Town staff presented a draft of their proposed Fiscal Year 2021 budget to Town Council yesterday. Crunching numbers and considering projected models, staff worked many late nights to present a balanced budget that maintains core services and plans for a resilient future. The blended approach adapts to the potentially significant loss of sales tax revenue in the coming year and is only possible due to years of prudent budgeting and planning, which puts the Town in a decent position to respond to significant anticipated reductions.
The proposed budget makes it clear that tradeoffs are a necessity in response to the COVID-19 pandemic and includes reductions across the organization and utilization of over $4.8M in reserve funds saved for a “rainy day” like what we is currently happening. Town staff developed this blended approach to respond to the current situation using two lenses 1) Core Services that contribute to the health, safety, and welfare of citizens and visitors to our community and 2) The Comprehensive Plan that provides a macro-level guidepost for focusing attention and resources on our Community’s vision for long-term Ecosystem Stewardship, Growth Management, and Quality of Life.
The unexpected decrease in revenue assumes a projection that sales and lodging tax will be down 50%, meaning the Town will collect $7.1M less in taxes in the coming year. A portion of the decrease in revenue will be made up for with reserve funds. Staff proposes to utilize $4.8 million in reserves, which would leave about $3.7 million in reserves or the recommended 21% of the annual budget. Reductions to make up for the rest of the loss are proposed to come from fewer capital expenditures and a reduction of Town program services 23% below last year. That said, as we decreased budgets, staff simultaneously innovated and searched for efficiencies to ensure the Town delivers acceptable, although sometimes reduced, levels of service. The largest reductions are proposed from Town Police, Public Works, and START reflecting the relative budget-size in these departments. Reductions also include cutting and freezing nine full-time equivalent employees.
Town Council was asked to weigh in with their perspective about the working assumption of tax collection being down by 50% as well as the reliance on the reserve fund. Councilman Jonathan Schechter noted, “I am looking at this in terms of what could happen in 2022. The methods in place here, in terms of drawing down reserves, are not things we can continue to do. We can rely heavily on reserves for one year, but we will not have near that amount to use again. We must look at this as a one-off budget that will get us through 2021 and then to keep working on positioning the Town to get through the years after that. With that context, I am comfortable proceeding for now, but as we continue these discussions need to consider if more cuts are necessary.”
Overall, Town Council agreed to the assumptions the draft budget is based upon, at least initially, though they asked for continued focus on what else can be trimmed to potentially hold a bit more in reserves. Mayor Muldoon said, “In coming meetings, we will need to go through the budget line by line and there may need to be cuts beyond those proposed here.”