HomeMy WebLinkAboutSection I - FY 2020 Budget Message- WEBSITE
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Town of Nantucket
Fiscal Year 2020 Budget Message
As of December 14, 2018
Revised:
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TABLE OF CONTENTS
I – Introduction…………………………………………………….. Page 3
II – Overview of FY 2020 General Fund Budget.……………….....Page 5
A. Projected FY 2020 General Fund Revenue
B. Projected FY 2020 General Fund Expenses
III – FY 2020 General Fund Budget Recommendations………...….Page 7
IV - Future Year Considerations…………………………………..Page 13
V – Conclusion…………………….……………………………... page 15
APPENDICES
A. Moody’s Credit Rating Opinion, October 23, 2018....................Page 16
B. State of the Economy…………………………………………..Page 22
Global Economy’s Momentum to Continue in 2018,
The Conference Board, PR Newswire, November 13, 2017
C. The Muni Watch – Economic data dashboard………………... Page 25
D. FY 2020 General Fund Revenue Breakdown………….……...Page 26
E. FY 2020 General Fund Expenditure Breakdown……….……. Page 27
F. FY 2020 Expense Increase Request List…….………………...Page 28
G. New Growth and Local Revenues…………………………….Page 29
H. Other Postemployment Benefits (OPEB) Trust Fund………...Page 30
I. Stabilization and Reserve Funds.……………………………. ..Page 31
J. Free Cash and Unused Levy Capacity……….………………...Page 32
K. Enterprise Funds Subsidies and Retained Earnings...…………Page 33
• Our Island Home
• Solid Waste Enterprise Fund
L. General Fund Debt Service Schedule…………………………Page 34
M. List of Collective Bargaining Agreements……………………Page 35
N. Town of Nantucket Financial Policies
• Link: http://www.nantucket-ma.gov/186/Financial-Policies
O. Strategic Plan
• Link: https://nantucket-ma.gov/192/Select-Board
P. Staffing Study (December 19, 2018)
• Link: https://www.nantucket-ma.gov/161/Human-Resources
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I. Introduction
The Town ended FY 2018 in a strong financial position and preliminary results for FY 2019
are positive overall. We remain confident but cautious going into FY 2020. We are monitoring
several 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 upgraded from a Aa1 to Aaa by Moody’s Investor Services
in October of 2018 (Appendix A) with a Stable Outlook. The Town continues to have
a rating of Aa+ from S&P Global. The Moody’s rating is the highest rating for a
municipality and Nantucket is one of 15 (out of 351) cities and towns in Massachusetts
to achieve this rating. The benefits of these high ratings include the opportunity to
borrow at lower interest rates.
◼ Free Cash for use in FY 2019 and FY 2020 was certified by the Department of Revenue
on October 3, 2018 in the amount of $9,593,671 for the General Fund. This amount is
believed to be the highest amount ever certified for the Town. 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 $5,059,485 (Appendix
I). A best management practice is to have reserves that are 10% of the budget. Using
an approximate budget of $100,000,000, the Stabilization Fund balance is
approximately 5.05%. However, when we account for the Certified Free Cash
(undesignated reserves) balance of $9,593,671, 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. This upgraded process also includes the development of software
for the town to more efficiently review and process capital requests for all stakeholders
involved in the capital planning process. The process continues to be refined going into
FY 2020 capital planning.
◼ Increased focus on Town infrastructure continues. The FY 2019 General Fund budget
allocated additional funds to the DPW budget for a Deputy Director of Public Works,
whose primary focus is on town-owned facilities. The first step in this process is to
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begin compiling a comprehensive listing of all town-owned facilities, along with the
current maintenance needs, and a maintenance schedule. The FY 2020 Capital
Program will seek to continue the focus on infrastructure maintenance. A number of
capital projects were approved at the 2018 annual town meeting. Many of these are
either on-going or are in the beginning stages of procurement.
◼ 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 has
slowed, in FY 2019 we saw a 2.49% increase in new growth ($41,231 more than the
prior year) (Appendix G).
◼ The Town maintains its commitment to funding the OPEB Trust Fund (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 $2,390,558
(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 past fiscal years, the Town has realized significant savings in certain rapidly growing
fixed costs, primarily in health insurance and the Town’s general insurance coverages.
First, the Town rebid all its insurance policies with the help of industry experts and
secured comparable coverage at lower costs to the Town. Secondly, to address ever
rising health insurance costs, the Select Board authorized plan design changes which
generated a one-time cost reduction of approximately $1M in FY 2019. This one-time
action allowed for increased flexibility in the FY 2019 budget to focus on the items that
were 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 still largely
positive with employment at stable levels and gross domestic product maintaining the
momentum from the past few fiscal years, although growth in future years is predicted to start
slowing. On the other hand, interest rates are expected to continue to rise over the next year,
the impacts of recently enacted tax legislation are beginning to wane, and wage growth is still
mostly stagnant. Some might argue we are due for a market correction sooner rather than later
(Appendix B). 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 2020.
Each year, we are challenged to not only present a balanced budget but a plan of service for the
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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 2020 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 Select Board and Town Administration.
II. Overview of FY 2020 General Fund Budget Projection
A. Projected FY 2020 General Fund Revenue
As noted earlier, local economic revenue indicators are showing overall continued strength. In
FY 2018 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 2019, 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
Tax Revenue
85%
Local Receipts -
All Other
3%
Motor Vehicle
3%
Rooms and Meals
4%Licenses and
Permits
1%
State Aid
4%
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for a detailed breakdown of the FY 2020 proposed General Fund budget revenue as compared
to the FY 2019 approved budget.
B. Projected FY 2020 General Fund Expenses
The proposed FY 2020 General Fund budget will fund:
◼ Projected Town and School salaries and fixed/current 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 11.0% for FY 2020. While the town did realize cost savings because of
plan design changes in FY 2019, increased utilization of the plan, and the
continued rise of medical rate inflation have had an impact on the FY 2020
health insurance budget.
- General Insurance, is being projected to increase 10% from FY 2019 actuals
based on current trends. The increase is a result of new town buildings
(Intermediate School and Fire Station) being added. The increase is also
resulting from the large losses that carriers have faced across the nation due to
natural disasters over the past few years.
- Debt Service, which is established by the current repayment schedule. Debt
Municipal
Departments
28.9%
School
Department
30.3%
Non-Departmental
29.3%
Special
Appropriations
11.4%
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service has increased in FY 2020, which is a result of the town issuing debt for
the Fire Station, as well as the first debt being issued for the Nantucket Harbor
Shimmo/PLUS Parcels sewer extension. The Town will see in the coming years
a slow rise in debt service as new borrowings come on-line for prior approved
projects. (Appendix L)
- Retirement assessment, in the Barnstable County Retirement System, which is
assumed to increase 8.5% in FY 2020.
◼ General Fund subsidies to the following Enterprise Funds:
- Our Island Home – Proposed subsidy in the amount of approximately
$2,025,000 which is $500,000 more than in FY 2019.
- Solid Waste Enterprise Fund -- $6,189,664 in transfers for operations as well as
$700,000 for the continued mining of the landfill (like the arrangement in recent
prior years). As of this presentation, discussions are ongoing as to the
continuation of the mining program.
◼ Capital funds of $974,276 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
◼ Other Annual Appropriations for the following:
- $500,000 to the Other Post-Employment Benefits (OPEB) Trust Fund, in
accordance with the Town’s OPEB policy. FY 2020 will be the 6th consecutive
year in which a deposit to this Trust Fund is made. The current balance of the
fund through the first quarter of FY 2019 is $2,390,558 (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 2020 proposed General Fund expenses as
compared to the FY 2019 approved budget
III. Town Administration Recommendations
FY 2020 Expense Increases
Over the past 6-7 years, Nantucket has experienced significant growth and the Town’s scope
of responsibility has increased. We have taken on initiatives in response to needs and/or
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mandates yet staffing and 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. In addition, global, national and regional
issues of coastal resiliency and solid waste management are becoming more and more critical
in terms of climate change, sea level rise and sustainability of natural resources. During FY
2018 and 2019, the Select Board undertook the development of a Strategic Plan intended to
help focus Board initiatives and budgetary allocations toward the goals contained within the
Plan. Information as to the specifics of the Strategic Plan may be found on the Town
website at nantucket-ma.gov/192/Select-Board. The FY 2018 budget contained funding for
a Town-wide Staffing Study (excluding the School and all Enterprise Funds with the
exception of Sewer) to help us determine if a) staffing levels are sufficient (based on
industry standards) to provide the level of services and programming necessary to meet the
demands of the community; b) recommendations on any staffing needs, process or other
improvements that will overall improve town operations and efficiencies. The study
commenced at the end of FY 2018 and the final report will be presented to the Select Board
at the Board’s December 19, 2018 meeting. (nantucket-ma.gov/161/Human-Resources)
The Staffing Study contains 19 recommendations for new positions to be considered by
Town Administration and the Select Board over the next several budget cycles. While the
FY 2020 budget recommendations begin to address items contained within the Strategic Plan
and the Staffing Study, not all requests and recommendations can be addressed at this time.
Town Administration received the following requests* from Town departments and
recommendations from the Staffing Study:
◼ 18.0 additional FTE’s (full-time equivalents) requested from Town departments totaling:
$1,984,672
◼ 19 additional FTE’s recommended by the Staffing Study totaling: $1,628,392
◼ 12.5** additional FTE’s recommended by Town Administration totaling: $624,007
Additionally, there are budget requests for $4,531,390 in increased non-personnel expenses
(including $3,000,000*** for the Affordable Housing Trust voted by the Select Board at its
November 28 and December 5, 2018 meetings)
*for the purposes of budgeting the personnel numbers, new positions include the cost of
$30,000 of benefits per FTE
**of the 12.5 FTEs, 4 are already being addressed in FY 2019 and 8.5 are recommended for
FY 2020
***as of the writing of this Budget Narrative, utilization of the Community Preservation
Fund (through borrowing) was being reviewed as the funding source for this $3,000,000
request
After removing one-time expenses from the FY 2019 Town budget and providing additional
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funding to the School budget, we have approximately $1,475,000 available for Town use
(available levy capacity) for FY 2020. As one can see, there is a significant gap (over
$2,041,062) between the requests received (total of $3,516,062) and available funds.
Using a point system, with “Legal Mandate” being automatically supported, the requests were
individually ranked and prioritized in accordance with the following criteria:
Legal Mandate
Strategic Plan Initiative
Staffing Study Recommendation
Department Operations Improvement
Necessary to Support New Program
Necessary to Support Existing Program
Continuity of Operations
The maximum score is 6.0. Requests that qualify as a Legal Mandate automatically score 6.0
and are being recommended for funding. There are three such requests. Each of the other six
criteria is weighted equally and can receive up to 1.0 points (or a fraction of a point) for a
maximum score of 6.0. Requests receiving a 4.0 or higher are being considered for funding.
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 the Board’s Strategic Plan, the Staffing Study and critical
Town operational issues
◼ recommended use of funds from other sources
◼ reallocated existing resources, where possible, to accommodate the request
◼ not recommended funding or a different approach (in other words, no action)
◼ put forward for consideration, again, the possibility of seeking voter approval for specific
items currently funded in the General Fund to be funded through a targeted override
Based on the foregoing, the following expense increases are recommended for FY 2020:
Personnel-Related Expense Requests
1. Harbormaster
-- Third Assistant Harbormaster
The Staffing Study (Recommendation 77) is recommending a total of four Assistant
Harbormasters. Currently, there are two. Because of the volume of departmental expense
requests and the fact that we cannot fund every recommendation/request within existing revenue,
we are supporting part of the request to bring the number of Assistant Harbormasters to three by
reclassifying the “Beach Maintainer” position. This can be funded with no increase to the
General Fund and will allow for the expanded scope of responsibility that is needed. This
position also relates to the Strategic Plan (Environmental Leadership Goal #2) because a third
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Assistant Harbormaster will allow for increased patrols of the harbors, including for water
quality management purposes.
2. Information Technology
-- Increase existing part-time position to full-time
-- Add one additional full-time position
The Staffing Study is recommending two additional positions for Munis support (one in IT and
one in Finance) (Recommendations 13 and 19). “Munis” is the Town’s financial management
software (widely used by towns in Massachusetts and elsewhere). A recurring theme of the
Staffing Study is the necessity to devote additional staff focus and dedication to more complete
utilization of Munis. This would allow for increased efficiency and accuracy of information
across all departments. Currently there is a part-time position in IT that we propose to increase to
full-time to take on more “help desk” activities and office administration tasks. It is important to
provide the needed resources to Munis, so we are also recommending the additional full-time
position in IT, but not in Finance at this time.
3. Fire Department
-- Add two additional Firefighter/Paramedic positions
-- Add one new part-time administrative clerk position
In addition to more firefighter positions, several positions are recommended in the Staffing
Study for the Fire Department. Based on our ranking criteria, we are recommending two new
full-time positions and one part-time for FY 2020. Two years ago, the Town began the process
of funding the transition from Basic Life Support emergency medical services, to Advanced Life
Support. Nantucket is one of the only communities in the state which remains BLS. In the
current fiscal year, the Town has started the necessary training program for the initial firefighters
who will staff ALS service. In the meantime, emergency medical-related calls have been
increasing. To staff closer to a national standard for fire and emergency medical services, in
consultation with the Fire Chief we are recommending two additional positions at this time.
Additionally, the administrative workload of the department has increased and there is a need for
more assistance.
4. Health and Human Services Department
-- One additional full-time Health Inspector
This is not only a recommendation in the Staffing Study (Recommendation 101) but it
addresses Goal 2 (Water Quality Management Plan) of the Board’s Environmental Leadership
Focus Area of the Strategic Plan. Currently, the Public Health Director is spending a significant
amount of time conducting inspections, which detracts from getting to policy and other
planning activities. Having the resources to handle inspections will free up the Director to focus
on higher level functions like these that are currently not being fully addressed.
5. Human Resources
-- Full-time HR Generalist position
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 has become more
and more apparent in the last several years, that to attract and retain qualified employees, we
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need more of a focus on doing just that. Employment-related regulations and reporting
requirements have also increased in recent years (for example, health insurance reporting, state
requirements for ethics training and testing, the 2018 amended Massachusetts Equal Pay Act,
safety and other training requirements). All of these should be monitored and tracked, centrally.
The day-to-day human resources administration of an organization as large as the Town
necessitates a certain level of staffing – combine that with the uniqueness of recruiting, hiring
and retaining qualified employees on an island with significant seasonality and there is a need
for increased focus and attention to ensure that we are properly staffed. Additionally, the
position can help with employee housing issues (including assistance with lease management,
policies, data gathering as to Town employee housing needs), which helps address Housing
Goal 2 of the Strategic Plan.
6. Finance
-- Capital Asset Manager
We have long needed a position dedicated to capital project oversight, including point of
contact (as needed), coordination with departments, capital planning and budgeting, more
comprehensive management of Town’s Capital Improvement Plan, outreach, scheduling and
asset management. There are too many current and upcoming projects for existing staff with
other duties and responsibilities to also properly manage the larger capital projects. The Capital
Program Committee recommended a position such as this in its 2018 Annual Report (nantucket-
ma.gov/261/Capital-Program-Committee). See also Recommendation 14 of the Staffing Study.
This position will also assist to manage the long-term goals and initiatives of the Select Board’s
on-going Strategic Plan from fiscal year to fiscal year, with particular emphasis on capital
management
7. Town Administration
-- Assistant Town Manager for Special Projects
During FY 2018, the position of Strategic Projects Manager was established. The incumbent has
since left the island but is continuing to work remotely, part-time, and coming to the island when
needed. This position is recommended in the Staffing Study and will assist with special projects
that do not have a readily identifiable “owner”. This is a “conversion” of an existing position that
does not actually require an expense increase for FY 2020 (see Recommendation 9 of the
Staffing Study). We have long discussed the need for an additional position with executive level
responsibility to address the more and more complicated issues and projects facing the Town.
This position will remain directly involved in facilitating and implementing current and future
projects contained within the Board’s Strategic Plan.
8. Police Department
-- Additional Police Officer
Several positions are recommended in the Staffing Study for the Police Department. In
consultation with the Chief, the most critical for operations is the additional police officer,
which is what we are recommending.
9. Other Personnel Recommendations
In various departments (PLUS, DPW, Natural Resources, Harbormaster in particular), we are
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recommending increases to the overtime and seasonal staffing budgets due to high levels of
activity for which current staffing is insufficient; and, the need for some activities to happen
outside of regular work hours.
As noted earlier in this section, there are positions referenced in the Staffing Study to be funded,
that already were or are, funded in FY 2019. These include a Senior Planner position in PLUS
and a restructure of the Building Commissioner position. The Building Commissioner position
will also be designated as Deputy Director for Code Enforcement. Again, funding exists in the
current budget for both positions.
Operational Expense-Related Requests
Operational expense increases meeting the prioritization criteria and recommended for funding
are as follows:
Additional Recommendations
Department Description of Expense Request
One-Time or
Ongoing Approved EIRs
Operating Expense Increase Requests (EIRs)
C&T Installation of 2 outdoor water stations One-Time 13,000
C&T Electric Vehicle One-Time 40,000
C&T Purchase of 10 Bike racks One-Time 10,000
Fire Replacement of Fire Prevention Officer Vehicle One-Time 45,000
Fire Additional Department Vehicle for command staff One-Time 49,000
Fire Purchase Mechanical CPR devices One-Time 18,000
Health Replace one of two inspection vehicles One-Time 35,000
HR MEPA Audit One-Time 30,000
HR OSHA Compliance Plan One-Time 50,000
IT Department Vehicle One-Time 20,000
IT Phase II of EnerGov project for permitting/liscensing interface One-Time 82,000
IT Security Assessment (should be performed every 3-5yrs)One-Time 50,000
IT Virtualization maintenance and support One-Time 16,000
IT Team Dynamix Project Portfolio Managetment Software One-Time 15,000
NRD Harbor Plan Update One-Time 100,000
Police/Harbormaster Shark Warning Signs with Theft Proof Mounts for Beaches One-Time 10,000
Town Admin Strategic Plan Initiatives One-Time 100,000
Town Admin Strategic Plan Facilitation One-Time 100,000
Town Admin Legal Budget Increase One-Time 100,000
Town Admin Affordable Housing Trust One-Time 3,000,000
Town Admin Sustainability Plan One-Time 50,000
Town Admin Staffing Study Implementation One-Time 80,000
DPW Mosquito Control contractual increase Ongoing 4,010
DPW Increase safety uniforms budget Ongoing 4,000
DPW Vehicle maintenance budget increase Ongoing 10,000
DPW Equipment maintenance budget increase Ongoing 30,000
DPW Design/construction support srvcs to implement various DPW projects Ongoing 30,000
DPW Increase protective clothing budget Ongoing 5,000
Fire Increase funding for training Ongoing 63,000
IT Upgrade current comcast modem service to Ethernet Dedicated Internet Ongoing 17,016
Total Operating Expense Increase Requests 4,176,026$
Aligns with Strategic Plan
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There has been discussion at the Board level as to including a “Sustainability” component to
Town government to oversee, initiate and coordinate activities such as examining the
environmental and other impact of development projects or proposals, public outreach and
education for sustainability-related programs, provide support for the implementation of
Strategic Plan goals and other Plans (Harbors Plan for example). Rather than establish a position
for FY 2020, we plan to seek a grant that will help us develop a Sustainability component within
Town government, including staffing or other resource recommendations.
The topic of an override for Our Island Home (OIH) has been part of budget presentations and
discussions for the last three years. The current “gap” between OIH revenues and expenses is
approximately $4,713,000 – which has been covered by a general fund subsidy and retained
earnings in recent years. 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. In the FY 2019 Budget Message,
we had the following comment:
If we were not realizing savings from health insurance changes … we would be proposing an
operating override [in FY 2019] for Our Island Home … Since we can 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; considering
funding challenges to 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.
As we progress through FY 2019, the operations at Our Island Home and also the Solid Waste
Enterprise Fund have given Town Administration some cause for concern. During the tax rate
setting process for FY 2019, the Department of Revenue asked the town about the amount of
revenue projected for the enterprise funds. Based on the first quarter of FY 2019, it now appears
to be possible that we may not meet the revenue targets established during the FY 2019 budget
process for Our Island Home and Solid Waste. If this concern becomes reality, then the town will
be required at the 2019 Annual Town Meeting to make transfers from other available funds,
including the General Fund, or from certified free cash. Faced with this possible reality, which
would not only impact FY 2019, but most certainly impact FY 2020 along with the future impact
of year-round NRTA service coming in FY 2021, we are again recommending that we have
serious discussions about the targeted override for Our Island Home that has routinely been
raised, and quite possibly Solid Waste as well.
IV. Future Year Considerations
Strategic Plan
In the first quarter of FY 2019, the Board completed its first multi-year Strategic Plan which
contains several goals and objectives, some of which are recommended for funding in FY
2020 (nantucket-ma.gov/192/Select-Board). The Strategic Plan will be updated on an on-
going basis and progress reports will be provided quarterly, beginning later in FY 2019. The
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Board is to be commended for its focus on and completion of this Plan. Some of the items
contained in the current Strategic Plan will require funding in future years.
Staffing Study
The Staffing Study will be a valuable tool when considering department personnel and
resource requests. We intend to utilize it going forward and update it as needed. There are
several items contained in the Study that could improve town operations, programs and
services which could potentially be funded in future years. There also may be
personnel/staffing issues that arise outside of the staffing study that need to or should be
addressed.
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, 2022 (extended
from 2020 under Trump Administration). 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. This potential expense will be considered
in our budgetary forecasting.
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 nearly completed an
update to the Town’s Hazard Mitigation Plan and are in the process of finalizing a Coastal
Resiliency Plan (nantucket-ma.gov/1126/Community-Resilience). In the next 2-3 years there will
be an update to the Town’s Master Plan (nantucket-ma.gov/309/Publications-Available) and an
update to the Town’s Harbors Action Plan (nantucket-ma.gov/130/Natural-Resources) will
commence later in FY 2019 or early in FY 2020. 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. https://nantucket-
ma.gov/163/Collective-Bargaining-Agreements Contracts were settled with most units in FY
2018 and 2019 for three years. Negotiations for contracts expiring in FY 2019 and 2020 will
commence in the winter/spring of calendar year 2019/20.
NRTA Year-round Service
Our FY 2019 Budget Message contained this comment:
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
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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.
We continue to recommend that the cost of NRTA service be put before the voters, if not for FY
2020, it should be evaluated for FY 2021.
Harbor Place
Discussions with the Harbor Place owner’s group have continued into FY 2019. 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 too preliminary to be more exact at this point,
but it should remain in our thinking for future budgets.
New/Expanded Revenue Possibilities
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 to cover needs and priorities
include:
◼ PILOT possibilities (Payment-in-Lieu-of-Taxes for entities that do not pay property tax –
if all of these were taxed in FY 2018, 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);
◼ short-term rental tax (State legislation pending) a Town Meeting vote will be necessary to
implement this – we are in the process of analyzing what this could mean for the Town
◼ 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, 2017 and 2018 ATMs, efforts
continue to further the legislation);
◼ tax on medical and recreational marijuana sales (local option tax approved at November 6,
2017 Special Town Meeting – projections unknown).
◼ new local option surcharge on tax bills of up to 3% (similar to how the Community
Preservation Act surcharge is applied) called the Municipal Water Infrastructure
Investment Fund – we are examining how this could be used for Nantucket
Some of these have been pursued by the Town, others are being pursued and some have
remained stalled or not pursued.
V. Conclusion
As recommended, the FY 2020 General Fund budget can be funded within available revenue,
with some amount of new initiatives, improved programs and services. Our biggest challenges
include adequate staffing and retaining and attracting qualified employees, housing, need for
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expanded programming to address public demands, infrastructure maintenance, population
growth. Our budget addresses many of these items; however, there are factors that affect our
budget that do not necessarily affect the budgets of similar sized towns, including Our Island
Home, and Solid Waste expenses. It will take additional resources in the coming year(s) to
address these, as we have noted in this Message.
Thanks to the Select Board, Town departments, Finance Committee, Capital Program
Committee, and especially to the staff who spend many, many hours putting together the
information necessary to develop the budget recommendations, especially Assistant Town
Manager Gregg Tivnan, Director of Municipal Finance Brian E. Turbitt, and Financial Analyst
Alexandria Penta.
Prepared by:
Town Manager, pursuant to Article IV, Section 4.2(d)(3) of the Charter of the Town of
Nantucket