Budgeting 101

Every city and town must pass an annual budget to balance revenues with expenses, and plan for borrowing and paying back the loans.

Cities and towns must spend money to provide services and maintain public facilities. The major categories for public expenditures are:

Schools and education
Public safety (police and fire departments)
Libraries
Maintenance of public facilities (roads, bridges, parks, and public buildings)
Insurance (mainly health insurance for public employees)
Administration (including the clerk, treasurer, comptroller, assessors, information technology, inspections, and many other departments)
Payback of loans which paid for major projects (like a new school)
Payments to the state for services provided at a state level (public transportation, water & sewer, etc.)
Pensions for retired employees
Money set aside for emergencies and unexpected expenses (reserve and “rainy day” funds)

To pay for all this, cities and towns raise revenue, mainly from the following sources:

Property taxes
Other taxes (auto excise, meals, etc.)
Fees and fines (building permits, dog licenses, swimming pool or skating rink fees, parking tickets, etc.)
State aid (from state tax revenues)
Grants (from the state and federal governments and private sources)
Loans (to spread the cost of major, infrequent expenses, like a new school)
Money taken from reserves or “rainy day” funds, usually for an unexpected expense or emergency

Although town finances are under review all year round and long range planning is continuous, the annual budget process usually begins in August with capital planning and ends in mid-May when Town Meeting votes on the budget. Here is a basic timeline of the process.

Click on a month to see more details.

July - books are closed, the new fiscal year begins

August - first budget requests

September - capital requests

October - budget guidelines set

Capital planning is actively meeting. This is the earliest a Budget and Revenue Task Force meeting is likely to be called. BRTF is a joint meeting of the School committee, Select Board and Finance Committee. They are usually called to review long range plans and complex issues in a public setting. The knottier the problems the earlier they are likely to begin to meet. BRTF meetings are posted public meetings.

November - budget starts coming together

December - draft budget

The first week in December the Assessor completes the Tax Classification, presents it to the Select Board and the Select Board votes to confirm the tax rate. A lot of math has gone on in the Assessor’s office by this time. They have to calculate total assessed value of property in town, the new levy limit, additional taxes that can be levied due to past votes of the town on debt exclusions and anything else that affects the tax rate. Then the amount to be raised is divided by the assessed value to come up with the tax rate per thousand dollars of property value. This and a number of other documents must be filed with the state and approved. Also in December the annual town meeting warrant opens and various town bodies submit articles for consideration. Many of these are appropriations and are standard items. Others are requests to change by-laws, adjust zoning or consider new ideas. Articles may be added to warrant by the Town Manager and various town elected bodies. Any group of ten registered voters may also add an article.

January - final draft submitted to Fincom

The Town Manager must submit his budget to the Finance Committee. In truth, he assembles the budgets for all appointing authorities (Town Departments, Treasurer, Assessor, Town Clerk, Comptroller, Enterprise funds like the Ed Burns Arena and Skating Rink and the Council on Aging) and submits a consolidated budget. The schools prepare and submit their budget separately. The revenue projections are compared to budget requests and the gap – if any – is estimated. It is important to note that at this point the revenue numbers are fluid and remain so for months since 15% of our budget depends on the state budget which is negotiated in parallel. Usually the highest possible revenue from the state is known at this point since the Governor issues a draft budget in January as well. The school’s general fund revenue is known since it is on the five year plan and is increased year over year by formula but the rest of their revenues may be equally uncertain until the state budget is ratified. Sometime in January the town meeting warrant closes. This means that all articles on the town meeting agenda are known and nothing new can be added. Often the School Committee holds a series of public hearings on their budget and/or seeks public input through surveys at this point.

February - Fincom reviews all budgets, Selectmen review warrant articles

The Finance Committee is in full swing. Members are working with the departments they are responsible for to understand budget requests and help find reductions if needed. Finance Committee is meeting twice a week on Monday and Wednesday evenings to hear from departments about their budgets and to consider appropriation articles on the town meeting warrant. These are posted public meetings. The Select Board begins to review Town Meeting articles that they must write recommended votes for as do the redevelopment board and finance committee. Each board considers an article at one meeting, votes on the action to take and then votes on the wording of the recommended vote at a subsequent meeting. The Budget and Revenue Task Force will meet this month or in March to review the long term plan and any over-arching budget issues. The Capital Planning Committee has continued to meet this entire time and has begun to assemble their recommendations for Capital projects into a report to town meeting.

March - Fincom & Selectmen finalize recommendations to Town Meeting

April - Town election, Town Meeting opens

The town election is held. Any newly elected Select Board, School Committee members etc. are sworn in and attend their first meetings. The warrant is issued to all residents. Town meeting opens the Monday after the April school break. Reports to Town Meeting from the Select Board, Finance Committee, Redevelopment Board and Capital Planning Committee to town meeting are due on the first night of town meeting. Town meeting opens and begins to consider the warrant articles in order. The capital plan, town budgets and other appropriations are articles on the warrant.