HomeMy WebLinkAboutFiscal Year 2021 Budget_2020011416201072751
Town of Nantucket
Fiscal Year 2021 Budget Message
(July 1, 2020 – June 30, 2021)
December 11, 2019
As of 12/10/19
A buoy is an anchored float that serves as a guide to show hazards or to keep something from sinking
2
TABLE OF CONTENTS
I. Introduction……………………………………………………….. page 3
II. Overview of FY 2021 General Fund Budget……………………… page 8 A. Projected FY 2021 General Fund Revenue
B. Projected FY 2021 General Fund Expenses
III. FY 2021 Town Administration General Fund Budget
Recommendations………………………………………………… page 10
IV. Current and Future Year Considerations…………………………. page 14
V. Conclusion………………………………………………………… page 18
APPENDICES A. Enterprise Funds Subsidies and Retained Earnings
a. Our Island Home
b. Solid Waste Enterprise Fund
B. FY 2020 Cherry Sheet and FY 2021 NRTA Letter
C. Strategic Plan Summary (Adopted October 24, 2018 and updated September 11, 2019)
D. Moody’s Credit Rating Opinion, October 23, 2018 E. Unused Levy Capacity and Free Cash
F. Stabilization and Reserve Funds
G. Town of Nantucket Financial Reserves Policy H. New Growth and Local Receipts History
I. Other Postemployment Benefits (OPEB) Trust Fund
J. Government Finance Review article, February 2019
K. State of the Economy
a. Nantucket Real Estate Market Insights. Fisher Real Estate, October 2019
b. United States Economic Forecast. Deloitte Insights, 3rd Quarter 2019
c. Global Economy Will Avoid Recession and See Some Recovery in 2020. The Conference Board, PR Newswire, October 10, 2019
L. FY 2021 General Fund Revenue Breakdown
M. General Fund Debt Service Schedule N. FY 2021 General Fund Expenditure Breakdown
O. FY 2021 Expense Increase Requests
P. List of Collective Bargaining Agreements
3
I. Introduction
Challenges. Continuity. Caution. These three “C’s” are the basis of our budget recommendations
for FY 2021. The Town ended FY 2019 in a strong financial position and preliminary results for
FY 2020 are positive overall. We remain confident but cautious going into FY 2021. We are
monitoring several economic and financial indicators, some of which are showing continued
signs of leveling off. The following demonstrate the Town’s challenges and successes in
maintaining its strong financial condition:
Challenges.
Our Island Home (OIH). The Town’s municipally-operated nursing home (the only municipal skilled nursing facility in Massachusetts), despite having been made an Enterprise Fund in 2011,
is not an operation that generates enough revenue to fully fund its operations. There are a variety
of reasons for this including the relatively small number of beds (licensed for 45), collective bargaining restrictions, regulatory requirements, condition – as nursing homes go, it is not a modern facility and as it ages it requires more and more maintenance and repairs. Federal and state reimbursements do not cover the daily cost of care for a resident – which varies, depending
on what level of care they are receiving (see chart below this paragraph). Currently, in FY 2020,
the OIH subsidy from the General Fund is budgeted at $2,276,181.
Primary Pay
Source
Current Census
(as of 12/3/2019)
Average Payment
Rate Per Resident Per Day
Cost Per Resident
Per Day (based on 2018 Cost Report)
Difference in
Payment vs. Cost per day
Current loss per
day based on Resident census
Medicaid/
MassHealth 30 $225.47 $661.95 $(436.48) $ (13,094.54)
Medicare A 5 $521.67 $661.95 $ (140.28) $ (701.42)
Private 5 $560.00 $661.95 $ (101.95) $ (509.75)
The topic of an override for Our Island Home (OIH) has been part of budget presentations and discussions for the last four years. For the last two years, we had the following comments in the
Budget Messages:
FY 2019 Budget Message
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.
FY 2020 Budget Message
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
4
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. 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.
The projected gap for FY 2021 between OIH revenues and expenses is approximately $5,300,000. In prior years this gap has been covered by a general fund subsidy and retained earnings. For FY 2021, closing the gap is projected to require approximately $3,700,000 from
the General Fund and $1,600,000 from retained earnings*. 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.
For FY 2021, we are recommending an override to fund the operations of Our Island Home so
that:
the General Fund subsidy may be:
o reallocated to town and school operations
o reserved for budgetary flexibility in the event of an economic downturn or one-time
community need
OIH reliance on its use of retained earnings in its operating budget may be reduced or
eliminated
we may ensure that there is an on-going funding source for OIH operations and potential capital needs without compromising town operations.
*Retained earnings is the amount of funds that is annually certified by the state Department of
Revenue, following the close of the fiscal year. These funds are a combination of unspent budgeted
expenditures and revenue which has been received above budgeted levels. See Appendix A for OIH Retained Earnings and General Fund Subsidy histories.
NRTA Year-round Shuttle Service. In 2018, the NRTA began year-round shuttle service. NRTA operations are funded through state contributions as well as an assessment to the Town on the state’s “Cherry Sheet”. The FY 2021 Cherry Sheets are not out yet; however, we have been advised by the NRTA that the increase between FY 2020 and FY 2021 will be $436,000. See
Appendix B for the FY 2020 Cherry Sheet and NRTA FY 2021 letter.
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
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
5
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.
An override was not put forward, and the FY 2021 budget contains an additional assessment for the year-round service ($436,000). Since there is no dedicated funding source at this time for the year-round service, there is less room for funding expanded programs, initiatives or new
requests.
Strategic Plan Initiatives. The Board’s Strategic Plan (Summary found in Appendix C) contains several initiatives that require funding. The challenge is to fund them, while continuing to fund existing operations. One of the Board’s initiatives is a paid parking program that would go into effect in FY 2022; however, in order for that to happen, some items need to be budgeted in FY 2021, because they must be in place ahead of time. We anticipate that over time, a paid parking
program could potentially pay for itself but there is a need for upfront funding to get it underway. With the additional pressure on the budget from new initiatives, plus the OIH and NRTA subsidies, it is very challenging to put forward a balanced budget that accommodates even existing services. Continuity and Financial Strengths.
The Town’s bond rating was upgraded from an Aa1 to Aaa by Moody’s Investor
Services in October of 2018 (Appendix D) 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 2020 and FY 2021 was certified by the Department of Revenue
on October 21, 2019 in the amount of $10,334,761 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.
Free Cash is typically used for capital projects or items or other one-time expenses. See
Appendix E for a five-year history of certified Free Cash.
The Stabilization Fund remains strong with a current balance of $5,411,965 (Appendix
F). 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 5.41% of the budget. However, when we account for the Certified Free
Cash (undesignated reserves) balance of $10,334,761, the reserve amount exceeds the
best management practice guideline as per the Town of Nantucket Financial Reserves
Policy (Appendix G).
The Town maintains a balance of $1,250,000 in the Capital Projects Reserve Fund. The
current balance represents 1.25% of expenditures while the target is 3%.
6
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, involving a standardized ranking system that allows for a
consistent approach to prioritizing capital projects in a systematic manner, and provides
additional transparency as well accommodates anomalies or unusual circumstances.
Software was developed for the town to more efficiently review and process capital
requests for all stakeholders involved in the capital planning process. The process was
used for FY 2020 projects and continues with FY 2021 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. One of the first tasks for that
position is to begin compiling a comprehensive listing of all town-owned facilities,
along with condition assessments, current maintenance needs, and a maintenance
schedule. The position was filled in the fall of 2018; however, less than 12 months
later, the individual left the island for another opportunity and this process has
become delayed. We are working toward filling the position again and anticipate
getting this back on track during FY 2020. The FY 2021 Capital Project
recommendations will continue the focus on infrastructure maintenance and
improvement.
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 may be showing signs of slowing. In FY 2020 it was certified at
$1,057,634, a $225,364 decrease from FY 2019 (17.56% reduction). Comparatively,
new growth increased 2.49% between FY 2018 to FY 2019 (Appendix H).
In January of 2019, the state enacted new legislation that expanded the hotel/motel
room occupancy tax to cover certain short-term rentals. Link: https://www.nantucket-
ma.gov/1327/Short-Term-Rentals. Collections began in early FY 2020. First quarter FY
2020 reports indicate a significant increase in room occupancy tax receipts. Based on
this we will review the potential to increase our projected revenue; however, until we
have seen a full year of the expansion being in place it would be unwise to budget more.
Additionally, with regard to this new revenue source, the Board has had some
discussion as to reserving some amount of it for specific purposes – this could require
special legislation. Specific purposes which have been discussed include water quality
programs, affordable housing, human services, infrastructure improvements/
maintenance. In order to determine what amount to potentially reserve, again, we
should have a better picture of how much additional revenue we may be realizing from
this expanded tax. Meanwhile, we should be cautious with its use.
7
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 $3,130,512
(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, in FY 2018 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 $1,000,000 in FY
2019. This one-time action allowed for increased flexibility in the FY 2019 budget to
focus on the items that were recommended. While that savings was helpful for FY
2019, nation-wide health insurance costs continue to rise, as do other costs and it will be
difficult to continue to fund new programs, services and on-going expenses with
projected costs outpacing revenue (See Appendix J, Government Finance Review article
February 2019)
For the fifth consecutive year, the Town was awarded the Government Finance Officers
Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting
for the Town’s Fiscal Year 2018 Comprehensive Annual Finance Report (CAFR),
https://nantucket-ma.gov/ArchiveCenter/ViewFile/Item/400. Our Fiscal Year 2019
CAFR is in the process of being submitted to GFOA.
Caution.
We are closely monitoring local economic trends – we want to be cautious with our revenue projections. Some retail sales reports indicate a downward trend; and, some real estate data is showing properties for sale are on the market longer and selling at less than the listing price. (See Appendix K, a. – “Nantucket Real Estate Market Insights by Fisher Real Estate”). Local
economic conditions continue to appear stable 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. (Appendix K, b. – “United States Economic Forecast by Deloitte Insights”). 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 (See Appendix K, c. – “Global Economy Will Avoid Recession and See Some Recovery in 2020 by the Conference Board”). Here on the Island, the Town 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
8
on the Town’s ability to fund programs, needs and requests and remain below the levy limit for FY 2021.
Each year, we must present a balanced budget which represents a plan of service for the
community. Not all requests and competing needs can be met to the degree desired by
individual groups and departments. We continue to be impacted by the effects of the current
growth period on the island, which is straining Town resources. Fixed costs are always
increasing, especially those of employee benefits, service contracts, supplies, insurance and
(generally) utilities. The Town’s levy capacity for FY 2021 allows for minimal increases to
existing Town and School operations after allocations to Our Island Home and NRTA.
II. Overview of FY 2021 General Fund Budget Projection
A. Projected FY 2021 General Fund Revenue
As noted earlier, local economic revenue indicators are showing overall continued strength. In
FY 2019 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
Tax Revenue
85%
Local
Receipts -All Other
2%
Motor Vehicle
3%
Rooms and Meals
5%Licenses and
Permits
1%
State Aid
4%
9
motor vehicle excise taxes. As we near the end of the first half of FY 2020, we are seeing
increases in certain revenue categories while others (building permits, for example, see
Appendix H) are showing signs of stabilizing or even slight decreases year-over-year. Refer
to Appendix L for a detailed breakdown of the FY 2021 proposed General Fund budget
revenue as compared to the FY 2020 approved budget.
B. Projected FY 2021 General Fund Expenses
The proposed FY 2021 General Fund budget will fund:
Projected Town and School salaries and fixed/current operational expenses – with
limited additional positions and programs.
Fixed costs allocated between several expense categories including:
- Health Insurance for active and retired employees, which is projected to rise at a
rate of 8% for FY 2021. 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 2021 health
insurance budget.
- General Insurance is projected to increase 13% from FY 2020 actuals based on
current trends. The increase is resulting from the large losses that carriers have
faced across the nation due to natural disasters over the past few years.
- Debt Service is established by the current repayment schedule. Debt service has
increased in FY 2021, 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
Municipal
Departments
27.9%
School Department 30.4%
Non-Departmental
29.4%
Special
Appropriations
12.3%
10
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 M)
- Retirement assessment, in the Barnstable County Retirement System, 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
$3,100,000 which is $975,000 more than in FY 2020;
- Solid Waste Enterprise Fund -- $6,345,275 for landfill operations.
Capital funds of $1,033,750 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 2021 will be the 7th 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 $3,130,312 (Appendix I);
- $500,000 to the Reserve Fund (see Appendix F);
- State Cherry Sheet charges, the County Assessment and unpaid bills from prior
fiscal years;
- the annual Health and Human Services appropriation is level-funded at
$450,000.
Refer to Appendix N for a detailed breakdown of the FY 2021 proposed General Fund expenses as compared to the FY 2020 approved budget
III. Town Administration Expense Increase Recommendations
Background Over the past 6-7 years, Nantucket has experienced significant growth and the Town’s scope
of responsibility has increased. We have taken on and/or funded initiatives in response to
needs, requests and/or 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 2020, the Select Board updated its Strategic Plan, which is intended to help
focus Board initiatives and budgetary allocations toward the goals contained within the
11
Plan. Information as to the specifics of the Strategic Plan may be found on the Town
website at https://nantucket-ma.gov/1530/Strategic-Planning. 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, as applicable) 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. We engaged The Novak Group to conduct the study in June
2018 and the final report was presented to the Board on December 19, 2018, which can be
found at https://nantucket-ma.gov/DocumentCenter/View/23207/Nantucket-Staffing-Study-
Report-December-2018. During 2018, The Novak Group also prepared an Operational and
Staffing Review of the Planning & Land Use Services (PLUS) Department, which was
completed in February, 2019. That report also contained several recommendations, some of
which will need to be funded in order to implement. Between the Staffing Study and the
PLUS report, many of the recommendations that require funding will be considered by
Town Administration and the Select Board over the next several budget cycles, not all
requests and recommendations can be addressed at once. Both Reports can also be found on
the Strategic Plan webpage at https://www.nantucket-ma.gov/1530/Strategic-Planning.
FY 2021 Expense Increase Requests
Departmental expense increase requests for FY 2021 are shown in Appendix O, separated into
categories of:
Personnel Requests
Expense Requests – One-time
Expense Requests – On-going.
Using a point system, with “Legal Mandate” being automatically supported, the requests were individually ranked and prioritized in accordance with the following criteria:
Ranking Criteria Scale Description
Legal Mandate Y/N Required by State/Fed or Local Bylaw (Y = Automatically
Fund; Score of 9.0)
Staffing Study 0-2 Is it within the Staffing Study? If yes, 1 or 2 score would
be determined by priority level (2 for higher priority)
Strategic Plan 0-2 Is it within the Strategic Plan? If yes, 1 or 2 score would
be determined by priority level (2 for higher priority)
Staffing Study & Strategic Plan 0-1 Is it in both Staffing Study and Strategic Plan then 1
additional point to weight it higher
Department Operations & Efficiency 0-1 Funding necessary to support provide a department
with necessary support for existing or new program
Approved New Programming 0-1 Funding necessary to support a new initiative
12
Necessary for Existing Programming 0-1 Funding necessary to support or expand ongoing
initiatives
Continuation of Operations 0-1 Funding necessary to support unexpected increases or
items already operationalized (eg. software licenses)
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, the PLUS report and critical Town operational issues
recommended use of funds from other sources (fund the one-time expenses from Free Cash)
reallocated existing resources, where possible, to accommodate the request
not recommended funding or a different approach (in other words, no action)
recommended an operating override to fund the operations of Our Island Home
Even with the above actions, we do not have the funding to accommodate most of the FY
2021 expense increase requests (Appendix O). We have prioritized them using the system
noted above, and recommendations follow:
FY 2021 Personnel Expense Increases
1. Department of Public Works
One (1) new position:
Construction Inspector
This position has been discussed for several years. With the increase in development, there is a
growing impact to municipal infrastructure, including roadways, sidewalks, and storm water
drainage. A recent issue has also been raised about utility petitions and associated roadway
Department Description of Expense Request
One Time or
Ongoing Approved EIRs
Personnel Expense Increase Requests (EIRs)
DPW Construction Inspector Ongoing 107,387
Police Parking Enforcement Officer Ongoing 83,000
Police (3) Addntl CSO's for Expanded Parking Hours Ongoing 40,000
Total Personnel Expense Increase Requests 230,387$
Operating Expense Increase Requests (EIRs)
Town Clerk Elections Expenses- Voting Tabulators One-Time 10,000
IT Upgrade the Town Exchange Mail Server to most current version One-Time 10,000
IT Phase III Energov One-Time 80,000
Fire Equipment and Trailer for Mass Casualty Preparedness One-Time 15,000
Fire Active Shooter Hostile Event Response (ASHER) Equipment One-Time 30,000
HR Compensation & Classification Study One-Time 50,000
PLUS Professional Services Related to Update of 2009 Master Plan One-Time 100,000
PLUS Replacement Vehicle for PLUS Fleet One-Time 27,000
PLUS Prof. Svcs Related to update of Historic Architectural surveys from HDC One-Time 100,000
Town Admin Potential Data Collection Initiative One-Time 60,000
Town Admin Sustainability Office One-Time 100,000
Town Admin Strategic Plan Initiatives One-Time 100,000
Town Admin Rental Regulations Assistance One-Time 60,000
Town Admin Governance Workshops One-Time 100,000
Town Admin Professional Administrative Support Services One-Time 100,000
Total Operating Expense Increase Requests 942,000$
Total Town Personnel & Operational Expense Increase Requests 1,172,387$
(1)
(1) IncludesHealth Insurance Benefits
13
and sidewalk work in connection with them. All of these need to be considered and reviewed
in a more coordinated fashion with the appropriate departments (a more robust coordinated
review process is a recommendation within the above-referenced PLUS report). There are
many examples of costly impacts to town infrastructure caused by development, utility, storm
water drainage issues and private activities which could be avoided and/or mitigated with a
position focused on compliance with regulatory requirements. The Town of Nantucket does
not have a meaningful fee structure in connection with private roadway, sidewalk and storm
water drainage work – if we are able to put a structure in place, fees could potentially offset
the cost of this position.
2. Police Department (all related to Board’s Strategic Plan)
Two (2) new year-round positions:
Parking Coordinator (1)
This position will be focused entirely on administering, overseeing, and monitoring the Town’s
parking enforcement program. It will collect data to help determine how best to implement the
Board’s Strategic Plan Transportation Goal #1 “Launch a downtown parking management
system based on demand management principles that achieves (or is measured by) 85%
occupancy of public parking spaces.” The position will be hired in FY 2020.
Year-round Parking Enforcement Officer (1)
This position will support year-round, consistent enforcement of parking regulations and will
help support the implementation of paid parking in FY 2021.
Three (3) new seasonal positions:
Additional Community Service Officer positions to assist with parking enforcement. It is likely
that the hours of parking enforcement will be increased in FY 2021 – it will be necessary to
have additional staff on board to handle the expanded time frame.
Ultimately, it is anticipated that the implementation of paid parking, could generate an increase
in revenue to offset the cost of these positions.
FY 2021 Operational Expense Increases (One-Time)
The items listed below are considered one-time and as such, may be funded through Free
Cash.
1. Town Clerk
New voting tabulators - $10,000
2. Information Technology
Upgrade Town’s Exchange Mail Server to most current version - $10,000
Implement Phase III of Energov (e-permitting system) - $80,000 (Relates to Strategic Plan)
14
3. Fire Department
Trailer with equipment for mass casualty preparedness - $15,000
Active Shooter Hostile Event Response (ASHER) equipment - $30,000
4. Human Resources
Compensation & Classification Study - $50,000
5. Planning & Land Use Services (PLUS)
Professional Services in connection with update of 2009 Master Plan - $100,000
Replacement of vehicle - $27,000
Professional Services in connection with update of historic architectural surveys for HDC - $100,000
6. Town Administration
Commuter shuttle - $100,000 (expected to start in late FY 2020)
Data analysis initiative - $60,000
Sustainability Office - $100,000 (pending the outcome of a plan, funded through a grant from ReMain, which is underway currently)
Strategic Plan initiatives - $100,000
Governance workshops for Select Board - $50,000
Professional administrative support services - $50,000
FY 2021 Operational Expense Increases (On-going)
None of these are funded.
IV. Current and Future Year Considerations
Sustainability
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, resiliency and other impacts 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, Hazard Mitigation Plan for example), and to seek and manage grants that could support these measures. In FY 2020,
through a grant from ReMain, we secured a consultant to make recommendations as to how to structure a sustainability function within the Town’s government. The consultant’s report is pending; it may be that we evaluate the findings and design a course of action for FY 2022. We have programmed $100,000 into FY 2021 for this initiative.
Strategic Plan
In the first quarter of FY 2020, the Board updated its multi-year Strategic Plan (Appendix C,
https://www.nantucket-ma.gov/1530/Strategic-Planning) which contains several on-going
goals and objectives, some of which are funded in FY 2020, some are funded and will begin
in late FY 2020 and carry through into FY 2021 (several of the parking-related initiatives, for
15
example); and, some are funded to begin in FY 2021. It is expected that as the Strategic Plan
continues, some goals will be met, some will need on-going funding, and some will need to be
funded in future years in order to be realized. It is intended that the Strategic Plan goals will
be kept at the forefront of funding recommendations.
Staffing Study
The Staffing Study, https://nantucket-ma.gov/DocumentCenter/View/23207/Nantucket-
Staffing-Study-Report-December-2018, 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 scheduled 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. The majority of the Town’s plans are in
excess of these thresholds. Because of pending legislation at the federal level which would
eliminate the “Cadillac Tax”, this potential (significant) cost is not currently considered in our
budgetary forecasting.
Coastal Resiliency/Infrastructure/Planning
Global warming, climate change and sea level rise have been more and more frequently appearing in the news media as growing issues for municipalities. In FY 2019, we completed an update to the Town’s Hazard Mitigation Plan, which can be found here https://www.nantucket-
ma.gov/1373/Hazard-Mitigation-Plan. The plan contains over 50 projects that are supposed to be
implemented over the next five years. The Select Board established a Coastal Resiliency Advisory Committee https://www.nantucket-ma.gov/1391/Coastal-Resiliency-Advisory-Committee to make recommendations about a variety of coastal resiliency issues, including a Coastal Resiliency Plan. In the next 2-3 years there will be an update to the Town’s Master Plan
(https://www.nantucket-ma.gov/1530/Strategic-Planning) and an update to the Town’s Harbors Action Plan (https://www.nantucket-ma.gov/DocumentCenter/View/29038/Harbor-Plan?bidId=) will commence in FY 2020. All of these are likely to 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
Appendix P shows the list of collective bargaining contracts. The contracts can be found at
16
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 are commencing now. Earlier in 2019, we began working with the Select Board and
other voting agencies (Airport Commission, Nantucket Water Commission, School Committee), to develop our approaches to upcoming collective bargaining and to review financial projections, employee benefit costs, and universal union contract language issues.
Harbor Place Discussions with the Harbor Place owner’s group continued into FY 2019; had stalled by the end
of the year and we expect discussions to resume this fall/winter. 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. Per and Polyfluoroalkyl Substances (PFAS) – https://www.mass.gov/info-details/per-and-
polyfluoroalkyl-substances-pfas An emerging issue for municipalities across the country is PFAS contamination. As noted in material found on the state website, at all levels, governments are working toward developing ways to “holistically” address PFAS contamination. This issue is currently being discussed among
the various Town departments that will be involved in determining the extent of PFAS issues on the island and this is likely to have a budgetary impact in both the General Fund and Enterprise Funds in the near future. It is unclear whether or not outside funding will be available to help offset what could be a substantial financial impact to cities and towns.
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 (several of these are part of a 2009 Ad Hoc Fiscal Committee Report -
https://www.nantucket-ma.gov/170/Ad-Hoc-Fiscal-Committee):
PILOT possibilities (Payment-in-Lieu-of-Taxes for entities that do not pay property tax,
such as certain tax-exempt organizations such as hospitals, posts and churches – if all of
these were taxed in FY 2020, taxes due would have exceeded $16,300,000);
parking fees (increase parking fines; implement paid parking downtown)
taxi transaction fee (requires meters);
increase Town permit fees other than those already at statutory maximum allowance (over
the road permits, road closing, etc.);
room occupancy tax – as noted above, this source could be substantial with the expansion
of the tax to short-term rentals, and there is discussion as to how best to allocate it and/or
put it aside for future needs, as mentioned earlier; we have projected a conservative
increase for FY 2021 for General Fund operations; see chart below:
17
Local Option Rooms and Meals Revenue FY 2015 – FY 2019 Actuals
increase to the ferry embarkation fee (requires substantial political work and coordination
with the other ports);
increase of real estate transfer tax for housing initiatives or another dedicated purpose
(requires special legislation which was approved at 2016, 2017, 2018 and 2019 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; Town Meeting subsequently authorized a special stabilization
fund for 50% of these tax proceeds to be set aside for substance abuse programs);
currently, we do not have enough information to make an informed projection on this
revenue source;
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. In addition to potential ways in which to generate additional
revenue, we have begun to consider what measures we might need to put in place in the event of
an economic downturn. So far, these would possibly include:
review all municipal services for reduction or elimination – in other words, an “Austerity
Budget”
reduction-in-force of personnel
enforce a hiring “freeze” or “chill”
eliminate unexpended expense increases, including vacant positions
reduce the NRTA year-round service (would have a delayed impact because of how/when
NRTA is funded through the state)
defer capital projects.
0.00
1,000,000.00
2,000,000.00
3,000,000.00
4,000,000.00
FY15 FY16 FY17 FY18 FY19
Rooms Tax Meals Tax
18
V. Conclusion
As recommended, the FY 2021 General Fund budget can be funded within available revenue,
with limited new initiatives, and continuity of current services. Our biggest challenges include
funding the growing priorities of the community and increasing demands for services; retaining
and attracting qualified employees and housing them and infrastructure maintenance. It will take
additional resources in the coming year(s) to address these, as we have noted in this Message
and in prior Messages.
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 for Strategic Projects Gregg Tivnan, Assistant Town Manager for Administration
Rachel K. Day, 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