Town meeting handout Article 3 Special Town Meeting August 3, 2016 Town meeting handout Article 3 DEBT EXCLUSION 2) ADJUST PROJECTED REVENUES 3) RESPONSIBLE USE OF FREE CASH 4) BUDGET REDUCTIONS

1) Present $330,900.80 Debt Exclusion on September 8, 2016 A debt exclusion temporarily raises additional tax revenue to pay debt service costs associated with a capital project or purchase. When the debt is paid off, the additional property taxes are removed from the levy. 3 years remain on the non-excluded debt issued in 1999 for Naquag Elementary and Central Tree Middle School construction/renovations. Total annual debt service for the school projects is $1,195,351.80. $864,451 is reimbursed annually by the Massachusetts School Building Authority, leaving the remaining portion as an on-budget expense.

ESTIMATED TAX RATE IMPACT Debt Exclusion The Town of Rutland borrowed $15.513 M in 1999 to construct the Central Tree Middle School and Naquag Elementary School. The Town receives reimbursements of $864,451 each year from the Massachusetts School Building Authority to offset the annual debt payments. The debt is scheduled to be completely paid off in FY2019 The payment schedules below show the annual debt payment amounts the Combined Debt and the potential effect the debt exclusion would have on the tax rate associated with the average house in Rutland with an assessed value of $250,000. FY2017 FY2018 FY2019 Original Borrowing Principal Interest Combined School Debt Payments 15,513,000 1,089,000.00 106,351.80 1,126,000.00 72,157.20 1,172,000.00 36,800.80 Total Principal and Interest 1,195,351.80 1,198,157.20 1,208,800.80 MSBA Reimb (864,451.00) Total School Debt Exclusion 330,900.80 333,706.20 344,349.80 Est. Tax Rate Adjustment   0.42 0.43 0.44 Est. Annual cost for avg. $250k home 105.56 106.46 109.85 Estimated cost per quarterly tax bill 26.39 26.62 27.46 A debt exclusion ballot question is presented to voters as a way to pay for specified debt service through a temporary tax levy increase. To calculate your estimated annual cost based on your home's value, use the following formula: = Total School Debt Exclusion/(783666600/1000) x (assessed value of your home/1000) FY2016 Valuation 783,666,600.00

2) Adjust FY17 Projected Revenues Revenue projections must remain conservative to avoid potential revenue deficits, and to mitigate mid-year funding reductions in state aid. Since Annual Town Meeting, revenue categories have been reviewed and the following may be conservatively adjusted: Estimated New Growth $ 40,000 61A Sales & Conversions $ 25,000 6 MW Solar Project (est. 6-mo.) $ 52,000 1.8 MW Solar Project (est. 6-mo.) $ 11,000 Est. Fee Increases (fee schedules) $ 13,000 Misc. estimated revenues $ 7,000 TOTAL $148,000

3) Responsible Use of Certified Free Cash FREE CASH IS: Comprised of actual receipts in excess of revenue estimates, including one-time receipts, and unspent departmental budget line-items at fiscal year’s end. It is reduced by property tax receivables and certain year-end deficits. Considered a non-recurring funding source because of the uncertainty of funding sources it contains. It should be used to fund one-time expenditures, capital items, or to replenish other reserves such as Stabilization, Capital Stabilization and OPEB Trust Fund. Projected to be above last year’s level for FY16 , primarily due to receipt of one-time revenues such as FEMA and other reimbursement grant funding.

4) Budget Reductions Required Budget Reductions (Projected) $81,281.20 FUNDING REQUIRED: $ 710,182.00 Passage of the Debt Exclusion (FY17) $ 330,900.80 Adjusted FY17 Projected Revenues $ 148,000.00 Projected use of Certified Free Cash ($150,000 or 30%, whichever is less) $ 150,000.00 Required Budget Reductions (Projected) $81,281.20 Failure of the debt exclusion would require budget reductions totaling an estimated $412,182. (approx. 7.5% departmental reductions)

OVERRIDES Relation to Appropriations Town Meeting voted the FY17 municipal budget by budget sections. Because of that, the municipal budget was appropriated generally. An override “for the purpose of funding the operating expenses of municipal departments” for FY17 was passed on May 9, 2016. The Department of Revenue treats override dollars as the first dollars spent for the stated purposes. As long as appropriations made for the stated purpose equal or exceed that amount, the first dollars appropriated for that purpose are deemed to come from the override.

OVERRIDES Relation to Appropriations Example: The May 9th override funded $6,720.00 of the Planning Board’s FY17 budget, for a total departmental budget appropriation of $16,354.36. As long as the Town spends $6,720.00 for the Planning Board’s FY17 budget, the Town will have met the override. Should the town need to make budget cuts in this fiscal year, departmental amounts could be reduced as needed to the amount established by the override. The amount of the override may be included in any future budgeting.