require more
improvements to the facility than are currently accounted for. Following action taken at the 2017
Annual Town Meeting not to proceed with a new facility at a different location, the Board has
directed Town Administration to undergo a re-evaluation of the current site. If we were not
realizing savings from the health insurance changes referenced earlier, we would be proposing an
operating override for Our Island Home to be used for the General Fund subsidy so that the
General Fund could be used for actual General Fund expenses rather than the expenses of an
Enterprise Fund. Since we are able to fund some of the most important expense increase requests
with available funds, we are not recommending that for this year. With no large projected
savings – such as from health insurance – in FY 2020; taking into account funding challenges to
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Department Description of Expense Request
One-Time
or Ongoing Funding
Personnel Expense Increase Requests (EIRs)
Town Admin Real Estate Specialist Ongoing TBD
DPW Add'l Mechanic Ongoing TBD
DPW Add'l Sr Equipment Operators (1 of 2 requested)Ongoing TBD
DPW Add'l Laborer Ongoing TBD
Police Parking Enforcement Officer Ongoing TBD
Police Dispatch PT to FT position Ongoing TBD
Total Personnel Expense Increase Requests -$
Operating Expense Increase Requests (EIRs)
DPW / Facilities Allocation to address various requests Ongoing TBD
DPW / Mosquito Control Increase in service area for mosquito control program Ongoing TBD
Total Operating Expense Increase Requests -$
Total Town Personnel & Operational Expense Increase Requests -$
School Personnel & Operational Expense Increase Requests TBD
meet demands; and other budgetary items on the “radar” for FY 2020, we recommend that a
discussion regarding the possibility of an operating override to provide direct funding for Our
Island Home take place now in anticipation of the FY 2020 budget.
Our recommendation for FY 2019 is that the amount of retained earnings be increased to fund
the Our Island Home budget, thereby reducing the General Fund subsidy and allowing for more
General Funds to be used for Town operations: specifically, for the subsidy to be reduced by
approximately half, allowing an additional $755,000 for General Fund use. Our preliminary
recommendations of items to be funded is as follows (subject to Board of Selectmen
endorsement):
Remaining Expense Increase Requests
Personnel Requests
Public Community Health position – for FY 2019 (or sooner) we are proposing to consolidate
the Health and Human Services Departments into one department. Once a new Our Island Home
Administrator is hired (expected in FY 2018) the current Human Services Director who is acting
as Our Island Home Administrator could take on this function, with support from existing
Human Services staff.
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Town Clerk additional administrative position – the additional minute taker position/OML
compliance position we intend to hire in FY 2018 will also be responsible for meeting postings.
This will free up Town Clerk staff time for other matters.
DPW Positions x 2 – not recommended at this time. See how we do this year with the additional
positions recommended and/or proposed in the override.
Fire administrative position – not recommended at this time; reconsideration in FY 2020.
Health additional inspector – not recommended at this time; reconsideration in FY 2020.
Natural Resources part-time administrative position – not recommended for FY 2019;
reconsideration in FY 2020.
Expense Requests
Purchase of electric vehicle with branding – love the idea, but not a high priority; will review
License Plate fund to determine if expenditure is feasible from that source.
Municipal towing and tow lot feasibility study – not a high priority; may have to do in-house.
Luggage storage shed – not recommended for FY 2019 but could be a future year issue if NGrid
Candle Street lot is not available after FY 2019. May need to seek municipal property that a
private group could lease from the Town (not sure where); or perhaps a private solution will
arise. Eventually, an Intermodal Transportation Center at Harbor Place could include this.
Stump grinder – not recommended at this time; reconsideration in FY 2020.
Additional vehicle for Fire Department – not a high priority; reconsideration in FY 2020.
Replacement of gates at DPW -- not recommended at this time; reconsideration in FY 2020.
Perhaps could work into Garage project.
DPW public shade tree inventory – not recommended at this time. We believe this is an
important item but will investigate other way(s) to fund (grant, intern, special project).
Cemetery Management Software – not a high priority.
New vehicle for Conservation Commission – not a high priority.
IV. Future Year Considerations
Strategic Plan
During FY 2018, the Board expects to continue the development of a Strategic Plan with
measurable goals and objectives. A Strategic Plan will help us become more proactive and
make use our resources effectively to focus on and accomplish formally agreed-upon goals.
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Health Insurance
The “Cadillac Tax”, a component of the Affordable Care Act (ACA), is a federally mandated
excise tax on high-end plans and is expected to be implemented January 1, 2020. In summary,
employers will pay a 40% tax on all costs for health insurance plans in excess of $27,500 for
family and $10,200 for individual plans with some inflation adjustment in future years. The
Town is in the process of reassessing the impact of a potential Cadillac Tax on the modified
health insurance plans now offered.
Coastal Resiliency/Infrastructure
Global warming, climate change and sea level rise have been more and more frequently
appearing in the news media as growing issues for municipalities. We have underway an update
to the Town’s Hazard Mitigation Plan and a Coastal Resiliency Plan. In the next 2-3 years there
will be an update to the Town’s Master Plan and Harbors Plan. These may include
recommendations for capital or other expenditures to address ways in which the Town can be
responsive to the impacts of environmental change on Town infrastructure. We need to pay
attention to this because expenditures and/or impacts are imminent. Other impacts could
include the loss of taxable real estate and the Town’s bond rating.
Collective Bargaining
An attached Appendix shows the list of collective bargaining contracts. Current negotiations are
for contracts that expired on June 30, 2017. To date, negotiations are concluded with the
Teacher’s Union (School) Police Union and Our Island Home union. Those contractual
obligations are contained with the FY 2018 budget and are included in the base budget for FY
2019. Unsettled contracts continue with the DPW, Fire, and Laborer’s unions.
NRTA Year-round Service
The Board of Selectmen voted on September 13, 2017 to implement year-round NRTA service
beginning in FY 2019. The NRTA’s estimated cost for year-round service is $838,000 with an
estimated off-set of $427,000 from fares. The amount of the cost not covered by fares will be
covered by a charge to the Town, beginning in FY 2021. This will mean that cost will have to be
covered in the Town’s budget, unless an alternative source of funding is available. Town
Administration is concerned about the impact of this potential cost to the General Fund budget
and recommends that the Board seriously consider an override in FY 2020 to cover this cost.
Harbor Place
This project is currently the subject of a feasibility study in connection with an intermodal
transportation center at the site. Depending on how the project develops, there may be an impact
on Town resources in connection with future infrastructure maintenance and capital costs. It is
likely too preliminary to be more exact at this point, but it should remain in our thinking for future
budgets.
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Revenue
Although in the near future, current revenue sources appear to be stable, other areas to
potentially look toward in the future for generating new revenue include: PILOT possibilities
(Payment-in-Lieu-of-Taxes for entities that do not pay property tax – if all of these were taxed
in FY2017, taxes due would have exceeded $10,000,000); parking fees (paid parking for Town
parking lots, downtown parking, beach parking); taxi transaction fee (requires meters);
expansion of room occupancy tax to seasonal vacation rentals (legislation pending); increase to
the ferry embarkation fee (requires substantial political work); increase of real estate transfer
tax for housing initiatives or another dedicated purpose (requires special legislation which was
approved at 2016 and 2017 ATMs, efforts continue to further legislation); tax on medical and
recreational marijuana sales (local option tax approved at November 6, 2017 Special Town
Meeting – projections unknown). Some of these have been pursued by the Town, others are
being pursued and some have remained stalled or not pursued.
V. Conclusion
The FY 2019 General Fund budget, as proposed, is $94,581,813 this represents an increase of
$1,485,739, or 1.6%, over the FY 2018 budget.
The Town has been extremely fortunate to be able to fund several items, within its levy limit
and other available revenue, including Our Island Home, Solid Waste Enterprise Fund
(including the landfill mining program), health insurance, Other Post-employment Benefits
(OPEB), an annual amount of capital items, Affordable Housing Trust Fund, health and
human services allocation. While the FY 2019 budget is balanced, and addresses our fixed
obligations, it puts forward only a few of the requests that are intended to provide better or
increased service to the public, provide the additional resources needed to maintain our
growing infrastructure in a proactive manner, and addresses or continues to address a small
amount of the goals and priorities of the Board of Selectmen and Town Administration. Our
biggest challenges include adequate staffing, need for expanded programming to address
public demands, infrastructure maintenance, housing and keeping pace with the cost of living
and faster-than-expected increases in costs ranging from health insurance to
construction/maintenance costs – the same issues Nantucket families and businesses are
encountering with their own budgets. Over the last 20 years, our community has grown
significantly in size and diversity. We are facing some “big city” problems (public safety,
housing shortage) now more than ever and it will take additional resources in the coming
years to address these.
Thanks to the Board of Selectmen, Capital Program Committee, Finance Committee, Town
departments, and especially to the staff who spend many, many hours putting together the
information necessary to develop the budget recommendations, including Assistant Town
Manager Gregg Tivnan, Finance Director Brian E. Turbitt, Assistant Finance Director &
Acting Treasurer Lynell Vollans and Financial Analyst Julia Lindner.
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Prepared by:
Town Manager, pursuant to Article IV, Section 4.2(d)(3) of the Charter of the Town of
Nantucket
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Appendix A18
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21
22
23
24
25
Global Economy's Momentum to
Continue in 2018
Mature Economies are Solidifying Growth Path; Emerging Economies
More Mixed
NEWS PROVIDED BY
The Conference Board
Nov 13, 2017, 12:00 ET
○
NEW YORK, Nov. 13, 2017 /PRNewswire/ -- After exceeding expectations in 2017,
the global economy is projected to carry forward its current momentum to
generate a 3 percent growth rate through 2018, according to The Conference
Board's latest Global Economic Outlook.
The Conference Board Global Economic Outlook 2018 provides projections for
the output growth of the world economy, including 11 major regions and
individual estimates for 33 mature and 36 emerging market economies for 2018
–2022 and 2023–27.
T
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Appendix B
26
"Global growth has finally left the starting gate since the global economic and
financial crisis," said Bart van Ark, Chief Economist of The Conference Board. "GDP
growth, which we predicted to grow at 2.8 percent a year ago, is likely to end at
about 3 percent for 2017, and through 2018."
While the growth path of mature markets will remain solid in the short term,
potential for much faster growth is limited, and a growth slowdown is likely to set
in later in the decade. "As some major emerging markets are maturing
themselves, especially China, they are unlikely to return to growth trends of the
past," added van Ark. "The good news is that a larger role for qualitative growth
factors—an improvement in labor force skills, digitization, and especially stronger
productivity growth—may help sustain growth and provide better conditions for
businesses to thrive over the next decade."
Mature Economies to Continue Momentum
Momentum in mature economies increased during 2017, which sets them up to
continue growing at a decent pace in 2018 compared to the previous five-year
average of 1.8 percent (2012–2017). Mature economies are projected to grow by 2.1
percent in 2018 compared to 2.2 percent in 2017. The US economy will especially
benefit from carrying stronger investment growth into next year. By the middle of
2018, several European economies may see some weakening of cyclical tailwinds
and fall back to their medium-term growth trend. These slowdowns will mostly
be quite modest. On the other hand, Japan and the UK are projected to slow
more dramatically next year.
Emerging Markets to Gain Some Strength
T
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27
Emerging markets will continue to gain some strength in 2018 (projected to grow
by 3.8 percent, compared to 3.7 percent in 2017), but there are significant
differences across countries. China had somewhat stronger growth in 2017 than
anticipated, due to a revival in exports and ample government support of the
economy in the run-up to the once-every-five-year Party Congress in October. But
China will continue its long, soft fall going into 2018. India, which had a weaker-
than-expected year due to implementation difficulties with major policy
initiatives, such as the demonetization of large currency notes and the
introduction of a country-wide goods and services tax, will see improved growth
in 2018, largely driven by consumption. Brazil will continue to recover slowly from
a deep economic crisis, while Mexico is likely to face more headwinds from
uncertainty around the NAFTA negotiations and domestic policy uncertainty
related to upcoming elections in 2018.
Challenges to Sustaining Current Economic Strength
The Conference Board warns that several factors may limit the period during
which the current strength in the global economy may continue:
T
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28
• The growth uptick in 2017 reflects a combination of unique events,
including the stabilization of energy and commodities prices, improved
business confidence based on hopes for fiscal stimulus and tax reforms by
the new US administration, a cyclical recovery in Europe, and China's policy-
driven growth stimulus. These events are unlikely to provide sustained
growth going forward.
• A less-than-convincing recovery in investment may limit the speed with
which technology can be translated into productivity growth.
• A slowdown in consumption growth is possible in several countries, as real
wage growth remains slow, even as labor markets tighten.
• Global trade growth may remain modest at best in light of a shift in growth
toward less trade intensive categories of services, such as retail and personal
and government services, causing a slower medium-term growth path,
especially for emerging markets.
• Policy and geopolitical risk may also distort the growth path in 2018. Some
of those risks are related to domestic policy, especially in the United States,
India, and China. Others are more geopolitical and geoeconomic in nature,
related to a possible fallout from dragging negotiations on Brexit and other
threats to Europe's stability, an acceleration in protectionism or even a trade
war between the US and China, and increased risk of political or even
military conflicts in different parts of the world.
Long-term economic trends and structural changes pose even bigger risks in the
global economy. Slow labor force growth due to aging populations, troubles with
translating technology into productivity, and unequal distribution of the benefits
of technological change have limited the potential size of the economy.
Unfavorable corporate tax regimes and business regulations may be additional
structural factors hindering business investment.
Strengthening the Qualitative Sources of Growth
T
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29
The Conference Board's Global Economic Outlook identifies several forces that
could help strengthen the quality of growth and make it more sustainable over
the next decade:
• Labor shortages may help induce faster investment growth especially in
sectors with high demand for scarce talent. This increased capital intensity
is a source of labor productivity growth, particularly for Europe, the United
States, and other mature economies.
• Investment growth can also be sustained by improvements in the "quality"
of capital, caused by a shift toward more investment in machinery and
equipment and a greater concentration in digital assets and services.
• The impact of digital technology investments on business productivity
growth may only become more pronounced over time. In recent years, the
biggest companies have, on average, widened the productivity growth gap
relative to the larger segments of small and medium-sized companies by
making the complex digital transformation process work to their benefit.
• Emerging markets with substantial scope for "catch up" growth will see
strong contributions from quantitative growth sources, in particular labor
force growth and investment. At the same time, they'll be increasingly
challenged to raise their qualitative growth contributions as they transition
from primarily export and investment-driven economies to ones more
dependent on domestic growth factors, notably consumption and services
sector growth.
• The skill composition of the workforce is another critical qualitative growth
component. Emerging markets still have substantial scope to bring better
educated and skilled workers into the labor force as the less educated retire.
Mature economies have to zoom in on critical talent shortages arising from
slower labor force growth.
For more information on The Conference Board Global Economic Outlook:
https://www.conference-board.org/data/globaloutlook/T
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30
For other information on economic data and analysis by The Conference Board:
https://www.conference-board.org/data/
ABOUT THE CONFERENCE BOARD
The Conference Board is a global, independent business membership and
research association working in the public interest. Our mission is unique: To
provide the world's leading organizations with the practical knowledge they
need to improve their performance and better serve society. Winner of the
Consensus Economics 2016 Forecast Accuracy Award (U.S.), The Conference
Board is a non-advocacy, not-for-profit entity holding 501 (c) (3) tax-exempt status
in the United States. www.conference-board.org
SOURCE The Conference Board
Related Links
http://www.conference-board.org
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31
Outlook
The Muni Watch
Periods based on fiscal calendar (1)Trend (2)
Local Receipts Last Qtr Qtr/Qtr LTM Yr/Yr 3 Mo LTM DetailsLocal Receipts Last Qtr Qtr/Qtr LTM Yr/Yr 3‐Mo LTM Details
Building Permits $315,122 (5%) $1.2M (1%)
Rooms Tax $106,521 (6%) $3.5M 2%
Meals Tax $75,400 7% $1.1M 6%‐ Yellow if trend is between +5% and ‐10%
Motor Excise Tax $445,051 (23%) $2.7M 2%‐ Red if trend is below ‐10%
Local Indicators
For Local Receipts categories:
‐ Green if trend is 5% or above
Real Estate ‐ Sales ($M) $240M 15% $1,026M 8%
Real Estate ‐ Transactions 118 (3%) 507 (6%)
SSA Freight Revenue ($M) $8.7M 5% $27M 3%
SSA Nantucket Passengers 162,645 34% 648,004 (1%)
GA Airport Landings 601 8% 13,917 11%
'l d d
between 0% and ‐3%, Red if trend is < 3%
Airport: Private aircraft activity.
SSA categories: ‐ Green if trend ≥ 0%, Yellow if
Green if trend ≥ 5%, Yellow if 0% to 5%, Red if < 0%
Real Estate categories: ‐ Green if trend ≥ 0%, Yellow if
between 0% and ‐10%, Red if trend is < 10%
Nat'l Leading Indicators Current 3‐Mo 12‐Mo 3‐Mo LTM
LIBOR T‐Bill Yield Spread 0.28% 0.39% 0.39%
Sr Loan Officer Survey (4%) (3%) (7%)
S&P 500 Performance 2,423 2,363 2,102
Weekly Initial Claims 250 250 242 000 261 250
‐ Difference between 3mth LIBOR & 3 mth treasury bill
(< 0.5% signals stability).
‐ Fed Reserve: % of loan officers seeing loan standards
tightening for med/large firms (< 10% is positive).
‐ S&P 500 index as proxy of performance of risky
equity assets. Level > 1950 is positive.
‐ 4‐wk average of unemployment insurance initial
Quarterly Building Permits
(in thousands of dollars)
Quarterly Real Estate Sales
(in millions of dollars)
Quarterly Building Permits 4 QTR Moving Average Quarterly Real Estate Sales 4 QTR Moving Average
Weekly Initial Claims 250,250 242,000 261,250 claims, < 300,000 is positive.$297K$272K$238K$262K$242K$310K$257K$322K$332K$274K$340K$277K$315K$211M$274M$343M$163M$156M$251M$289M$200M$209M$317M$287M$182M$240M$382K$383K
$424K
$418K
$432K
$460K
$1.30M
$1.56M
$1.56M
$1.65M
$1.55M
$1.71M
$1.38M
$0 70M
$1.66M
$1.75M
Quarterly Motor Excise Tax
(in millions of dollars)
Quarterly Meals Tax
(in thousands of dollars)
Quarterly Rooms Tax
(in millions of dollars)
$75K
$79K
$64K
$86K
$71K
$94K
$75K$0.08M$0.09M $0.08M $0.10M$0.11M $0.13M$0.11M
$0.57M
$0.29M$0.14M
$0.70M
$0.27M$0.17M
$0.57M
$0.39M
$0.14M
$0.45M
(1) Local receipt and local indicator data comparisons are based on the Town’s fiscal year (ex: Q1 = 7/1‐9/30).(2)LTM refers to “last twelve months”.
Appendix C
32
FY2019 General Fund Revenue Breakdown
Budget Budget
FY2018 FY2019 $ Change % Change
Tax Revenue Limitations
Levy Limit from Prior Year 68,716,742$71,686,428$2,969,686$ 4.3%
Add: 2 1/2 % increase 1,717,919 1,792,161 74,242 4.3%
Add: Prop 2.5% operating override ---na
Add: new growth estimate 1,251,767 800,000 (451,767) (36.1%)
Add: operating override ---na
Levy Limit for Current Year 71,686,428 74,278,588 2,592,161$ 3.6%
Add: Debt Exclusion 7,689,196 6,691,602 (997,594)
Maximum Allowable Levy for Current Year 79,375,624$80,970,190$1,594,567$ 2.0%
OVERLAY (900,000)(900,000)--
Net available:78,475,624$80,070,190$1,594,567$ 2.0%
State Aid 3,271,156$3,320,527$49,371$ 1.5%
Local Receipts:
Motor Vehicle Excise 2,400,000 2,450,000 50,000 2.1%
Rooms and Meals Tax 3,920,000 3,850,000 (70,000) (1.8%)
Licenses and Permits 1,500,000 1,479,100 (20,900) (1.4%)
Local Receipts - All Other 2,742,720 2,534,680 (208,040) (7.6%)
Total Local Receipts 10,562,720 10,313,780 (248,940) (2.4%)
Total Revenue 92,309,500$93,704,497$1,394,998$ 1.5%
Other Sources
Other Sources 65,000 -(65,000) (100.0%)
Free Cash Used 1,110,500 1,125,900 15,400 1.4%
Excess Overlay -
Total Revenue and Other Sources 93,485,000$ 94,830,397$ 1,345,398$ 1.4%
Total Expenses and Other Uses (budget reprogramming)93,210,064$ 94,581,813$ 1,371,749$ 1.5%
Appendix D
33
FY2019 General Fund Expense Breakdown
Budget Budget
FY2018 FY2019 $ Change % Change
General Fund Operating Budget Items: Salaries - Town (includes allowance for collective bargaining)17,716,373$18,905,100$1,188,727$ 6.7%Town Expense increase Requests- Salaries 349,307 541,000 191,693 54.9%
Salaries - School (includes allowance for collective bargaining)21,115,849 22,957,555 1,841,706 8.7%
School Expense increase Requests- Salaries 1,191,706 455,000 (736,706) (61.8%) Transfers to community school 400,000 450,000 Subtotal Salaries 40,773,235$ 43,308,655$ 2,535,420$ 6.2%
Operating Expenses, Town:6,375,051 6,970,863 595,812 9.3%
+Town Expense Increase Requests-Operating 1,180,500 571,900 (608,600) (51.6%) Operating Override - 2011 Mosquito Control 107,689 110,381 2,692 2.5% Operating Expenses, School 4,976,793 5,179,087 202,294 4.1%
+School Expense Increase Requests-Operating 202,294 228,000 25,706 12.7%
Transfers to community school 65,000 -(65,000) (100.0%) Subtotal Expense 12,907,327$ 13,060,231$ 152,904$ 1.2%
Group Medical Insurance- Active Employees 9,472,238 9,162,145 (310,093) (3.3%)
Group Medical Insurance- Retired Employees 3,157,413 3,054,048 (103,364) (3.3%)
General Insurance (all other insurance)2,457,743 2,275,830 (181,913) (7.4%)
Subtotal Insurance 15,087,393$ 14,492,023$ (595,370)$ (3.9%)
Debt Service 8,522,421$7,016,501$(1,505,920)$ (17.7%)
Retirement 4,255,533$4,617,253$361,720$ 8.5%
Total General Fund Operating Budget Items 81,545,909$ 82,494,663$ 948,754$ 1.2%
Other Articles
Unpaid Bills 20,000 20,000 --
Reserve Fund 500,000 500,000 --
Health and Human Services 400,000 450,000 50,000 12.5% County Assessment 170,201 170,201 -- Other Post Employment Benefits (OPEB / GASB45) 500,000 500,000 --
Affordable Housing Trust Fund 500,000 800,000 300,000 60.0%
Capital -naGeneral Fund budgeted from revenue (Town Bylaw 11-12.1)-na Town Capital (Non-Recurring)435,150 449,000 13,850 3.2%
School Capital (Non-Recurring)435,150 449,000 13,850 3.2%
Enterprise Fund Transfers -na Transfer to Enterprise Fund (Our Island Home - Beginning FY2011)1,511,446 1,511,446 --Add: Additional Subsidy from Free Cash (Our Island Home)---na
Transfer to Enterprise Fund (SWEF Operating Overrides 1999/2006)3,394,033 3,478,863 84,830 2.5%
Add: Additional General Fund Subsidy to SWEF 2012-Forward 2,498,185 2,560,640 62,455 2.5% Add: Additional General Fund Subsidy to SWEF-Landfill Mining 700,000 700,000 --Total Other Article Appropriations 11,064,165$ 11,589,150$ 524,985$ 4.7%
Other Statutory Expenditures
Overlay and other deficits ---na Cherry Sheet Offsets and Charges 486,000 498,000 12,000 2.5%
Total Appropriations and Other Statutory Expenditures 93,210,064$ 94,581,813$ 1,371,749$ 1.5%
Appendix E
34
FY2019 Town Expense Increase Request
Department Description of Expense Request
One-Time
or Ongoing
Amount
Requested
Amount
Recommended
FTEs
Requested
FTEs
Recommended
Personnel Expense Increase Requests (EIRs)
DPW Capital Project Manager / DPW Facilities Director Ongoing 150,000$ 150,000$ 1.0 1.0
PLUS Senior Planner / Code Enforcement Ongoing 114,000 114,000 1.0 0.5
Town Admin Open Meeting Law (OML) Compliance Position Ongoing 95,000 95,000 1.0 1.0
HR Benefits Coordinator Ongoing 90,000 90,000 1.0 1.0
DPW Add'l Mechanic Ongoing 89,000 89,000 1.0 1.0
PLUS Building Inspector (PT)Ongoing 72,000 72,000 0.5 0.5
Various Increase in Overtime, Shift Coverage and Reclassifications Ongoing 49,000 75,000 -
DPW Add'l Mechanic Ongoing 86,000 - 1.0
DPW Add'l Sr Equipment Operators (1 of 2 requested)Ongoing 172,000 - 2.0
DPW Add'l Laborer Ongoing 80,000 - 1.0
DPW Add'l Jr Equipment Operators (2)Ongoing 136,000 - 2.0
Fire Add'l Admin Assistant Ongoing 91,152 - 1.0
Health Add'l Public Health Inspector Ongoing 107,000 - 1.0
Health Public Community Health Officer Ongoing 107,000 - 1.0
Natural Resources Part time Admin Assistant Ongoing 58,000 - 0.5
Police Parking Enforcement Officer Ongoing 88,707 - 1.0
Police Dispatch PT to FT position Ongoing 54,300 - 0.5
Town Admin Real Estate Specialist Ongoing 100,000 - 1.0
Town Clerk Add'l Admin Assistant Ongoing 85,000 - 1.0
Total Personnel Expense Increase Requests 1,824,159$ 685,000$ 18.5 5.0
Appendix F
35
FY2019 Town Expense Increase Request
Department Description of Expense Request
One-Time
or Ongoing
Amount
Requested
Amount
Recommended
FTEs
Requested
FTEs
Recommended
Operating Expense Increase Requests (EIRs)
DPW / Facilities Increase in overall Facilities and Public Works budget Ongoing 225,000
Fire Siasconset fire station building study One-time 40,000 30,000
Fire Purchase of mechanical CPR devices One-time 16,000 16,000
Health (Central Fleet)Replacement of inspection vehicle One-time 35,000 35,000
IS GIS Support services for virtualization project Ongoing 12,000 12,000
IS GIS MUNIS self-service project One-time 11,400 11,400
Natural Resources Pond management program Ongoing 25,000 25,000
Natural Resources (Central Fleet)Replacement of department vehicle One-time 35,000 35,000
Town Admin Board of Selectmen strategic plan implementation One-time 50,000 50,000
Town Admin Municipal employee housing rent Ongoing 34,000 34,000
Town Admin NCTV annual meeting recording increase Ongoing 27,000 27,000
Town Admin (Facilities)Mobile bathroom trailer for Surfside or Cisco Beach One-time 50,000 50,000
Town Clerk Increase for election-related expenses One-time 25,000 15,000
Town Clerk Voter check-in tablets One-time 6,500 6,500
Culture & Tourism Biodegradable pennies program Ongoing 3,500 -
Culture & Tourism (Central Fleet)Purchase of electric vehicle with branding One-time 35,000 -
Culture & Tourism (Facilities)Purchase of storage shed(s) for luggage storage service One-time 20,000 -
DPW Public shade tree condition assessment One-time 10,000 -
DPW Purchase of Stump grinder One-time 40,000 -
DPW Increase to engineering services Ongoing 250,000 -
DPW (Facilities)Replacement of entrance/security gates at DPW One-time 50,000 -
DPW (IS GIS)Cemetery management software One-time 20,000 -
DPW / Facilities Facilities inspection services and develop maintenance plan One-time 25,000 -
Fire (Central Fleet)Purchase of additional vehicle for command staff One-time 49,000 -
Natural Resources (Central Fleet)New vehicle for ConCom One-time 35,000 -
Town Admin Municipal towing and tow lot feasibility study One-time 35,000 -
DPW Increase in road materials for road maintenance Ongoing 175,000 gg
DPW Replacement of split-rail fence town-wide Ongoing 50,000
DPW Increase in protective clothing Ongoing 20,000
DPW (Facilities)Facilities sprinkler / alarm systems inspection & maintenance Ongoing 50,000
DPW (Facilities)Increase to architectural / engineering services for facilities Ongoing 250,000
DPW (Facilities)Increase in facilities general maintenance (landscaping) Ongoing 250,000
DPW (Facilities)Facilities general maintenance - heating & cooling cleaning, in Ongoing 100,000
DPW (Mosquito Control)Increase in island-wide service Ongoing 50,000
Total Operating Expense Increase Requests 1,904,930$ 571,900$ - -
Total Town Personnel & Operational Expense Increase Requests 3,729,089$ 1,256,900$
Funding Source:
Tax Levy 839,000$
Free Cash 192,900
Alternate Sources (revolving funds, special revenue funds, dept'l budgets)225,000
Total Recommended Funding 1,256,900$
36
New Growth and Local Receipts History
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
New Growth 859,043$ 679,339$ 1,037,750$ 1,140,085$ 1,270,680$ 1,237,400$
Local Receipts Summary
Motor Excise Tax 1,850,103 2,444,483 2,512,722 2,674,907 2,753,692 2,400,000
Rooms Tax 2,346,122 2,582,944 3,041,496 3,428,604 3,498,400 3,100,000
Meals Tax 783,557 860,798 908,283 997,903 1,061,396 854,000
Building Permits &
Plumbing, Wiring Insp. Fees 909,396 1,082,521 1,239,278 1,600,561 1,591,768 1,250,000
Penalties & Interest 677,906 597,411 882,782 657,303 687,316 613,000
Licenses & Permits 321,280 506,081 436,147 493,147 475,910 386,000
Other 2,431,660 3,853,893 2,349,217 3,889,759 2,829,099 1,993,720
Total Local Receipts 9,369,323$ 11,939,392$ 11,447,107$ 13,742,183$ 12,897,581 10,596,720
Appendix G
37
Other Post Employment Benefits Trust Fund
Other Post Employment Benefits are those benefits that an employee is eligible to receive at the
start of retirement. Other post employment benefits that a retiree may be eligible for are typically:
health insurance premiums, life insurance premiums, or deferred compensations. They do not
include pension benefits. Bond rating agencies rate municipalities more highly if they establish an
OPEB Trust Fund and make regular annual appropriations to begin covering a greater portion of the
established OPEB liability over time. The balance at the end of the previous five years is shown
below.
2013 2014 2015 2016 2017
OPEB Trust Fund $250,111 $248,522 $765,994 $1,341,213 $1,903,825
Appendix H
38
Stabilization Fund
The Stabilization Fund is a special revenue account permitted by Massachusetts General Laws to
allow savings to be set aside and made available for emergency expenditures. In the case of an
emergency expenditure, a municipality with a Stabilization Fund balance may use the available
fund balance rather than spiking its property tax rate. The tax rate may be therefore “stabilized”.
Bond rating agencies rate municipalities more highly if they maintain a healthy reserve balance in
this and other reserve accounts. The five-year history of the Stabilization Fund is shown below.
Reserve Fund
The Reserve Fund is a special revenue account permitted by Massachusetts General Laws to allow
municipalities to appropriate or transfer a sum not exceeding 5% of the tax levy of the prior fiscal
year. This Reserve Fund is dedicated to extraordinary or unforeseen expenditures, such as a natural
disaster, and does not carry over to any future years if it goes unspent. No direct drafts against this
fund can be made, but transfers from time to time can be voted by the Finance Committee of the
Town. Bond rating agencies rate municipalities more highly if they maintain a healthy reserve
balance in this and other reserve accounts. The five-year history of annual appropriations in the
Reserve Fund is shown below.
2013 2014 2015 2016 2017
General Stabilization $3,740,988 $4,776,308 $4,834,733 $5,044,535 $5,053,411
Capital Stabilization $0 $0 $1,000,000 $1,250,000 $1,250,000
2013 2014 2015 2016 2017
Reserve Fund $867,000 $725,000 $500,000 $500,000 $500,000
Appendix I
39
Unused Levy Capacity
Excess levy capacity is a potential municipal reserve that arises out of the operation of Proposition
2 1/2. It is the difference between the maximum tax revenue a municipality is permitted to raise
under Proposition 2 1/2 rules (levy limit) and the tax revenue actually raised (levy). If a city or town
creates excess levy capacity, it can in subsequent years build the reserve by again taxing less than
the levy limit or tap into this taxing capacity to finance municipal spending without restriction.
Free Cash
Free cash is a revenue source that results from the calculation, as of July 1, of a municipality’s
remaining, unrestricted funds from operations of the previous fiscal year, based on the balance sheet
as of June 30. It typically includes actual receipts in excess of revenue estimates and unspent
amounts in departmental budget line-items for the year just ending, plus unexpended free cash from
the previous year. Free cash is offset by property tax receivables and certain deficits; as result, it can
be a negative number. Free cash plays a role in sustaining a strong credit rating, and the DOR
encourages the adoption of policies on its use. Under sound financial policies, a community would
strive to generate free cash in an amount equal to 3% to 5% of its annual budget. As a non-recurring
revenue source, a prudent use of free cash is to fund one-time expenditures, capital expenditures, or
replenish other reserves, according to DOR. Free cash is not available for use until a balance sheet
for the prior year is submitted by the accountant, auditor or comptroller and free cash is certified by
the Department of Revenue. The use of free cash requires an appropriation approved by the city
council on recommendation of the mayor, or the town council or town meeting, but only after it is
certified by the DOR. Free cash is “a necessary component of sound fiscal management” and “one
indicator of fiscal health” that can positively affect bond ratings and reduce borrowing costs,
according to the Division of Local Services.
FY2012 FY2013 FY2014 FY2015 FY2016 FY2017
Unused Levy Capacity 2,559,985$ 2,077,549$ 2,725,185$ 3,462,350$ 2,793,322$ 845,439$
2013 2014 2015 2016 2017
Certified Free Cash $5,671,200 $5,201,357 $5,405,506 $6,642,219 $6,215,883
Appendix J
40
Enterprise Fund Subsidies and Retained Earnings
In recent years, the General Fund budget has funded operational deficits for Our Island Home and
the Solid Waste Enterprise Fund. Below is a summary of the last five years of subsidies to
Enterprise Funds.
FY2013 FY2014 FY2015 FY2016 FY2017
General Fund Subsidy 2,261,560$ 2,295,000$ 2,267,598$ 2,295,000$ 2,762,535$
Certified Retained Earnings 2,054,350 1,747,556 1,649,432 5,962,402 5,321,795
CPE Payment 1,798,751 1,017,038 1,690,143 5,204,549 1,324,207
Solid Waste Enterprise Fund
Landfill Operations 4,516,502 4,612,963 4,699,787 4,810,000 4,930,250
Landfill Mining 700,000 700,000 700,000 700,000 700,000
Retained Earnings 1,643,730 1,781,493 2,245,252 75,264 2,775,435
Appendix K
41
Town of Nantucket, Massachusetts
Total Long-Term Tax-Supported Debt Outstanding as of June 30, 2017
Aggregate Debt Service
Date Principal Interest Total P+I
06/30/2017 ---
06/30/2018 5,536,357.57 2,906,338.77 8,442,696.34
06/30/2019 4,215,866.80 2,185,971.73 6,401,838.53
06/30/2020 4,208,526.36 2,057,212.34 6,265,738.70
06/30/2021 4,224,543.56 1,931,674.48 6,156,218.04
06/30/2022 4,239,003.70 1,784,983.41 6,023,987.11
06/30/2023 4,192,688.13 1,633,967.13 5,826,655.26
06/30/2024 4,079,832.68 1,473,378.48 5,553,211.16
06/30/2025 3,160,368.21 1,333,772.11 4,494,140.32
06/30/2026 3,207,305.87 1,208,953.96 4,416,259.83
06/30/2027 3,193,281.81 1,084,369.48 4,277,651.29
06/30/2028 2,996,415.93 980,639.51 3,977,055.44
06/30/2029 2,978,861.20 891,667.18 3,870,528.38
06/30/2030 2,385,656.73 805,200.62 3,190,857.35
06/30/2031 2,094,937.16 733,045.19 2,827,982.35
06/30/2032 2,154,561.07 673,196.37 2,827,757.44
06/30/2033 2,214,536.51 611,645.83 2,826,182.34
06/30/2034 2,279,872.38 548,310.11 2,828,182.49
06/30/2035 2,345,576.74 483,105.52 2,828,682.26
06/30/2036 2,411,659.18 416,023.16 2,827,682.34
06/30/2037 2,410,360.65 347,340.95 2,757,701.60
06/30/2038 2,480,763.55 277,713.13 2,758,476.68
06/30/2039 1,890,000.00 214,043.76 2,104,043.76
06/30/2040 1,945,000.00 156,518.76 2,101,518.76
06/30/2041 2,005,000.00 96,015.63 2,101,015.63
06/30/2042 2,070,000.00 32,343.75 2,102,343.75
Total $74,920,975.79 $24,867,431.36 $99,788,407.15
Par Amounts Of Selected Issues
November 9 2007 MWPAT CW-04-19 (IE).....................................................................................................................................................................397,724.11
February 15 2008 non-called -Waste Water Treatment Facility (General 34%) (IE)..........................................................................................................................6,800.00
February 15 2008 non-called -Childrens Beach Ramp (IE)..................................................................................................................................................15,000.00
February 15 2008 non-called -Bikepath (IE)..............................................................................................................................................................45,000.00
February 15 2008 non-called -Washington Street Building (IE)............................................................................................................................................10,000.00
February 15 2008 non-called -South Shore Road Bike Path (IE)............................................................................................................................................30,000.00
February 15 2008 non-called -Nobadeer Farm Road Bike Path (IE)..........................................................................................................................................5,000.00
February 15 2008 non-called -NES Building Improvements 1 (IE)...........................................................................................................................................10,000.00
February 15 2008 non-called -NES Building Improvements 2 (IE)...........................................................................................................................................20,000.00
February 15 2008 non-called -CPS Building Improvements (IE).............................................................................................................................................20,000.00
February 15 2008 non-called -CPS Building Improvements 2 (IE)...........................................................................................................................................20,000.00
February 15 2008 non-called -NHS Building Improvements (IE).............................................................................................................................................45,000.00
February 15 2008 non-called -NHS Building Improvements 2 (IE)...........................................................................................................................................35,000.00
February 15 2008 non-called -New School Playing Fields (IE).............................................................................................................................................80,000.00
Dec 15 2009 MWPAT CW-05-21 General 34% (IE)Revised......................................................................................................................................................10,766,620.69
February 15 2010 -Drainage (IE).........................................................................................................................................................................555,000.00
February 15 2010 -Police Station (IE)...................................................................................................................................................................7,810,000.00
March 15 2011 MWPAT CW-06-43 (IE) Revised...............................................................................................................................................................2,490,771.66
June 7 2012 -Cur Ref of May 15 2001 Land Acquisition (I)................................................................................................................................................14,300.00
June 7 2012 -Adv Ref of December 1 2003 Rec Facility (IE)...............................................................................................................................................70,700.00
June 7 2012 -Adv Ref of December 1 2003 School Remodeling (IE)..........................................................................................................................................725,000.00
June 7 2012 -Hummock Pond Rd. Bike Path (IE)............................................................................................................................................................2,125,000.00
March 5 2013 -Adv Ref of October 1 2004 School Remodeling (IE)..........................................................................................................................................39,000.00
March 5 2013 -Adv Ref of October 1 2004 Land Acquisition 1 (IE).........................................................................................................................................6,364,000.00
March 5 2013 -Adv Ref of October 1 2004 Rec Facility 1 (IE).............................................................................................................................................30,000.00
March 5 2013 -Adv Ref of October 1 2004 Remodeling (IE).................................................................................................................................................193,000.00
March 5 2013 -Adv Ref of October 1 2004 Rec Facility (IE)...............................................................................................................................................30,000.00
February 5 2015 -Adv Ref 11-15-05 School Remodeling (IE)................................................................................................................................................305,000.00
February 5 2015 -Adv Ref 11-15-05 Outdoor Rec Facility (IE).............................................................................................................................................140,000.00
February 5 2015 -Adv Ref 11-15-05 Bath House Construction (IE)..........................................................................................................................................86,000.00
February 5 2015 -Adv Ref 11-15-05 Land Acquisition (IE).................................................................................................................................................130,000.00
October 22 2015 Series A Cur Ref Land (IE)..............................................................................................................................................................1,880,000.00
October 22 2015 Series B -Nobadeer Farm Road Playing Fields (I).........................................................................................................................................640,000.00
June 22 2016 EOEEA (I)..................................................................................................................................................................................1,139,834.33
August 3 2016 -Adv Ref Feb 15 08 WWTF (General 34%) (IE)................................................................................................................................................64,150.00
August 3 2016 -Adv Ref Feb 15 08 Childrens Beach Ramp (IE)..............................................................................................................................................48,325.00
August 3 2016 -Adv Ref Feb 15 08 Bike Path (IE).........................................................................................................................................................173,000.00
August 3 2016 -Adv Ref Feb 15 08 Washington Street Building (IE)........................................................................................................................................93,800.00
August 3 2016 -Adv Ref Feb 15 08 South Shore Road Bike Path (IE)........................................................................................................................................119,000.00
August 3 2016 -Adv Ref Feb 15 08 Nobadeer Farm Road Bike Path(IE).......................................................................................................................................24,000.00
August 3 2016 -Adv Ref Feb 15 08 NES Building Improvements 1 (IE).......................................................................................................................................83,500.00
August 3 2016 -Adv Ref Feb 15 08 NES Building Improvements 2 (IE).......................................................................................................................................187,300.00
August 3 2016 -Adv Ref Feb 15 08 CPS Building Improvements 1 (IE).......................................................................................................................................166,750.00
August 3 2016 -Adv Ref Feb 15 08 CPS Building Improvements 2 (IE).......................................................................................................................................140,550.00
August 3 2016 -Adv Ref Feb 15 08 NHS Building Improvements 1 (IE).......................................................................................................................................374,750.00
August 3 2016 -Adv Ref Feb 15 08 NHS Building Improvements 2 (IE).......................................................................................................................................328,000.00
August 3 2016 -Adv Ref Feb 15 08 New School Playing Fields (IE).........................................................................................................................................380,500.00
August 3 2016 -Cur Ref December 18 2008 USDA Sewer (OE).................................................................................................................................................993,600.00
November 9 2016 -School (IE)............................................................................................................................................................................35,470,000.00
TOTAL...................................................................................................................................................................................................74,920,975.79
Aggregate | 8/29/2017 | 2:58 PM
FirstSouthwest, a Division of Hilltop Securities Inc.
Public Finance
Appendix L
42
List of Collective Bargaining Agreements
Town Contracts:
Union Description Contract Expiration
1199 SEIU United Healthcare
Workers East
Our Island Home June 30, 2020
LiUNA Town June 30, 2017
LiUNA Deputy June 30, 2018
Police 330 Patrol Officers June 30, 2020
Police 330A Superior Police Officers June 30, 2020
IAFF Fire June 30, 2017
AFSCME DPW June 30, 2017
LiUNA Airport June 30, 2017
LiUNA Water June 30, 2017
School Contracts:
Union Description Contract Expiration
Nantucket Teachers’ Association Teachers Assistants June 30, 2018
Nantucket Teachers’ Association Teachers June 30, 2020
Nantucket Teachers’ Association Educational Support Personnel June 30, 2019
Nantucket Teachers’ Association Facilities June 30, 2018
Appendix M
43