TO THE HONORABLE TOWN COUNCIL AND CITIZENS OF DEXTER:
INTRODUCTION TO THE 2000-2001 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 60% of our total funding needs are paid for by property taxes with the remaining 40% covered by a variety of local revenue sources, state reimbursements, and grants. Out of each municipal dollar we will spend approximately 66 cents to operate the town, 31 cents to run the schools, and 3 cents go for services provided by Penobscot County.
We're now in the third year of our program to move the municipal budget to a pure "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 2001 budget has a net increase of $ 23,150 over the previous year. This translates to less than 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, projected increases in the minimum wage, significant increases in the cost of petroleum products. 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 some of our aging equipment. 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.
Last year we made some major changes to the municipal departmental structure which has helped better define responsibilities and accountability for spending. This was particularly apparent as it related to the maintenance of municipal facilities and the operation of our recreation program. In FY2001 we continue to dedicate funds to support the long term needs to maintain and enhance municipal buildings and facilities, however, attention to future capital improvement requirements requires the contribution of significant sums to dedicated reserve accounts. This year we also continue to support a special commission created to review the Town Charter and have sustained the level of funding to support our initiatives in the economic development arena.
As we entered into this budget development cycle, the Town Council issued a guideline that we attempt to achieve a level of spending that wouldn't necessitate an increase in the level of property taxes, which was 20.5 mills in FY2000. The municipal department heads worked very hard to define a level of funding that would meet the Council's guidelines. However, during the final phase of our budget development we determined that some significant cuts to many of the departmental funding requests would be necessary. After another round of review we were able to make revenue projection adjustments and reductions in proposed spending that totaled more than $200,000. The proposed budget that is being presented to the Council comes very close to meeting their guidelines; however, in attempting to reach the Council's goal we were forced to pare some programs, adjust our planned contributions to several capital reserve funds, and make modest reductions in some employee benefits. However, I feel we were successful in retaining the integrity of our capital program, and will be able to proceed with essential improvements and major maintenance projects associated with our municipal facilities. This budget also incorporates a modest cost of living increase for many of our permanent employees as well as increasing the minimum wage positions to a level that we anticipate will be mandated by the federal government.
Also of significant note is fact that we are only recommending the withdrawal of $100,000 from the General Fund to help offset property taxes. We're comfortable with this amount; however, any greater pressure on our General Fund could serve to endanger our ability to conduct operations without having to borrow funds in anticipation of payment of taxes. 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 municipal services, education and the county has increased significantly. This has placed the municipal leadership in the unenviable position of having to raise taxes or reduce programs. Their efforts to hold down taxes has been relatively successful during the last two years, and if this budget is approved it will be the third consecutive year that the residents of Dexter have not been faced with an increase in property taxes. As we look to the coming fiscal year we are faced with a munltitude of challenges; however we continue to posture ourselves for future development and continued long term needs of the community.
Robert F. Simpson