Division of Local Services Alerts Part 2

Division of Local Services Alerts Part 2

Monthly State Aid Distribution and Use of Additional Funds

For FY2015, the Municipal Data Management/Technical Assistance Bureau will distribute certain Cherry Sheet aid monthly as in FY2014. Further details of the FY2015 distribution process are expected to be released in the near future similar to those issued in IGR 13-301 for FY2014.
Receipt of monthly Cherry Sheet aid in FY2014 should have improved cash flow and provided some additional investment income. The Bureau wrote a best practice highlighting one community’s use of its extra cash flow. Could their idea help your community or district? 

“Hitting the Ceiling”

For some cities and towns in FY2014, their levy limit either approached their levy ceiling or “hit the ceiling” either because their levy limit rose faster than their levy ceiling or their ceiling fell due to market conditions or to an extraordinary circumstance to the point where a collision occurred. When this occurs, there is a further loss to the levy limit and there is no process to recoup the loss. For most cities and towns, the levy ceiling is not a concern. But it is for others and it is serious enough to affect public services.
For cities and towns where such a collision has occurred or where one may occur in FY2015, please contact either the Bureau of Local Assessment or Bureau of Accounts if you need further information. 

Chapter 90 Apportionments

The Bureau received several calls and E-mails regarding FY2014 appropriation of Chapter 90 apportionments equal to the Governor’s recommendation, but greater than those finally approved by the Legislature.

The Bureau recommends that communities whose current appropriation exceeds their current apportionment limit their expenditure to the apportionment amount and correct the vote at the next meeting of their legislative body. 

Community Preservation Fund

During FY2014, 155 cities and towns collected the local Community Preservation Act (CPA) surcharge and are eligible for state matching grants in FY2015. The Division of Local Services (DLS) estimates that the balance in the state trust fund will be sufficient to provide a first round match of 23% of the surcharge levied by each city and town.
In FY2014, there will be equity and surplus distributions for those cities and towns that have adopted the maximum 3% surcharge. With these additional distributions, the total state reimbursement for qualifying cities and towns will increase, depending on their decile and total surcharge amount. The above estimates are subject to change depending on Registry of Deeds collections between now and October. 

More Community Preservation

The FY2014 State budget provided supplemental CPA funding of up to $25 million from the State’s General Fund surplus. This supplemental funding allowed for a first round match of 52.22% rather than what would have been a first round match of less than 31%.
Some CPA communities may not have met the annual 10% appropriation/reservation requirement for all three purposes prior to the setting of the FY2014 tax rate due to the timing of the trust fund distribution and the amount in excess of our recommendation in last March’s Bulletin. If the community hasn’t, it should make the corrective appropriation from their FY2014 budgeted reserve or the CPA unreserved fund balance as of June 30, 2013 at their next legislative body’s meeting. If these funds are not available, a corrective appropriation should be taken as soon as practicable from the new fund balance as of June 30, 2014 or FY2015’s estimated CP Fund revenues. The extra State funds, if unbudgeted on Schedule A-4 when the FY2014 tax rate was certified, cannot be appropriated from until they become part of the new fund balance.
The Division of Local Services is preparing new guidance on the CPA to be released soon that will:

• *  combine all prior guidance and incorporate recent amendments to Chapter 44B related to additional revenues and spending purposes;
  
• *  explain how a CPA community may adopt § 3(b1⁄2) to assess at least a 1% surcharge and appropriate additional municipal revenues to the CPA fund to equal 3% of the levy required to receive the maximum State match;
  
• *  explain that the 10% Open Space appropriation requirement now includes Recreation;
  
• *  provide further clarity on expenditure purposes; and
  
• *  remind that the annual disbursement date for trust fund monies has changed from on or before October 15 to on or before November 15.