HomeMy WebLinkAboutFY_25_General_Fund_Budget_Message
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Fiscal Year 2025
Town Manager’s Budget Message
(July 1, 2024 – June 30, 2025)
Town of Nantucket, Massachusetts
16 Broad Street
Nantucket, MA 02554
https://www.nantucket-ma.gov/
Photo credit: Maureen DiLuca
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TABLE OF CONTENTS
I. Transmittal Letter………………………………………………………...............3
II. Introduction……………………………………………………………………….5
III. Overview of FY 2025 General Fund Budget……………………………………14
A. Projected FY 2025 General Fund Revenues
B. Projected FY 2025 General Fund Expenses
IV. FY 2025 Town Administration General Fund Budget
Recommendations……………………………………………………………….16
V. Current and Future Year Considerations………………………………………. 19
VI. Conclusion………………………………………………………………………22
APPENDICES
A. Enterprise Funds Subsidies and Retained Earnings
a. Our Island Home
b. Solid Waste
B. FY 2024 Cherry Sheet
C. Strategic Plan Summary (Adopted October 24, 2018, updated September 11, 2019, and pending October 2023) D. Moody’s Credit Rating Opinion
E. Unused Levy Capacity and Free Cash
F. Stabilization and Reserve Funds
G. Town of Nantucket Financial Reserves Policy
H. Capital Improvement Plan
I. New Growth and Local Receipts History
J. Other Post-Employment Benefits (OPEB) Trust Fund
K. Price Waterhouse Cooper Article/Medical Cost Trends 2024
L. Articles
a. Nantucket Real Estate Market Insights by Fisher Real Estate
b. State of the Economy
M. FY 2025 General Fund Revenue Breakdown
N. General Fund Debt Service Schedule
O. FY 2025 General Fund Expenditure Breakdown
P. FY 2025 Approved Expense Increase Requests
Q. List of Collective Bargaining Agreements
R. FY 2025 Expense Increase Requests S. Coastal Resiliency Completed Projects
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TOWN OF NANTUCKET
Office of Town Manager
16 Broad Street
Nantucket, Massachusetts 02554
508-228-7200
C. Elizabeth Gibson, Town Manager
December 13, 2023 Chair Holdgate and Members of the Select Board:
Enclosed please find the Town Manager’s Proposed General Fund Budget for Fiscal Year 2025
(July 1, 2024 - June 30, 2025) in accordance with the requirements of the Town Charter (Article IV, section 4.2(3)). The proposed budget would increase by 6.5% over the FY 2024 budget.
The proposed FY 2025 General Fund operating budget of $122,733,634 represents an increase of $7,464,535, of which the Town operating budget is proposed to increase $2,994,111, Nantucket Public Schools $2,851,408 and all other operating items including debt service, insurance, and retirement of $1,619,019. Increasing the School budget will continue the strong commitment and
investment in public education and address emerging issues and regulatory requirements. Overall, General Fund revenue is projected to be $152,389,045 and total General Fund expenses $152,252,602. This leaves unused levy capacity at $136,543. Unused levy capacity is the real and personal property taxes that the town does not raise in the tax rate in a given fiscal year. The
unused projection for FY 25 leaves very little margin for flexibility. Each year, Free Cash is certified as of June 30 for appropriation as of July 1. The June 30, 2023 certification is $22,066,661. Free Cash, in accordance with the Town’s financial policy as adopted
by the Select Board, is to be used for one-time operating expenses, capital, or to add funds to the
stabilization accounts. Like all Massachusetts municipalities, Nantucket is dependent on Property Taxes as a source of funding for Town operations, with 80.0% of its revenues coming from this source. Other sources
include Rooms and Meals Tax (10%) State Aid (3.0%), Other Local Revenues (such as licenses
and permits) (7.0%). The financial health of a municipality is partly reflected in its credit rating for borrowing funds. Since 2018, Nantucket has earned a Aaa credit rating, the highest possible, by Moody’s Investors
Service. The proposed budget maintains the sound fiscal practices that earned this rating. Major expense categories of the budget include debt service for voter-approved projects, pension, health insurance and compensation. Health insurance is expected to increase by 10% over FY
2024, while the Town will see a decrease in debt service of approximately $2,000,000 due to debt
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retirement.
With the increase in value of the stock market and the Town’s continued commitment to funding
long-term liabilities, the funded status of Nantucket’s portion of the Barnstable County Retirement
System and Other Post-Employment Benefits (OPEB) Trust fund has improved.
Town of Nantucket status within Barnstable County Retirement System As of the January 1, 2022 Actuarial Valuation, the Town of Nantucket has a Net Pension Liability of $56,934,193. This represents 10.35% of the total pension liability of the Barnstable County Regional Retirement System. The pension system is still on track to be fully funded by 2038.
Town of Nantucket Other Post-Employment Benefits (OPEB) Liability As of the June 30, 2023 Actuarial Valuation, Nantucket has a net OPEB liability of $125,584,139. Nantucket continues to appropriate money annually to the OPEB Trust Fund in accordance with the policy adopted by the Select Board. Once the pension system is fully funded, the annual pension appropriation will be directed into the OPEB Trust Fund.
Total Budget Plan The total General Fund budget includes funding for all Town programs and services apart from those Enterprise Fund operations supported all or in part by user fees, including Nantucket
Memorial Airport, Sewer Department, Solid Waste, Our Island Home and the Nantucket Water Department. Town Government Budget
As part of the budget process, the Town has identified the following priorities that help shape the formation of the FY 2025 Town Government budget:
• Securing Town employee and community workforce housing
• Ensuring competitive wage and benefits for employees
• Providing an increased level of funding for essential services such as public works, facilities, and coastal resiliency
• Enhancing government services by increasing staff to meet the needs of the community both
seasonally and year-round Conclusion
The FY 2025 General Fund budget continues Nantucket’s proud tradition of being financially
sound while providing funds for important programs and services. I would like to thank the Department Heads and their staff members who worked with us throughout this budget process.
Sincerely,
C. Elizabeth Gibson Town Manager
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II. Introduction
The FY 25 budget has been constructed with caution, realism, recognition of impending
challenges, and an eye toward ensuring continuity of municipal services. Our major initiatives,
and their funding, link back to the Select Board Strategic Plan. The initiatives and resources
included in this budget form a significant part of our service commitment to the residents of
Nantucket.
Creating affordable, attainable, safe, and stable housing for both residents and Town employees
remains the Select Board’s overarching mission and Town Administration’s main focus. The
housing crisis continues to impact the Town’s ability to deliver services. We have numerous
Town employees without stable housing, and it continues to be a serious impediment to
recruitment. Stable housing is generally positively correlated with a stable workforce, and we
have a lot of work to do on both.
The Town remains greatly impacted by workforce challenges with numerous vacancies in Town
Departments and a high “quit-rate” of staff. We continue to struggle to attract talent and our
vacancy rate of 15% remains stubbornly high. We are hopeful newly negotiated union contracts
and a Classification and Compensation Study for the non-union employees will help improve
recruitment and retention. We continue to request your patience as the Town adjusts to this
challenging environment.
Equally significant are the global economic challenges which dictate a cautious approach to
budget development. A hawkish Federal Reserve Bank is committed to reducing inflation. Its
fight to manage the delicate balance of containing inflation without tipping the economy into
recession continues. While stock markets have emerged from bear market territory, a soft
landing for the economy is not a certainty. However, what is certain is that inflation has eroded
discretionary income which could impact future Town tax receipts. Therefore, we remain
realistic and cautious that declining discretionary income due to recession and inflation could
lead to reduced economic activity on the island in the coming year. Locally we see mixed
indicators, where despite higher interest rates, the Island’s real estate market and associated
activities (building permits, sewer permits) remain robust. Registry of Deeds receipts are on par
with the prior year. Room occupancy tax revenue for the first quarter of FY 2024 has exceeded
the amount collected last year, however, we are not confident that is a reliable indicator of
future revenues. We remain cautious about becoming reliant on the room occupancy tax as a
predictable source of revenue.
Finally, we strive to commit our attention and resources to projects prioritized by the Select
Board. Work on new ideas, initiatives, concepts or citizen requests occurs only when resources
become available. While the tasks we have ahead of us are substantial, we know that we are
stronger as a group. We all must accept that others may have differing points of view, but it is
only together that we will be able to accomplish all that is in this budget.
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Below we highlight some of the major challenges facing the Town in the upcoming budget
period.
Challenges
Strategic Plan Initiatives
The Select Board held its annual Strategic Plan review and refresh retreat on October 24, 2023. During this retreat, Town Administration presented an update of accomplishments in each of the five strategic planning Focus Areas, as well as highlighting three projects to demonstrate the complexities and challenges of completing Strategic Plan initiatives. These projects included housing and property management for Town employees, the Surfside area roads project, and the
search for a new police chief. Each of these projects highlighted the Town’s ability and capacity to address both planned for and unforeseen challenges and demonstrated the need for realistic implementation expectations when adding new items to the Strategic Plan.
The most significant hurdle remains stable, affordable housing to recruit and retain staffing
levels needed to accomplish strategic and operational goals. Unstable housing leads to employee
turnover which reduces productivity and increases costs. The Board acknowledges the impact this staffing crisis has on Town operations and supports the Town’s efforts to purchase and create housing opportunities for Town employees but understands the limitations of these efforts. Adequate and affordable housing remains fundamental to ongoing operation of the Town, with
$67 million appropriated since FY19 to help accomplish these initiatives. Additionally, in 2023
voters approved $6.5 million annually to fund critical year-round housing initiatives.
At its October 2023 retreat, the Board thoughtfully reviewed each of the five Focus Areas in the Strategic Plan, and their corresponding aspirational statements and decided to replace “Quality of Life” with “Healthy and Vibrant Community” to better identify the intent of the Focus Area and
broaden the scope to achieve this goal for Nantucket’s residents, businesses, and visitors. The five Focus Areas are Housing, Transportation, Environmental Leadership, Efficient and Effective Town Operations, and Healthy and Vibrant Community. The updated plan (Summary found in Appendix C) contains several initiatives that continue to require funding. The updated plan is also available on the Town website.
Major Projects Nantucket has many large, complex municipal projects that are currently either in progress, in development, or planned for the next few years. These projects vary widely from transportation upgrades to new facilities to complex and costly resiliency enhancements. Execution of major
projects on Nantucket continues to be a challenge due to lack of personnel to manage multiple projects, remote location, public procurement, escalating costs, and competing priorities. Through the Town’s robust capital improvement plan (CIP) process, the Finance Department and the Capital Program Committee have a well-defined roadmap of major projects to be completed over the next decade.
However, the Town faces financial and execution “collisions” relative to project funding and management: • A financial collision where large sums of money will be required to be borrowed to
construct, maintain, and improve island-wide assets, and
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• An execution collision where many large and complex projects simultaneously compete for
limited non-financial resources, such as staff capacity, scarce building materials, permitting
and currently unknown, but emerging critical capital projects such as coastal resiliency and
PFAS.
These two collisions create risks with the financing, execution, and implementation of the CIP
over the next 10 years. The current CIP projects a funding requirement of more than
$800,000,000 over the next 10 years, with more than two dozen major capital projects in the CIP over the next decade. The financial collision results from previously authorized projects, projects in the forward-
looking CIP, and an increasing number of debt exclusions. The Town has approximately
$64,000,000 in approved authorizations for projects in addition to the $800,000,000 of additional projects in the CIP. These prior and proposed authorizations could put the Town’s Aaa rating at risk, leading to higher borrowing costs if projects are not initiated and completed in a timely manner. A sample of the more than two dozen major capital projects in the plan over the next
decade, include:
• Our Island Home (new facility) • Town Employee Housing (to be constructed on Town property) • Central Municipal Building (new facility) • New DPW Campus at a new site (plus, potential repurposing costs for existing site) • Baxter Road Alternative Access (most likely this cost will be offset by betterment
assessments; however, the funds to construct will need an initial appropriation)
• Somerset Sewer Extension • New Middle School • Coastal Resiliency projects The execution collision is a result of the Town’s limited ability to execute and deliver the CIP. The Town is resource-constrained and has a backlog of funded projects. Constraints include: • Budgeting and staffing of a Program Management Office to properly sequence competing projects • Staff resources to deliver important project components such as project scope, timeline and milestones, technical and quality specifications • Management oversight • Competing priorities and ongoing supply chain challenges • Unknown permitting timelines • Local objection to a given project slowing its execution • Unexpected, time-consuming emergent issues requiring some project re-prioritization The scope and complexity of managing major projects is of substantial concern. Successful execution requires strong discipline and difficult choices and trade-offs will need to be made.
Our Island Home (OIH)
In recent years we have noted the financial challenges of operating the Town’s municipally operated nursing home (the only municipally operated skilled nursing facility in Massachusetts).
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While the financial challenges and staffing shortages persist, OIH has been able to maintain its staffing levels through expensive engagement with travel nursing agencies. The regulatory
environment for skilled nursing facilities remains as challenging as ever and we have outsourced
a very competent management team that is engaged in the day-to-day operation of the facility. As noted in previous budget messages, OIH does not generate enough revenue to fully fund its operations, however it has increased revenue significantly through efficient operations in FY23 and into FY24. Historically, there are a variety of reasons for revenue challenges, including the
relatively small number of beds (licensed for 45), collective bargaining agreements, regulatory
requirements, and maintenance and repair of an aging facility. Most significantly, Federal and State reimbursements do not cover the daily cost of care for a resident. Currently, for FY 2024, the budgeted OIH subsidy from the General Fund is $5,125,000.
On a positive note, FY23 brought an increase in revenue to OIH of $1,000,000 and the positive
trajectory remains in place into FY24. Much of this is due to the recovery in the daily census . The average daily census has improved from 31 in FY22 to 40 in FY24. We are cautiously optimistic about the census moving into FY 25. There has also been a significant increase in the Medicaid rate for OIH due to some relief from the State as well as improvements in clinical documentation resulting in higher reimbursement. Another significant improvement was a 40%
increase in the private pay census for FY23. We are optimistic the trend will continue.
The work on developing the new OIH facility at Sherburne Commons is progressing with the Owner’s Project Manager and architect/design firm in place using funds approved at the 2022 Annual Town Meeting. The Town has developed a work group comprised of community and
provider members to work with the project team on the new facility.
Solid Waste
The Waste Services Agreement (WSA) with our landfill operator, Waste Options, expires on
November 30, 2025. For several years, we have been working internally on various scenarios, options, and cost projections for consideration as the contract expires. We are also developing a Request for Proposals (RFP) to solicit a contract operator to provide solid waste management services at the Madaket Road site after the WSA terminates. The work continues with one Select
Board representative and one Finance Committee representative providing valuable policy input
and guidance. Last year we outlined some of the areas of investigation with respect to the solid waste operation. We continue to grapple with many of the following questions and have come to realize that many
are significantly impacted by changing, or potentially changing, technological innovations or
regulatory change. An issue we thought we may have decided upon a year ago, may very well be an open issue today because of the dynamics of technology and policy. 1. What goals, programs and/or incentives should be adopted with respect to waste
reduction, including recycling?
The Town of Nantucket needs to establish a mechanism to separate food waste/organics
from non-compostable and non-recyclable mixed solid waste (MSW). We should consider removing paper from the composting waste stream and baling it separately for recycling. Feasible ways to accomplish this without being overly burdensome to commercial
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haulers might involve including paper with mixed recyclables; alternatively, there might be a colored bag program for food waste/organics, and possibly Non-Recyclable Non-
Compostable (NRNC) wastes. In this scenario, the recyclables would remain in the clear
bags to easily identify the recycling type. The Town’s Solid Waste Team is currently
reviewing options and evaluating the best way to achieve better waste sorting and handling in conjunction with planned changes to the WSA.
2. Should Composting Facility operations continue after 2025? Are there alternatives?
The Composting Facility is effective for processing food waste and organics to eliminate
pathogens and reduce volume without creating odors. Alternatives can be less effective
and more costly. The Town’s Solid Waste Team and consultant are working to evaluate alternative technologies capable of handling this type of waste.
3. If the Town continues with the composting operation, should the Town buy/own the
Composter? Should the Town own/operate/lease the Transfer Station?
This has been addressed through discussions with the Town Manager’s Long-Term Solid Waste Planning Work Group and Select Board. Owning these assets is a critical aspect to the development of the RFP for a new WSA and operation of the solid waste facility.
Moreover, the existing WSA provides an economic way to purchase the Composter either
for continued operation or to be re-purposed, and the Transfer Station is an extremely
versatile asset that can be economically purchased but could not be readily or economically replaced.
4. What waste disposal alternatives are feasible and realistic, including pyrolysis, shipping
off-island, incineration?
Each has their challenges. Conventional incineration is not permitted in Massachusetts
under a general MassDEP moratorium in place since the 1990s and is not being considered. The Town already faces challenges transferring construction and demolition (C&D) waste to the mainland, due to both limitations on available commercial ferry
capacity and the huge shortfall of disposal capacity in southeastern New England.
Massachusetts sends train loads of MSW and C&D waste to landfills as far away as
Ohio, South Carolina, and Alabama. Shipping more waste off-island would make Nantucket more vulnerable to the risks and cost increases of long-haul of waste outside the region already being experienced. On the other hand, emerging technologies that
utilize new approaches to pyrolysis and gasification might be attractive for at least some
waste stream components. The Town is reviewing opportunities for local development of
modular facilities of appropriate scale that utilize these technologies. 5. Should the solid waste operation remain at Madaket Road, given sea level rise and
climate change impact projections? What would it take to relocate it?
The landfill cells and the waste within the landfill cannot be relocated. The landfill is a
critical asset to the Town and should be utilized and further developed to its fullest
potential while the Town evaluates other long-term waste handling and disposal options. This allows the Town the time needed to research new technologies that could possibly
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enhance or lengthen the useful life of the landfill. Current off-island disposal costs are tracked and evaluated in conjunction with long-term solid waste planning efforts and
documentation can be provided to interested parties.
6. Is there one vendor; or more than one who could realistically operate one or more
components to the Town’s solid waste facility?
The Town of Nantucket’s Solid Waste Team have been in contact with five potential contractors, in addition to the Town’s current Operator, Waste Options. All contractors
have expressed potential interest in submitting proposals in response to the upcoming
RFP. We continue regular workshops with the Select Board to share and review information we have gathered and to seek policy input.
Sustainability and Coastal Resiliency Another priority of the Select Board which has significant budgetary implications is Sustainability. Sustainability is focusing on environmental, economic and social issues, and looking for ways of meeting the needs of the present without compromising the ability of future
generations to meet their own needs. Overall, the Town’s sustainability efforts will help local
climate change efforts and respond to impacts such as sea level rise, flooding, erosion, extreme temperatures and extreme weather events. Responses to some of these issues have taken shape within the Sustainability Focus Area, of the Select Board Strategic Plan through Coastal Resiliency. In 2025 the Town intends to hold a second two-day conference for staff, Select
Board and members of the public to workshop priorities of the Coastal Resilience Plan.
Significant financial hurdles are on the horizon. The scope and cost of these plans will present serious challenges to the Island’s taxpayers. The Coastal Resilience Plan has been integrated into the Town’s 10-year Capital Improvement Plan
as of FY23 to provide a more robust forecast of future financial requirements upon the Town.
The critical projects identified between now and 2035 may cost the Town as much as
$500,000,000. While some financial grants are likely, they will not significantly offset the costs to protect Nantucket from the impacts of climate change and sea-level rise. In FY24, the Natural Resources Department through its Sustainability Program was awarded a $421,875 Coastal Zone
Management (CZM) state grant to begin investigations of a Downtown Neighborhood Flood
Barrier for the Easy Street and Broad Street areas. It is hoped that this is a gateway to larger grants to offset costs.
Continuity and Financial Strengths
The Town’s bond rating was maintained at the Aaa level by Moody’s Investor Services
in June of 2023 (Appendix D) with a Stable Outlook. The Town continues to have a
rating of Aa+ from S&P Global. The Aaa rating is Moody’s highest rating for a
municipality and Nantucket is one of 14 (out of 351) cities and towns in Massachusetts
to achieve this rating. A benefit of these high ratings includes the opportunity to borrow
at lower interest rates.
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Free Cash for use in FY 2024 and FY 2025 was certified by the state Department of
Revenue on November 3, 2023 at $22,066,661. Pursuant to Town policy and best
management practices, Free Cash is used for non-recurring items such as capital
projects or other one-time expenses. See Appendix E for a five-year history of certified
Free Cash and the Town’s budget policy.
The Stabilization Fund remains strong with a balance of $7,664,198 at the end of FY
2023 (Appendix F). Best management practice is to hold reserves that are 10% of the
budget. Using an approximate budget of $120,000,000, the Stabilization Fund balance is
approximately 5% of the budget. Combined with the Certified Free Cash (undesignated
reserves), we expect the reserve amount to exceed the best management practice
guideline as per the Town of Nantucket Financial Reserves Policy (Appendix G) and
continue to commit $1,000,000 annually to it.
The Town maintained a balance of $2,676,448 in its Capital Projects Stabilization Fund
at the end of FY 2023. The current balance represents 1.8% of General Fund
expenditures. Best management practice is to hold capital projects reserves which meet
or exceed 3% of the budget. The town continues to work towards this as is demonstrated
by the nearly 100% increase over last year’s reserves of .94% and an annual
appropriation commitment of $1,000,000.
Increased focus on Town infrastructure continues to be a Select Board priority. Work to
compile a comprehensive list of all town-owned facilities, along with condition
assessments, current maintenance needs, and a maintenance schedule continues. The
FY 2025 Capital Project and General Fund recommendations will continue the focus
on infrastructure maintenance and improvement.
Local receipts, including meals excise tax and room occupancy tax revenues remain
stable in the first quarter of FY 2024.
For FY 2024, new growth is estimated to be $1,750,000, representing an increase of
$350,000 from FY 2023 (25% increase). This increase continues to be attributed to the
increase in building on the island.
In January of 2019, the state enacted 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 for the first quarter of FY 2024 remain
strong. The Select Board has discussed reserving some amount for specific purposes,
including affordable housing, human services, infrastructure improvements and
maintenance. It would be prudent to have a better picture of how much additional
revenue we may be consistently realizing from this expanded tax before commitments
for its use are made. Room occupancy tax revenue for the period of June 2023 through
September 2023 was higher than the same period a year ago.
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The Town has maintained its commitment to funding the OPEB Trust Fund (Other Post-
Employment Benefits) with annual contributions of $500,000 since 2015, thereby
lowering its net liability. The balance of the OPEB Trust Fund at the end of FY 2023
was $6,438,196 (Appendix J). We continue to fund an annual appropriation of
$500,000.
The Town continues to make its annual required contribution to the Barnstable County
Retirement System. When compared to the rest of the Commonwealth’s municipalities,
Barnstable County remains in the top half in terms of retirement funding levels.
The Town continues to work with its health insurance consultant, monitoring utilization
and exploring ways to mitigate the risk and reduce the overall cost of insurance. (See
Appendix K, Price Waterhouse Cooper (PWC) article June 2021).
Caution
In the same way we cautioned about revenues and expenses in last year’s budget, we are closely monitoring economic trends and continuing our cautious approach to both revenue and expense
projections. Revenue projections are clouded by the possibility of a recession and expense projections are meaningfully impacted by stubbornly high inflation. Additionally, rising wage demands are impacting the financial positions of public companies and municipalities alike.
Just as central banks have a balancing act between subduing inflation and tipping the global economy into recession, so too, the Town faces a delicate balance of managing the increasing demands of a growing island community while remaining within the levy limit. As we head into FY 2025, the Town’s ability to fund expanding demand for programs, provide ever more services, maintain quality of life, and maintain facilities and infrastructure will be stretched.
Addressing the expanding demand requires a stable workforce and we must acknowledge the difficulty of attracting, retaining, and housing employees. In summary, the FY 2025 budget is particularly challenging due to its many “unknowns”. What impact will inflation have on existing project plans? Will we still have sufficient funding for
our capital plans? How quickly can we bring more housing online? Will we come together as a community, or will we succumb to incivility? One of the few things we can say with certainty is that difficult choices will need to be made. Each year, we must present a balanced budget which represents a plan of service for the
community. Not all requests and needs can be met to the degree desired by individual groups
and departments. We continue to be impacted by the effects of growth on the Island, which is
straining Town resources. Fixed costs are always increasing, especially employee benefits,
service contracts, supplies and equipment, insurance, and utilities. The Town’s levy capacity for
FY 2025 allows for some increases to existing Town and School operations after allocations to
Our Island Home, Solid Waste Enterprise Fund and Nantucket Regional Transit Authority
(NRTA).
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As a result of economic risks and increasing demand we continuously review actions that would
allow us to address a slow-down in economic activity. These include:
review all municipal services for reduction or elimination – in other words, an “Austerity
Budget”
review options for reduction-in-force
enforce a hiring “freeze” or “chill”
eliminate unexpended budget 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.
Civility
Unproductive, mean-spirited civil discourse has become mainstream nationally and has also
found its way to our island. It has caused distraction, created delays, divided our community
and without question comes at a cost. A Harvard Business Review study found that when
treated in an uncivil manner, nearly 80% of employees lost work time worrying about the
situation, and their job commitment declined. Nearly 50% of workers stated they intentionally
reduced their work effort and their time spent at work. Our challenges around housing,
staffing, and the escalating cost of living are large enough on their own, we do not need
unhelpful, uncaring and often personal attacks permeating how we engage as a community of
islanders. We all must do better.
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III. Overview of FY 2025 General Fund Budget Projection
A. Projected FY 2025 General Fund Revenue
Refer to Appendix M for a detailed breakdown of the FY 2025 proposed General Fund revenue as
compared to the FY 2024 approved budget.
Tax Revenue
80%
Local Receipts -
All Other3%
Motor Vehicle
3%
Rooms and Meals10%
Licenses and
Permits1%State Aid
3%
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B. Projected FY 2025 General Fund Expenses
The proposed FY 2025 General Fund budget will fund:
Projected Town and School salaries and fixed/current operational expenses – with some
additional positions and programs.
Fixed costs allocated between several expense categories including:
- Health Insurance for active and retired employees is projected to rise at a rate of
~10% for FY 2025. While the Town did realize cost savings because of plan
design changes in FY 2019, and while utilization rates have been lower in the
past few quarters, we do expect rates to rise near the end of FY 2024 and into
the beginning of FY 2025. The continued rise of medical rates inflation is
expected to have an impact on the FY 2025 health insurance budget.
- General Insurance is projected to increase 14.7% from FY 2024, based on
current trends. The increase is resulting from the large losses that carriers have
faced across the nation due to severe natural disasters over the past few years.
- Debt Service is established by the current repayment schedule and will decrease
in FY 2025 due to the retirement of previously-issued bonds. However, the
Town will see an upward trend over the next 2-3 years, as new borrowings are
undertaken for approved projects not yet started. (Appendix N)
- The Barnstable County retirement assessment is assumed to increase 8.5% in
FY 2025.
Municipal
Departments
26%
School Department
27%
Non-Departmental
28%
Special
Appropriations
19%
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General Fund subsidies to the following Enterprise Funds and Affordable Housing Trust
Fund are projected for FY 2025:
- Solid Waste operations - $10,846,765
- Affordable Housing Trust - $6,662,500
- Our Island Home - $5,384,453
- Stormwater - $512,000
Minimum capital funding requirement of $1,589,947, 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 2025 will be the 9th consecutive
year in which a contribution to this Trust Fund is made. The balance of the fund
at the end of FY 2023 is $6,438,196 (Appendix J)
- $500,000 to the Reserve Fund (see Appendix F)
- State Cherry Sheet charges, the County Assessment and unpaid bills from prior
fiscal years
- Annual Health and Human Services appropriation is funded at $825,000 for FY
2024. The funding is split between a $650,000 contribution from the General
Fund and $175,000 from the Special Purpose Stabilization Fund for Substance
Abuse.
Refer to Appendix O for a detailed breakdown of the FY 2025 proposed General Fund expenses as
compared to the FY 2024 approved budget.
IV. Town Administration Expense Increase Recommendations
Background Over the past decade, Nantucket has experienced significant growth and the Town’s scope of
responsibility has increased. We have taken on and/or funded new initiatives in response to
needs, requests, and 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 and community and town employee housing efforts.
In addition, global, national, and regional issues of coastal resiliency, solid waste
management and energy use are becoming more and more critical in terms of climate change,
sea level rise and sustainability of natural resources. The Select Board’s Strategic Plan is
intended to help focus Select Board initiatives and budgetary allocations toward the goals
contained within the Plan. Information as to the specifics of the current Strategic Plan may
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be found on the Town website at https://nantucket-ma.gov/1530/Strategic-Planning. Many
other mandated and goal-oriented plans and studies have been developed in the past several
years which are taken into consideration during budget development, these include:
2018 Staffing Study
Hazard Mitigation Plan
Coastal Resiliency Plan
Green Community Requirements
Town-wide PFAS Assessment
Parks Master Plan
Capital Improvement Plan
Facilities Master Plan
Diversity Equity and Inclusion Assessment
FY 2025 Expense Increase Requests Departmental expense increase requests (EIR) for FY 2025 are shown in Appendix P,
separated into categories of:
Personnel Requests
Expense Requests – One-time
Expense Requests – Ongoing
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 and 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 provide a department with
necessary support for existing or new program
Approved New Programming 0-1 Funding necessary to support a new initiative
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 (e.g., software licenses)
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To fund these, we have:
focused our recommendations on the Select Board’s Strategic Plan, and the other studies and plans referenced above; as well as critical Town operational issues
recommended use of funds from other sources (such as fund the one-time expenses from
Free Cash and/or borrowing
not recommended funding and/or will take a different approach; or funded a reduced
request
We have prioritized the EIRs using the system noted above, and recommendations follow:
Department Description of Expense Request
One-time or Ongoing Approved EIRs *
Personnel Expense Increase Requests (EIRs)HR Position reclassifications One-time 50,000
Fire 4 additional firefighters Ongoing 449,027 Fire Overtime increase Ongoing 100,000
IT Deputy IT Director Ongoing 158,511 PLUS Administrative Specialist Ongoing 94,025
Public Works Laborer Ongoing 98,374 Public Works Senior Equipment Operator Ongoing 101,723
Public Works Maintenance Technician Ongoing 105,134 Public Works Central Fleet Maintenance Technician Ongoing 105,134
Town Admin/Real Estate
Office Paralegal*Ongoing -
Town Admin Town Committee Coordinator* Ongoing -
Total Personnel Expense Increase Requests 1,261,929$
* Not included in recommendations, currently under discussion
Department Description of Expense Request
One-time
or Ongoing Approved EIRs
One-Time Operating Expense Increase Requests (EIRs)Communications Community Survey One-time 24,000
HHS/NR Education and Compliance Specialist - Consultant One-time 50,000 Town Admin EV Replacement Vehicle One-time 45,000
Town Admin Grant Application Support One-time 100,000
Town Admin Project Management Software & Support One-time 175,000 Town Clerk Increase to Election Workers One-time 12,400
Town Clerk Increase to Postage One-time 4,500 Town Clerk Increase for Presidential Election (poll pads, ballot box,etc)One-time 7,000
Communications GLOBO Translation/Interpretation Services Ongoing 20,000 Total One-Time Operating Expense Increase Requests 417,900$
Department Description of Expense Request
One-time or
Ongoing
Approved
EIRs Ongong Operating Expense Increase Requests (EIRs)
DEI Guest Speaker Series Ongoing 4,000 DEI Professional Development Ongoing 4,000
DEI Community Outreach Ongoing 3,000 Fire Increase Training Ongoing 20,000
Fire Increase Safety Uniforms Ongoing 12,000 Fire Increase Safety Protective Clothing Ongoing 20,000
Fire Increase Books/subscriptions Ongoing 6,000
HHS VNA, needle disposal, and weights and measures costs Ongoing 10,000 HR NeoGov services Ongoing 22,678
HR Interim market adjustment review Ongoing 10,000 IT Software licensing, hardware support and technology services Ongoing 34,388 Public Buildings Increase Electricity Ongoing 50,000
Public Buildings Increase Propane Ongoing 20,000 Public Buildings Increase Water Ongoing 8,000
Public Buildings Increase Repair & Maintenance: Building Ongoing 10,000 Public Buildings Increase Professional Services on-call engineering services contract Ongoing 100,000
Public Buildings Increase Custodial Ongoing 50,000
Public Buildings Increase Telephone Ongoing 20,000 Public Works Increase Rentals/Leases Ongoing 7,000
Public Works Increase Property: Trees Ongoing 40,000 Public Works Increase Other: Licenses Ongoing 19,300
Public Works Increase Safety: Uniforms Ongoing 6,000 Public Works Increase Safety: Protective Clothing Ongoing 5,000 Public Works Increase Road Materials Ongoing 85,000
Street Lighting Increase Electricity Ongoing 35,000 Town Admin Increase to Strategic Plan funding Ongoing 50,000
Town Admin Equipment Ongoing 10,000 Total Ongoing Operating Expense Increase Requests 661,366$
Total Town Operating Expense Increase Requests 1,079,266$
Total Town Personnel & Operating Expense Increase Requests 2,341,195$
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V. Current and Future Year Considerations
Sustainability
In October 2023 the Select Board updated its definition of “Sustainability” as a guiding principle of the Town’s Strategic Plan:
Sustainability is how the Town of Nantucket, with a focus on historic preservation,
natural resources, hazard mitigation, solid waste management, energy, public health, and education, institutionalizes practices in municipal operations that support a balance of the economic, environmental, and social health of our Island, which meet the needs of current residents and visitors without compromising the ability of future
generations to meet evolving needs.
The Town has many complex and critical sustainability projects in its near and long-term future which are necessary to maintain its fragile ecology, historic character, and world class resort reputation. In FY22, the Town created a Sustainability Program within the Natural Resources Department and hired a Sustainability Program Manager in FY23 to ensure integration of this
sustainability principle on town wide operations. The Manager oversees various sustainability efforts such as the Town’s Coastal Resiliency Plan, Green Communities Plan, and Hazard Mitigation Plan. The Manager also convenes an interdepartmental Sustainability Workgroup consisting of the Assistant Town Manager for Special Projects, Coastal Resilience Coordinator,
Director of Natural Resources, Director of Public Works, Energy Coordinator, Environmental
Contaminant Specialist, Manager of Strategic Projects, Preservation Planner, Stormwater Manager, Solid Waste Coordinator, Transportation Planner, Town Manager and Water Quality Biologist, with ad hoc representation from various island agencies such as the Nantucket Land Bank, Nantucket Land and Water Council, and Nantucket Municipal Airport.
Coastal Resiliency/Infrastructure/Planning
Global warming, climate change and sea level rise are frequently identified in the news media and through scientific research 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 recommends over 50
projects for implementation over the next five years. The Select Board established a Coastal Resiliency Advisory Committee to make recommendations about a variety of coastal resiliency issues, including a Coastal Resiliency Plan (CRP). (https://www.nantucket-ma.gov/1391/Coastal-Resiliency-Advisory-Committee). In mid FY 2022 Coastal Resiliency Plan
was issued through the efforts of the Coastal Resilience Advisory Committee with its consultant,
Arcadis. In 2022, Select Board members, Town staff and members of the public participated in a two-day Design Thinking Workshop to increase familiarity with the CRP and associated issues and to build consensus among staff and boards around the CRP and ways to move forward. The group of ~35 attendees first defined opportunities within the CRP and then on the second day
established success metrics for each opportunity. The Coastal Resilience Advisory Committee
used this as a metric to move forward priority one projects in the CRP and as it currently stands, 20 of the 40 projects are progressing with 9 of these underway and 5 already completed within 2 years of the CRP being finalized (Appendix S). As with all major projects on the island, advancement or completion of these complex resiliency projects are subject to competing
priorities, funding, and personnel resources to be successfully managed.
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Parks Master Plan
A Parks Master Plan was finalized in winter of 2020 and projects were integrated into the Capital Improvement Plan. Subsequently, updated FEMA sea level rise projections were issued,
indicating that certain areas, such as Tom Nevers Park where significant infrastructure was
recommended, have been reassessed to include renovation of existing infrastructure rather than a complete reconstruction of the area.
The passage of Article 10 at the November 7, 2023 Special Town Meeting will fund the first big project of the Parks Master Plan: expansion and improvements of the Nobadeer Athletic Complex. Delays and potential changes to the School Department’s Campus Improvement plan
have caused portions of the Master Plan around the Delta fields to be reimagined. This process
and planning will continue to evolve in FY 2024 and FY 2025 as we continue to evaluate the Island’s recreation and athletic needs.
In FY 2025 the reconstruction of the Jetties Tennis Courts along with the addition and renovations of playgrounds in various locations are planned if funding is approved at the 2024 Annual Town Meeting.
Collective Bargaining
In FY 2024, the Town completed negotiations with most of its unions for contracts through June 30, 2026. Negotiation for contracts expiring in FY 2026 will commence in FY 2025 when we will again begin work 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. Appendix Q shows the list of collective bargaining contracts. The contracts can be found at https://www.nantucket-ma.gov/2384/Labor-Agreements
Per and Polyfluoroalkyl Substances (PFAS)
Communities around the Commonwealth are becoming more aware of the need to acknowledge and address per-and polyfluoroalkyl substances, also known as PFAS, are a group of manmade chemicals that have been manufactured and used in a variety of industries since the 1950s. They are referred to as ‘forever chemicals’ – they are persistent in our bodies, mobile in the
environment and many will not naturally degrade. PFAS chemicals are most often commercially
used to create grease, water, and stain resistant barriers for materials, including Teflon, grease-resistant take-out containers, and upholstery and carpet treatments; these chemicals are also found in firefighting foam.
Concerns have been raised regarding human health and ecological risks associated with certain
PFAS chemicals. The Town of Nantucket is following the guidance and testing requirements of Massachusetts Department of Environmental Protection (MassDEP) as it pertains to PFAS. More information is available at https://www.mass.gov/info-details/per-and-polyfluoroalkyl-substances-pfas.
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Like other municipal governments, the Town is working to understand the sources and receptors of PFAS in the environment. Because concerns have been raised regarding human health and
ecological risks associated with certain PFAS chemicals, the Town has voluntarily engaged in
multiple contracts with CDM Smith, Inc, an environmental engineering and construction firm located in Boston, MA, encumbering over $1,400,000 since July 2020 to assist the Town in various efforts regarding its long-term PFAS assessment and analysis. PFAS-related projects range from a multi-phase island-wide PFAS assessment of municipal properties to a complex
Wastewater Treatment Facility Aeration Tank Foam and Landfill Leachate Baseline Study. A
$8,300,000 public water main expansion project west of Nantucket Memorial Airport begun in November 2023 is being funded by the Massachusetts Department of Environmental Protection (MassDEP) State Revolving Fund as part of the Town’s extensive PFAS efforts. Additionally, the Town hired a full time Environmental Contaminant Specialist in the Department of Public
Health in FY 2022 to assist with long-term strategies regarding PFAS and other public health
contaminants. Because these efforts are voluntary, to ensure transparency and proper protocols the Town is following MassDEP guidance and testing requirements of as it pertains to PFAS. More
information is available at https://www.mass.gov/info-details/per-and-polyfluoroalkyl-
substances-pfas. The Town’s PFAS-related efforts are expected to span several years and there are likely budgetary impacts in both the General Fund and Enterprise Funds. As more information is collected and assembled, the scope and cost of PFAS containment, source reduction and cleanup will be better understood. It is unclear whether outside funding will be
available to help offset what could be a substantial financial impact to cities and towns. The
Town’s response to PFAS can be found at https://nantucket-ma.gov/1574/PFAS
Diversity Equity and Inclusion (DEI) Initiatives It was another productive year for the Diversity, Equity, and Inclusion (DEI) Office. Though
there are many milestones to acknowledge, our primary accomplishment was the completion of
our consultation with Tangible Development, LLC. Our work with Tangible Development created the town’s first ever DEI Commitment Statement, formed the DEI Committee for Town employees, and produced a DEI Strategic Plan (completed in April 2023). Nantucket’s DEI Strategic Plan has four focus areas: Communications (internal and external), Employee Training
and Professional Development, Celebration and Appreciation and Harness Local and Diverse
Talent. The outlook for implementation is approximately three years. Thanks to the consultation and with town leadership’s support, Nantucket is preparing to launch the DEI Trainings Project in 2024, which will include a variety of presentations, trainings, and workshops to provide town employees with continued education and professional development opportunities related to DEI.
The DEI Office continues to work within the community in a variety of ways such as supporting
the Nantucket Civic League as a friend and advisor. It is also important to note that the DEI Office’s work with the Massachusetts DEI Coalition continues. The Town of Nantucket remains steadfast in its support for the principles and purpose of diversity, equity, and inclusion.
Health and Human Services Funding
We propose to allocate $825,000 to local health and human service agencies in the community for FY 2025. This funding allocation is the same as FY 2024 and continues to be among the highest of all towns in Massachusetts. The funding consists of a $650,000 commitment from the Town’s General Fund along with $175,000 recommended to come from the Special Purpose
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Stabilization Fund for Substance Abuse paid to the Town by the through the local option Cannabis tax. Each year, the Human Services Contract Review Committee reviews agency
funding applications and recommends distributions levels to the Finance Committee and Select
Board. VI. Conclusion
The proposed FY 2025 General Fund budget can be funded within available revenue, while
supporting new and on-going initiatives and positions and providing continuity of services. The
list of challenges is long and includes funding the increasing demands for services from the
community; retaining, attracting, and housing qualified employees; and, maintaining
infrastructure while making it more resilient. Solid waste management, stormwater, PFAS and
Town employee housing issues will all require significant focus in FY 2025. 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 these budget recommendations, especially Assistant Town
Manager for Strategic Projects, Gregg Tivnan, Director of Municipal Finance, Brian E. Turbitt,
Assistant Town Manager, Rick Sears, Assistant Finance Director, Susan Carmel and Assistant
Town Accountant, Mariya Basheva.
Prepared by:
Town Manager, pursuant to Article IV, Section 4.2(d)(3) of the Charter of the Town of Nantucket
Preliminary Outline #6 for 2024 Annual Town Meeting Warrant
For 12/13/23 SB review
As of 12/10/23
NOTE: Numbering & Order is NOT FINAL Annual Articles
1. Receipt of Reports 2. Appropriation: Unpaid Bills
3. Appropriation: Prior Year Articles 4. Revolving Accounts: Annual Authorization 5. Appropriation: Reserve Fund 6. FY 2024 General Fund Budget Transfers 7. Personnel Compensation Plans for FY 2025 (add per diem dispatcher)
8. Appropriation: FY 2025 General Fund Operating Budget 9. Appropriation: Health & Human Services 10. Appropriation: General Fund Capital Expenditures 11. Appropriation: FY 2025 Enterprise Funds Operations 12. Appropriation: Enterprise Funds Capital Expenditures
13. FY 2024 Enterprise Funds Budget Transfers 14. Appropriation: Waterways Improvement Fund 15. Appropriation: Ferry Embarkation Fee 16. Appropriation: Ambulance Reserve Fund 17. Appropriation: County Assessment
18. Appropriation: Finalizing FY 2025 County Budget 19. Rescind Unused Borrowing Authority (if needed) 20. Appropriation: OPEB Trust Fund 21. Appropriation: Free Cash 22. Appropriation: Stabilization Fund
Other Select Board Sponsored Articles
NOTE: most of these were reviewed/discussed by SB and/or Town Administration since the 2023 ATM ZONING* BYLAW & GENERAL BYLAW AMENDMENTS *Board discussion occurred in January 2018 regarding a request/directive that all zoning articles mist be
accompanied by a narrative explanation as to why the item is being put forward, along with any operational or
financial impacts Zoning Bylaws See attached from Planning (includes Zoning and other)
General Bylaws - Anything for E-bikes, E-scooters? 11/15 – SB disc HRP? Would like update from BPAC Per 11/29 SB meeting: BPAC to continue to work on recommendations to regulate e-bikes - Rental car bylaw changes? Have requested recommended amendments from Town Counsel to address
surplus rental vehicle medallions; and, the “Turo issue”
- STR – ? HOME RULE PETITIONS Resubmittal of Pending HRPs from prior ATMs
-- Community Housing Bank (Article 76/2022 ATM; Article 79/2019 ATM; Article 70/2018 ATM; Article
88/2017 ATM; Article 82/2016 ATM) Will need to be re-voted with some language changes TBD
-- Sewer Act Amendment (Article 84/2023 ATM; Article 77/2022 ATM) Will need to re-vote -- Gov’t Study Committee Recommendations (Article 85/2023 ATM; Article 78/2022 ATM) Will need to re-vote -- Fertilizer Ban (Article 86/2023 ATM) May need to re-vote -- Real Estate Conveyances x 2 (1 – Article 87/2023 ATM, Article 94/2022 ATM: 50 Altar Rock Rd to NCF; 2 –
Article 88/2023 ATM, Article 95/2022 ATM: Portion of Ames Ave) Will need to re-vote
NEW:
Amend County Charter to change “Board of Selectmen” to “Select Board”
Coastal Resiliency Districts - ? Waiting on draft from Town Counsel; also reviewing the parameters of
betterments
Conveyance of paper road (W Chester St ext and Grove Ln) to Land Bank
Year-round housing deed restriction program? (not sure if this is also bylaw) Waiting on AHT MGL ACCEPTANCES
- Accept MGL c. 44, s. 54(b)(1) – Relating to the standards of investments of Trust Funds
REAL ESTATE RELATED - 31 Western Ave (under consideration - TBD) - Conveyance of paper road (W Chester St ext, Grove Ln) to Land Bank
- Appropriation for acq of transfer station
- Appropriation for acq of composter - Grant easement to NGrid for EV charging stations at Surfside Beach parking lot OTHER
- Increase borrowing auth for Housing
- Coastal erosion structure approval in connection with SBPF/Town project at Baxter Rd? - Increase salary for Select Board members? (discussed by Board 10/25/23) BALLOT QUESTIONS
-- possible debt exclusion(s) and/or capital exclusion(s) for capital projects; real estate
CITIZEN ARTICLES Submittal deadline Mon, November 13