INTRODUCTION TO THE 1999-2000 MUNICIPAL BUDGET

The municipal budget in Dexter includes funding requirements to cover town operations, the local share contribution to School Administrative District #46, and the annual tax levy set by Penobscot County to fund county operations. About 64% of our total funding needs are paid for by property taxes with the remaining 36% covered by a variety of local revenue sources, state reimbursements, and grants. Out of each municipal dollar we spend approximately 65 cents to operate the town, 32 cents to run the schools, and 3 cents go to the county.

We're now in the second year of our program to move the municipal budget to a "gross budgeting" process. This is the type of budgeting and accounting arrangement used by most municipal governments in Maine, and is designed to clearly project and account for all expenses and revenues in separate budget documents. In previous years several of our department expense budgets also included projected income from fees, services, and reimbursements. This procedure often masked the real cost of doing business, reduced overall revenue projections, and detracted from the value of the budget as an effective management device. In correcting this past fiscal procedure we have attempted to clearly define all our true expenses as well as revenues, and improve our accounting procedures. This has increased the "real" numbers as related to the cost of doing business as reflected in our expense budget, but has also greatly improved our revenue projections. As you review the expense budget please keep in mind the very important fact that many of the perceived departmental increases are offset by revenues that are presented in the accompanying revenue budget.

The most important single figure associated with a municipal budget is the bottom line net cost of operations, in other words, what needs to be raised through taxation after all revenues have been identified and subtracted from total obligations. The proposed FY 2000 budget has a net increase of $27,943 over the previous year. This translates to a 1.1% growth in funding requirements. Some of the factors which have influenced this growth are beyond our direct control such as a dramatic increase in employee health benefit premiums, plus increases in our workers compensation and municipal liability insurance premiums. We also saw modest increases in our local share contribution to the school district and county, as well as escalating costs related to communication, postage, and maintaining our aging computers and copy machine. Other costs that we had little control over related to workplace safety and public building maintenance that had to be addressed in the short term. One of the more distressing items we had to deal with was the increasing cost of vandalism to public property that occurred during the previous year. The cost of such damages forced us to delay several of our much needed facility upgrade and maintenance projects, particularly some of those relating to recreation. Some major changes to municipal departmental structure, and the continued effort to support the growth of our capital investment program also influenced the budget. We have realigned several departments and accounts, created a facilities management department, established an account to support a charter revision commission, significantly increased funding to support our economic development initiatives, assumed responsibility for operation of the municipal golf course, set money aside to publish a full color public relations brochure about Dexter, and addressed some of the more critical concerns relating to the Y2K problem and its potential impact on the community. We also fully funded a dispatch/administrative position in the police department which was previously funded by a federal grant, incorporated funding for a new ambulance, and establish a part-time position for an EMT-P in our Ambulance Service.

Also of significant note is that fact that this year we are reducing the amount requested to be withdrawn from the General Fund to help offset taxes. Several years of annually withdrawing significant sums from the General Fund to reduce the tax burden has placed us in a situation that, if continued, may necessitate the Town borrowing funds to operate in anticipation of tax collections. We are currently relatively solvent, and it's in all of our best interests to stay that way.

Over the past several years the demand on the tax dollar to support education and services has significantly increased, placing the municipal leadership in a difficult position. Their efforts to hold down taxes was only moderately effective and unfortunately had the long term impact of deferring major upgrade and maintenance projects for our buildings and delaying programs and acquisitions that were important for the future development of the community. We're now faced with the reality that we have to attend to the needs of our older facilities and address upgrades for some of our essential equipment, as well as plan for future growth.

Respectfully submitted,

Robert F. Simpson
Town Manager

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