Special Town Meeting Supplemental Information

MEMORANDUM

TO: Town Meeting Members
FR: Jennifer L. Wolowicz, Interim Town Administrator
Barry Del Castilho
RE: Special Town Meeting Supplemental Information
DA: August 7, 2009

The FY10 budget that was adopted at the Annual Town Meeting assumed a revenue from the Senate-proposed local option meals tax of 2% in the amount of $272,471. Town Meeting also approved a motion to approve any increase in the statewide meals and rooms taxes and to approve the maximum local option meals tax, not to exceed 2%. We said that both the revenue estimate and the tax approvals were not final, but both were based on the best information available at the time. The revenue estimate was more conservative than a previous estimate of almost $400,000 from the House-proposed budget.

The local option meals tax turns out to be ¾%, and there is now an increase in the local option rooms tax of 2%, from 4% to 6% (the latter increase had not been in any previous versions of the State budget). Both must be accepted by the Town with a specific reference to the statute that was enacted after the Annual Town Meeting dissolved. The estimated revenues from these taxes are $66,172 for the local option meals tax and $3,000 for the local option rooms tax, a total of $69,172. Those estimates are for three-quarters of FY10, beginning October 1, 2009. Town Meeting must accept those statutes before September 1, 2009 in order to receive the revenue for the period beginning October 1, 2009 and ending June 30, 2010. If Town Meeting accepts the statutes at a fall town meeting, the revenues would be received for the period beginning January 1, 2010 and would be approximately two-thirds of the estimates for three-quarters of the year, i.e. approximately $23,057 less.

The $203,299 difference between the $272,471 previous estimate and the $69,172 total current estimate is largely offset by an increase in “Unrestricted General Government Aid” in the amount of $160,850, presumably from the increase in the State sales tax. As always, other things also change, and some numbers aren’t even final yet. The estimated net effect on the FY10 budget as approved by Town Meeting is approximately $100,000. That will essentially reduce Free Cash, because less money from the State will require an additional amount from the Town. But no appropriation from Free Cash is being sought at the August 25, 2009 special town meeting because other changes resulting from FY09 revenues and expenditures may further offset that net amount. All budget adjustments will be recommended at a fall town meeting.

For additional information please contact Bill Sutton at 538-5031 or Jennifer Wolowicz at 538-5017.