The Necessity of FY14 Budget Cuts

The Necessity of FY14 Budget Cuts

State intervention has proven to no longer be a feasible option.

·       The DOR will only loan us $350,000 not the full $505,000 shortfall

o   Budget cuts will still be necessary

·       Deficit legislation will be a slow process

o   This process will holdup setting the tax rate, therefore delaying the mailing of tax bills

·       Due to the inability to set the tax rate thus far, the town has a cash flow problem which jeopardizes payroll and a bond payment due June 15^th 

·       We must avoid default on the June 15^th bond payment at all costs

In an effort to steer clear of default, solve our cash flow problem, and avoid unnecessary state intervention the Department Heads and Advisory Board proposed enough budget cuts to balance the FY14.  The Selectboard implemented these cuts, and passage of STM Article 1 resolves the issues state intervention cannot. 

A $350,000 DOR loan will:

·       Make Templeton the first town to require this type of stigmatized intervention

·       Lower our property values even lower

·       Further lower our bond rating making it more difficult to borrow money in the future 

·       Jeopardize the new elementary school building project due to reduced credit and increased debt.  This ultimately wastes the $500,000 feasibility study that was just approved at the ballot 

·       Add $80,000 in debt payments to the town budget for the next 5 years – pushing the problem forward

o   This includes $50,000 in interest over the 5 years

·       Put in place an additional level of bureaucracy, requiring approval of even routine expenditures, slowing town operation to a crawl

·       Give the DOR the right to make future reductions in town services without town input

A $350,000 DOR loan will not:

·       Bring in a DOR overseer or control board – We are not a big enough municipality 

·       Change our policies and procedures 

·       “Clean House,” mandate a change in BOS or town officials  

·       Cause a review of our financial records or require any additional auditing  

·       Cover the entirety of our $505,000 budget shortfall – department cuts will still be necessary

·       Solve the current cash flow issued as it will delay setting a tax rate

Regardless of whether STM Article 1 passes or fails, we will not be spending the funds that the Selectboard has approved as cuts.  However, the DOR will only consider FY14’s budget as balanced if STM Article 1 passes today.  This means that the cuts will stand without the intended benefit of stopping state intervention. 

In addition, The Selectboard, Advisory Board, and the Department Heads all worked together to achieve a balanced FY15 budget.  Due to the given budget limitations it was a tedious process, which required concessions from everyone involved.  We succeeded and have a balanced FY15 budget to present today that all three groups agree upon.  However, if we deal with the FY14 shortfall via a loan, thus extending the deficit over the next 5 years, we will have to take the balanced FY15 budget and find an additional $80,000 worth of cuts.  

Up until now, both the FY14 cuts and the balancing of the FY15 budget has been a decision making process with input from the Selectboard, Advisory Board, and the Department Heads.  If the state intervenes, the necessary $585,000 in cuts to be made in FY15 (and over the next 5 years) will be made by the DOR.  No one knows what services, employees, and/or departments the DOR may choose to reduce or eliminate. 

Passage of the Selectboard’s FY14 budget cuts is critical to our recovery.

Pass STM Article 1 enabling ATM Article 31 to be tabled and
allow us all to move forward as we continue to work toward stability.